<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 1998
1933 ACT REGISTRATION NO. 33-19338
1940 ACT REGISTRATION NO.811-05426
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO.
/ /
POST-EFFECTIVE AMENDMENT NO. 54
/X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 55
/X/
------------------------
AIM INVESTMENT FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
50 CALIFORNIA STREET, 27TH FLOOR,
SAN FRANCISCO, CA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 392-6181
------------------------
<TABLE>
<S> <C> <C>
MICHAEL A. SILVER, ESQ. SAMUEL D. SIRKO, ESQ. ARTHUR J. BROWN, ESQ.
INVESCO (NY), INC. A I M ADVISORS, INC. R. DARRELL MOUNTS, ESQ.
50 CALIFORNIA STREET, 11 GREENWAY PLAZA, KIRKPATRICK & LOCKHART LLP
27TH FLOOR SUITE 100 1800 MASSACHUSETTS AVENUE, N.W.,
SAN FRANCISCO, CA 94111 HOUSTON, TEXAS 77046 (713) 2ND FLOOR
(NAME AND ADDRESS OF AGENT 626-1919 WASHINGTON, D.C. 20036
FOR SERVICE) (202) 778-9000
</TABLE>
------------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485.
/ / ON PURSUANT TO PARAGRAPH (b) OF RULE 485.
/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) OF RULE 485 OR SUCH
OTHER DATE AS IT MAY BE DECLARED EFFECTIVE BY THE SECURITIES AND
EXCHANGE COMMISSION.
/X/ ON SEPTEMBER 8, 1998 PURSUANT TO PARAGRAPH (a)(1) OF RULE 485.
/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(2) OF RULE 485.
/ / ON 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.
CERTAIN SERIES OF THE AIM INVESTMENT FUNDS, INC. ARE "FEEDER FUNDS" IN A
"MASTER/FEEDER" FUND ARRANGEMENT. THIS POST-EFFECTIVE AMENDMENT NO. 54 INCLUDES
MANUALLY EXECUTED SIGNATURE PAGES FOR TWO MASTER TRUSTS, GLOBAL INVESTMENT
PORTFOLIO AND GLOBAL HIGH INCOME PORTFOLIO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
AIM INVESTMENT FUNDS, INC.
CONTENTS OF POST-EFFECTIVE AMENDMENT
THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT OF AIM INVESTMENT
FUNDS, INC. CONTAINS THE FOLLOWING DOCUMENTS:
<TABLE>
<S> <C> <C>
Facing Sheet
Contents of Post-Effective Amendment
Cross-Reference Sheet
Part A -- Prospectuses
-- AIM Developing Markets Fund
-- AIM Emerging Markets Fund
-- AIM Global Consumer Products and Services Fund
-- AIM Global Financial Services Fund
-- AIM Global Government Income Fund
-- AIM Global Growth & Income Fund
-- AIM Global Health Care Fund
-- AIM Global High Income Fund
-- AIM Global Infrastructure Fund
-- AIM Global Resources Fund
-- AIM Global Telecommunications Fund
-- AIM Latin American Growth Fund
-- AIM Strategic Income Fund
-- Prospectuses -- Advisor Class
-- AIM Developing Markets Fund
-- AIM Emerging Markets Fund
-- AIM Global Consumer Products and Services Fund
-- AIM Global Financial Services Fund
-- AIM Global Government Income Fund
-- AIM Global Growth & Income Fund
-- AIM Global Health Care Fund
-- AIM Global High Income Fund
-- AIM Global Infrastructure Fund
-- AIM Global Resources Fund
-- AIM Global Telecommunications Fund
-- AIM Latin American Growth Fund
-- AIM Strategic Income Fund
Part B -- Statements of Additional Information
-- AIM Developing Markets Fund, AIM Emerging Markets Fund and AIM Latin
American Growth Fund
-- AIM Global Theme Funds
-- AIM Global Government Income Fund, AIM Strategic Income Fund, AIM
Global High Income Fund and AIM Global Growth & Income Fund
-- Statements of Additional Information -- Advisor Class
-- AIM Developing Markets Fund, AIM Emerging Markets Fund and AIM Latin
American Growth Fund
-- AIM Global Theme Funds
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
-- AIM Global Government Income Fund, AIM Strategic Income Fund, AIM
Global High Income Fund and AIM Global Growth & Income Fund
Part C -- Other Information
Signature Pages
-- AIM Investment Funds, Inc.
-- Global Investment Portfolio
-- Global High Income Portfolio
Exhibits
</TABLE>
<PAGE>
AIM INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
PROSPECTUS -- CLASS A AND CLASS B
<TABLE>
<CAPTION>
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- --------------------------------- ------------------------------------------------------------------
<S> <C>
1. Cover Page................... Cover Page
2. Synopsis..................... Summary
3. Condensed Financial
Information.................. Financial Highlights
4. General Description of
Registrant................... Investment Objectives and Policies; Risk Factors; Management;
General Information
5. Management of the
Fund......................... Management
5A. Management's Discussion of
Fund Performance............. See Annual Report
6. Capital Stock and Other
Securities................... Dividends, Distributions and Tax Matters; General Information
7. Purchase of Securities Being
Offered...................... How to Purchase Shares; Exchange Privilege; Determination of Net
Asset Value; Management; Terms and Conditions of Purchase of the
AIM Funds; Special Plans
8. Redemption or
Repurchase................... How to Redeem Shares; Determination of Net Asset Value
9. Pending Legal
Proceedings.................. Not applicable
<CAPTION>
PROSPECTUS -- ADVISOR CLASS
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- --------------------------------- ------------------------------------------------------------------
<S> <C>
1. Cover Page................... Cover Page
2. Synopsis..................... Summary
3. Condensed Financial
Information.................. Financial Highlights
4. General Description of
Registrant................... Investment Objectives and Policies; Risk Factors; Management;
General Information
5. Management of the Fund....... Management
5A. Management's Discussion of
Fund Performance............. See Annual Report
6. Capital Stock and Other
Securities................... Dividends, Distributions and Tax Matters; General Information
7. Purchase of Securities Being
Offered...................... How to Purchase Shares; Exchange Privilege; Determination of Net
Asset Value; Management; Terms and Conditions of Purchase of the
AIM Funds; Special Plans
8. Redemption or Repurchase..... How to Redeem Shares; Determination of Net Asset Value
9. Pending Legal Proceedings.... Not applicable
</TABLE>
<PAGE>
AIM INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
STATEMENT OF ADDITIONAL INFORMATION -- CLASS A AND CLASS B
<TABLE>
<CAPTION>
ITEM NO. OF
PART B OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------- ------------------------------------------------------------------
<S> <C>
10. Cover Page................... Cover Page
11. Table of Contents............ Table of Contents
12. General Information and
History...................... Cover Page; Additional Information
13. Investment Objectives and
Policies..................... Investment Objectives and Policies;
Investment Limitations; Options, Futures and Currency Strategies;
Risk Factors; Execution of Portfolio Transactions
14. Management of the
Registrant................... Trustees and Executive Officers; Management
15. Control Persons and Principal
Holders of Securities........ Trustees and Executive Officers; Management
16. Investment Advisory and Other
Services..................... Management; Additional Information
17. Brokerage Allocation and
Other Practices.............. Execution of Portfolio Transactions
18. Capital Stock and Other
Securities................... Not applicable
19. Purchase, Redemption and
Pricing of Securities Being
Offered...................... Valuation of Fund Shares; How to Purchase and Redeem Shares
20. Tax Status................... Taxes
21. Underwriters................. Management
22. Calculation of Performance
Data......................... Investment Results
23. Financial Statements......... Financial Statements
</TABLE>
<PAGE>
AIM INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
STATEMENT OF ADDITIONAL INFORMATION -- ADVISOR CLASS
<TABLE>
<CAPTION>
ITEM NO. OF
PART B OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------- ------------------------------------------------------------------
<S> <C>
10. Cover Page................... Cover Page
11. Table of Contents............ Table of Contents
12. General Information and
History...................... Cover Page; Additional Information
13. Investment Objectives and
Policies..................... Investment Objectives and Policies;
Investment Limitations; Options, Futures and Currency Strategies;
Risk Factors; Execution of Portfolio Transactions
14. Management of the
Registrant................... Trustees and Executive Officers; Management
15. Control Persons and Principal
Holders of Securities........ Trustees and Executive Officers; Management
16. Investment Advisory and Other
Services..................... Management; Additional Information
17. Brokerage Allocation and
Other Practices.............. Execution of Portfolio Transactions
18. Capital Stock and Other
Securities................... Not applicable
19. Purchase, Redemption and
Pricing of Securities Being
Offered...................... Valuation of Fund Shares; How to Purchase and Redeem Shares
20. Tax Status................... Taxes
21. Underwriters................. Management
22. Calculation of Performance
Data......................... Investment Results
23. Financial Statements......... Financial Statements
</TABLE>
<PAGE>
[LOGO]
AIM DEVELOPING MARKETS FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Developing Markets Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-ended, series, management investment
company. The Fund is a non-diversified portfolio which primarily seeks long-term
capital appreciation. Its secondary investment objective is income, to the
extent consistent with seeking capital appreciation. The Fund normally invests
substantially all of its assets in issuers in the developing (or "emerging")
markets of Asia, Europe, Latin America and elsewhere. A majority of the Fund's
assets ordinarily is invested in emerging market equity securities. The Fund
also invests in emerging market debt securities, which are selected based on
their potential to provide a combination of capital appreciation and current
income.
The Fund is designed for long-term investors and not as a trading vehicle. The
Fund does not represent a complete investment program, nor is it suitable for
all investors. The Fund may invest significantly in equity and high yield, high
risk ("lower quality") debt securities that are predominantly speculative.
Investments of this type are subject to a greater risk of loss of principal and
interest. The Fund's investments in securities of issuers in developing markets
involves special considerations and risks that are not typically associated with
investments in securities of issuers in the United States or in other more
established markets. Investors should carefully assess the risks associated with
an investment in the Fund.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information dated
September 8, 1998 has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from
http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM DEVELOPING MARKETS FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objectives and Policies........................................................ 7
Risk Factors.............................................................................. 12
Management................................................................................ 17
Other Information......................................................................... 20
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of the Trust.
Investment Objectives: The Fund's primary investment objective is long-term capital appreciation; its secondary objective is
income, to the extent consistent with seeking capital appreciation.
Principal Investments: The Fund normally invests a majority of its assets in emerging market equity securities and also may
invest in emerging market debt securities.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment man-
agement group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
</TABLE>
Prospectus Page 2
<PAGE>
AIM DEVELOPING MARKETS FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calendar month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors: An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent
</TABLE>
Prospectus Page 3
<PAGE>
AIM DEVELOPING MARKETS FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
deferred sales charge. See "How to Redeem Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund will achieve its investment objectives. The Fund's net asset
value per share will fluctuate, reflecting fluctuations in the market value of its portfolio
holdings.
The Fund invests in foreign securities. Investments in foreign securities involve risks relating to
political and economic developments abroad and the differences between the regulations to which U.S.
and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings, and gains and losses realized on sales of securities. Securities of
foreign companies may be less liquid and their prices more volatile than those of securities of
comparable U.S. companies. The Fund normally invests substantially all of its assets in issuers in
emerging markets. Such investments entail greater risks than investing in issuers in developed
markets.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
The value of debt securities held by the Fund generally fluctuates inversely with interest rate
movements. Certain investment grade debt securities may possess speculative qualities. The Fund may
invest in below investment grade debt securities. Investments of this type are subject to a greater
risk of loss of principal and interest.
See "Investment Objectives and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM DEVELOPING MARKETS FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares (as a % of offering price)............................. 4.75% None
Sales charges on reinvested distributions to shareholders.......................................... None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)........................................................................................... None 5.00%
Redemption Charges................................................................................. None None
Exchange Fees...................................................................................... None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees...................................................... 0.98% 0.98%
12b-1 distribution and service fees................................................................ 0.50% 1.00%
Other expenses (after estimated reimbursements and waivers)........................................ 0.52% 0.52%
----------- -----------
Total Fund Operating Expenses........................................................................ 2.00% 2.50%
----------- -----------
----------- -----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (4):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS(7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (5)........................................................................ $67 $108 $151 $270
Class B Shares:
Assuming a complete redemption at end of period (6)................................... $77 $111 $157 [ ]
Assuming no redemption................................................................ $26 $ 79 $135 [ ]
</TABLE>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase; the charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges. "
(3) Expenses are estimated based on the fees and expenses the Fund is expected
to incur during its initial fiscal year as an open-end fund and AIM's
undertaking to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rate
of 2.00% and 2.50% of the average daily net assets of the Fund's Class A
shares and Class B shares, respectively. Without reimbursements and waivers,
"Other expenses" and "Total Fund Operating Expenses" are estimated to be
0.65% and 2.13%, respectively, for Class A shares and 0.65% and 2.63%,
respectively, for Class B shares. "Other expenses" include custody, transfer
agent, legal and audit fees and other operating expenses. See "Management"
herein and in the Statement of Additional Information for more information.
(4) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the example of a 5% annual return are required by regulations of the SEC
applicable to all mutual funds. The 5% annual return is not a prediction of
and does not represent the Fund's projected or actual performance.
(5) Assumes payment of maximum sales charge by the investor.
(6) Assumes deduction of the applicable contingent deferred sales charge.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one share of G.T. Global Developing Markets Fund, Inc. (the
"Predecessor Fund") for the periods shown. This information is supplemented by
the financial statements and accompanying notes appearing in the Statement of
Additional Information. . The Predecessor Fund was a
closed-end investment company whose single class of shares traded on the New
York Stock Exchange ("NYSE"). On October 31, 1997, the Fund, which had no
previous operating history, acquired the assets and assumed the liabilities of
the Predecessor Fund. On that date, all shareholders of the Predecessor Fund
received Class A shares of the Fund. The fees and expenses of the Fund will
differ from those of the Predecessor Fund. The Fund's fiscal year end will be
October 31, rather than December 31, which was the Predecessor Fund's fiscal
year end.
AIM DEVELOPING MARKETS FUND
(FORMERLY GT GLOBAL DEVELOPING MARKETS FUND)
(SUCCESSOR TO G.T. GLOBAL DEVELOPING MARKETS FUND, INC.)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM DEVELOPING MARKETS FUND
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's primary investment objective is long-term capital appreciation; its
secondary objective is income, to the extent consistent with seeking capital
appreciation. The Fund normally invests substantially all of its assets in
issuers in the developing (or "emerging") markets of Asia, Europe, Latin America
and elsewhere. A majority of the Fund's assets normally are invested in emerging
market equity securities. The Fund may invest in the following types of equity
securities: common stock, preferred stock, securities convertible into common
stock, American Depository Receipts, Global Depository Receipts, rights and
warrants to acquire such securities and substantially similar forms of equity
with comparable risk characteristics. The Fund may also invest in emerging
market debt securities that will be selected based on their potential to provide
a combination of capital appreciation and current income. There can be no
assurance the Fund will achieve its investment objective.
For purposes of the Fund's operations, emerging markets consist of all countries
determined by the Sub-adviser to have developing or emerging economies and
markets. These countries generally include every country in the world except the
United States, Canada, Japan, Australia, New Zealand and most countries located
in Western Europe. See "Investment Objectives and Policies" in the Statement of
Additional Information for a complete list of all the countries that the Fund
does not currently consider to be emerging markets.
For purposes of the Fund's policy of normally investing substantially all of its
assets in issuers in emerging markets, the Fund will consider investment in the
following emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
Although the Fund considers each of the above-listed countries eligible for
investment, it will not be invested in all such markets at all times. Moreover,
investing in some of those markets currently may not be desirable or feasible,
due to the lack of adequate custody arrangements for the Fund's assets, overly
burdensome repatriation and similar restrictions, the lack of organized and
liquid securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus, an issuer in an emerging market is an entity (1) for
which the principal securities trading market is an emerging market, as defined
above, (2) that (alone or on a consolidated basis) derives 50% or more of its
total revenues from business in emerging markets, provided that, in the
Sub-adviser's view, the value of such issuer's securities will tend to reflect
emerging market developments to a greater extent than developments elsewhere, or
(3) organized under the laws of, or with a principal office in, an emerging
market.
In selecting investments, the Sub-adviser seeks to identify those countries and
industries where economic and political factors, including currency movements,
are likely to produce above-average growth rates over the long term. The
Sub-adviser seeks those emerging markets that have strongly developing economies
and in which the markets are becoming more sophisticated. The Sub-adviser then
invests in those companies in such countries and industries that it believes are
best positioned and managed to take advantage of these economic and political
factors. The Sub-adviser believes that the issuers of securities in emerging
markets often have sales and earnings growth rates that exceed those in
developed countries and that such
Prospectus Page 7
<PAGE>
AIM DEVELOPING MARKETS FUND
growth rates may in turn be reflected in more rapid share price appreciation.
As opportunities to invest in securities in other emerging markets develop, the
Fund expects to expand and further broaden the group of emerging markets in
which it invests. In some cases, investments in debt securities could provide
the Fund with access to emerging markets in the early stages of their economic
development, when equity securities are not yet generally available or, in the
Sub-adviser's view, do not yet present an acceptable investment alternative.
While the Fund generally is not restricted in the portion of its assets that may
be invested in a single region, under normal conditions its assets will be
invested in issuers in at least four countries, and it will not invest more than
25% of its assets in issuers in one country. The Fund's holdings of any one
foreign currency together with securities denominated in or indexed to such
currency will not exceed 40% of its assets.
INVESTMENTS IN DEBT SECURITIES. The Fund may invest up to 50% of its total
assets in the following types of emerging market debt securities: (1) debt
securities issued or guaranteed by governments, their agencies,
instrumentalities or political subdivisions, or by government owned, controlled
or sponsored entities, including central banks (collectively, "Sovereign Debt"),
including Brady Bonds; (2) interests in issuers organized and operated for the
purpose of restructuring the investment characteristics of Sovereign Debt; (3)
debt securities issued by banks and other business entities; and (4) debt
securities denominated in or indexed to the currencies of emerging markets. Debt
securities held by the Fund may take the form of bonds, notes, bills,
debentures, bank debt obligations, short-term paper, loan participations,
assignments and interests issued by entities organized and operated for the
purpose of restructuring the investment characteristics of any of the foregoing.
There is no requirement with respect to the maturity or duration of debt
securities in which the Fund may invest.
There is no limitation on the percentage of the Fund's assets that may be
invested in debt securities that are rated below investment grade. Investment in
below investment grade debt securities involves a high degree of risk and can be
speculative. These debt securities are the equivalent of high yield, high risk
bonds, commonly known as "junk bonds." Debt securities in which the Fund will
invest may not be rated; if rated, it is expected that such ratings will be
below investment grade. See "Risk Factors -- Risks Associated with Debt
Securities" and "-- Risks Associated with Below Investment Grade Debt
Securities."
The Fund may invest in "Brady Bonds," which are debt restructurings that provide
for the exchange of cash and loans for newly issued bonds. Brady Bonds have been
issued by the countries of Albania, Argentina, Brazil, Bulgaria, Costa Rica,
Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Panama, Peru,
Philippines, Poland, Uruguay, Venezuela and Vietnam, and are expected to be
issued by other emerging market countries. As of the date of this Prospectus,
the Fund is not aware of the occurrence of any payment defaults on Brady Bonds.
Investors should recognize, however, that Brady Bonds do not have a long payment
history. In addition, Brady Bonds are often rated below investment grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time of issuance and is adjusted at
regular intervals thereafter.
Capital appreciation in debt securities may arise as a result of a favorable
change in relative foreign exchange rates, relative interest rate levels and/or
the creditworthiness of issuers.
ADDITIONAL INVESTMENT POLICIES
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy
for the Fund if it determines such a strategy to be warranted due to market,
economic or political conditions. Under a defensive strategy, the Fund may hold
cash (U.S. dollars, foreign currencies or multinational currency units such as
Euros) and/ or invest any portion or all of its assets in high quality money
market instruments of U.S. or foreign issuers. In addition, for temporary
defensive purposes, most or all of the Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Fund adopts a
temporary defensive posture, it will not be invested so as to directly achieve
its investment objectives.
Prospectus Page 8
<PAGE>
AIM DEVELOPING MARKETS FUND
In addition, pending investment of proceeds from new sales of Fund shares or in
order to meet ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest in foreign or
domestic high quality money market instruments. For a description of money
market instruments, see "Temporary Defensive Strategies" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
BORROWING AND REVERSE REPURCHASE AGREEMENTS. In connection with meeting requests
for the redemption of Fund shares, the Fund may borrow from banks or may borrow
through reverse repurchase agreements. The Fund also may borrow up to 5% of its
total assets for temporary or emergency purposes other than to meet redemptions,
but total borrowings may not exceed 33 1/3% of its total assets. However, the
Fund will not purchase securities while borrowings in excess of 5% of its total
assets are outstanding. Any borrowing by the Fund may cause greater fluctuation
in the value of its shares than would be the case if it did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed-upon price that includes an interest component.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. The Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. While a loan is outstanding, the borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to at least 100% of the value of the
borrowed securities plus any accrued interest or such other collateral as
permitted by the Fund's investment program and regulatory agencies, and as
approved by the Board. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral if the borrower fails financially.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. To attempt to increase
return, the Fund may write call options on securities. This strategy will be
employed only when, in the opinion of the Sub-adviser, the size of the premium
the Fund receives for writing the option is adequate to compensate it against
the risk that appreciation in the underlying security may not be fully realized
if the option is exercised. The Fund also is authorized to write put options to
attempt to enhance return, although it does not currently intend to do so.
The Fund may also use forward currency contracts, futures contracts, options on
securities, options on currencies, options on indices and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with its investments. These instruments are
often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities). The
Fund may enter into such instruments up to the full value of its portfolio
assets. See "Options, Futures and Currency Strategies" in the Statement of
Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on such futures
contracts to hedge its portfolio against movements in exchange rates.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets, to securities
denominated in such currencies or to securities of issuers domiciled or
principally engaged in business in such emerging markets. To the extent that
such a market does not exist, the Sub-adviser may not be able to effectively
hedge its investment in such markets.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-adviser intends to include in the
Fund's portfolio. The Fund also may purchase and sell put and call options on
Prospectus Page 9
<PAGE>
AIM DEVELOPING MARKETS FUND
stock indices to hedge against overall fluctuations in the securities markets or
in a specific market sector.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or a specific market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general market or market sector advance and thereby attempt to lessen the cost
of future securities acquisitions. Similarly, the Fund may use interest rate
futures contracts and options thereon to hedge the debt portion of its portfolio
against changes in the general level of interest rates.
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Fund may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). Pursuant to the Investment Company Act of 1940, as amended
(the "1940 Act"), the Fund generally may invest up to 10% of its total assets in
the aggregate in shares of other investment companies and up to 5% of its total
assets in any one investment company, as long as each investment does not
represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of their portfolio securities and multiple layering of
fees and expenses and is subject to limitations under the 1940 Act and market
availability. The Fund does not intend to invest in other investment companies
unless, in the judgment of the Sub-adviser, the potential benefits of such
investment justify the payment of any applicable premium or sales charge. As a
shareholder in another investment company, the Fund would bear its ratable share
of that company's expenses, including its advisory and administration fees. At
the same time the Fund would continue to pay its own management fees and other
expenses. AIM and the Sub-adviser will waive their advisory fees to the extent
that the Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments in some emerging markets have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain emerging markets, the ability of foreign entities such
as the Fund to participate in privatizations may be limited by local law or the
terms on which the Fund may be permitted to participate may be less advantageous
than those afforded local investors. There can be no assurance that governments
in emerging markets will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities and forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery to the Fund. If the Fund
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Fund enters into a transaction on a
when-issued or forward commitment basis, the Fund will segregate cash or liquid
securities equal to the value of the when-issued or forward commitment
securities with its custodian bank and will mark to market daily such assets.
There is a risk that the securities may not be delivered and that the Fund may
incur a loss.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may invest in fixed and floating
rate loans ("Loans") arranged through private negotiations between a foreign
entity and one or more financial institutions ("Lenders"). The majority of the
Fund's investments in Loans in emerging markets is expected to be in the form of
participations in Loans ("Participations") and assignments of portions of Loans
from third parties ("Assignments"). Participations typically will result in the
Prospectus Page 10
<PAGE>
AIM DEVELOPING MARKETS FUND
Fund having a contractual relationship only with the Lender, not with the
borrower. The Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, the Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the loan, nor any rights of set-off against the borrower,
and the Fund may not directly benefit from any collateral supporting the Loan in
which it has purchased the Participation. As a result, the Fund will assume the
credit risk of both the borrower and the Lender that is selling the
Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund
may be treated as a general creditor of the Lender and may not benefit from any
set-off between the Lender and the borrower. The Fund will acquire
Participations only if the Lender interpositioned between the Fund and the
borrower is determined by the Sub-adviser to be creditworthy. When the Fund
purchases Assignments from Lenders, the Fund will acquire direct rights against
the borrower on the Loan. However, because Assignments are arranged through
private negotiations between potential assignees and assignors, the rights and
obligations acquired by the Fund as the purchaser of an Assignment may differ
from, and be more limited than, those held by the assigning Lender.
ZERO COUPON SECURITIES. The Fund may invest in certain zero coupon securities
that are "stripped" U.S. Treasury notes and bonds. The Fund also may invest in
zero coupon and other deep discount securities issued by foreign governments and
domestic and foreign corporations, including certain Brady Bonds and other
foreign debt, and in payment-in-kind securities. Zero coupon securities pay no
interest to holders prior to maturity, and payment-in-kind securities pay
"interest" in the form of additional securities. However, a portion of the
original issue discount on zero coupon securities and the interest on
payment-in-kind securities will be included in the Fund's income. Accordingly,
for the Fund to continue to qualify for tax treatment as a regulated investment
company and to avoid a certain excise tax (see "Taxes" in the Statement of
Additional Information), it may be required to distribute an amount that is
greater than the total amount of cash it actually receives. These distributions
may be made from the Fund's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund will not be able to purchase additional
income-producing securities with cash used to make such distributions, and its
current income ultimately may be reduced as a result. Zero coupon and
payment-in-kind securities usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
INDEXED COMMERCIAL PAPER. The Fund may invest without limitation in commercial
paper that is indexed to certain specific foreign currency exchange rates. The
terms of such commercial paper provide that its principal amount is adjusted
upwards or downwards (but not below zero) at maturity to reflect changes in the
exchange rate between two currencies while the obligation is outstanding. The
Fund will purchase such commercial paper with the currency in which it is
denominated and, at maturity, will receive interest and principal payments
thereon in that currency, but the amount of principal payable by the issuer at
maturity will change in proportion to the change (if any) in the exchange rate
between the two specified currencies between the date the instrument is issued
and the date the instrument matures. While such commercial paper entails the
risk of loss of principal, the potential for realizing gains as a result of
changes in foreign currency exchange rates enables the Fund to hedge against a
decline in the U.S. dollar value of investments denominated in foreign
currencies while seeking to provide an attractive money market rate of return.
The Fund will not purchase such commercial paper for speculation.
OTHER INDEXED SECURITIES. The Fund may invest in certain other indexed
securities, which are securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals or other commodities
or other financial indicators. Indexed securities typically, but not always, are
debt securities or deposits whose value at maturity or coupon rate is determined
by reference to a specific instrument or statistic. The performance of indexed
securities depends to a great extent on the performance of the security,
currency or other instrument to which they are indexed and also may be
influenced by interest rate changes in the United States and abroad. At the same
time, indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
Prospectus Page 11
<PAGE>
AIM DEVELOPING MARKETS FUND
issuer's creditworthiness deteriorates. Indexed securities may be more volatile
than the underlying instruments. New forms of indexed securities continue to be
developed. The Fund may invest in such securities to the extent consistent with
its investment objectives.
OTHER INFORMATION. The Fund's investment objectives may not be changed without
the approval of a majority of its outstanding voting securities. A "majority of
its outstanding voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares. In addition, the
Fund has adopted certain investment limitations that also may not be changed
without shareholder approval. A complete description of these limitations is
included in the Statement of Additional Information. Unless specifically noted,
the Fund's investment policies described in this Prospectus and in the Statement
of Additional Information may be changed by the Trust's Board of Trustees
without shareholder approval. The Fund's policies regarding lending, and the
percentage of Fund assets that may be committed to borrowing, are fundamental
policies and may not be changed without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively, in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objectives. Investing in the Fund entails a substantial degree of risk, and an
investment in the Fund should be considered speculative. Investors are strongly
advised to consider carefully the special risks involved in investing in
emerging markets, which are in addition to the usual risks of investing in
developed markets around the world.
The Fund's net asset value will fluctuate, reflecting fluctuations in the market
value of its portfolio positions and its net currency exposure. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Fund will fluctuate
in response to general market and economic developments, as well as developments
affecting the particular issuers of such securities.
In addition, the value of debt securities held by the Fund generally will
fluctuate with the perceived creditworthiness of the issuers of such securities
and interest rates.
NON-DIVERSIFIED CLASSIFICATION. The Fund is classified under the 1940 Act as a
"non-diversified" fund. As a result, the Fund will be able to invest in a
smaller number of issuers than if it was classified under the 1940 Act as a
"diversified" fund. To the extent that the Fund invests in a smaller number of
issuers, the net asset value of its shares may fluctuate more widely and it may
be subject to greater investment and credit risk with respect to its portfolio.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of, the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to
Prospectus Page 12
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AIM DEVELOPING MARKETS FUND
domestic companies. In addition, certain costs attributable to foreign
investing, such as custody charges, are higher than those attributable to
domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Fund's net investment income from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing that income.
Investing in some foreign countries involves risks relating to potential
political and economic instability within such countries and the risks of
expropriation, nationalization, confiscation of assets and property or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation, the Fund could lose its entire investment in that market.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, currency depreciation,
resource self-sufficiency and balance of payments positions. Investments in
foreign government securities involve special risks, including the risk that the
government issuers may be unable or unwilling to repay principal or interest
when due.
The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will affect the net asset value
of the Fund's shares and also may affect the value of dividends and interest
earned by the Fund and gains and losses realized by it.
INVESTING IN EMERGING MARKETS. Emerging markets generally are dependent heavily
upon international trade and, accordingly, have been and may continue to be
affected adversely by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. Inflation and rapid fluctuations in
inflation rates have had and may continue to have negative effects on the
economies and securities markets of certain countries with emerging markets.
Disclosure and regulatory standards in many respects are less stringent than in
the United States and other major markets. There also may be a lower level of
monitoring and regulation of emerging markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause it to miss attractive investment opportunities. Inability
to dispose of a portfolio security caused by settlement problems could result
either in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
developed countries. The risk also exists that an emergency situation may arise
in one or more emerging markets as a result of which trading of securities may
cease or may be substantially curtailed and prices for the Fund's portfolio
securities in such markets may not be readily available. Section 22(e) of the
1940 Act permits a registered investment company, such as the Fund, to suspend
redemption of its shares for any period during which an emergency exists, as
determined by the SEC. Accordingly, when the Fund believes that circumstances
dictate, it will promptly apply to the SEC for a determination that such an
emergency exists. During the period commencing with the Fund's identification of
such conditions until the date of any SEC action, the Fund's portfolio
securities in the affected markets will be valued at fair value determined in
good faith by or under the direction of the Trust's Board of Trustees.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Fund generally will vary inversely with market interest rates. If interest
rates in a market fall, the Fund's debt securities issued by governments or
companies in that market ordinarily will increase in value. If market interest
rates increase, however, the debt securities owned by the Fund in that market
will likely decrease in value.
Prospectus Page 13
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AIM DEVELOPING MARKETS FUND
RISKS ASSOCIATED WITH BELOW INVESTMENT GRADE DEBT SECURITIES. The Fund may
invest up to 50% of its total assets in debt securities rated below investment
grade. Such investments involve a high degree of risk.
Debt rated Baa by Moody's Investors Service, Inc. ("Moody's") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), and
debt rated Ba, B, Caa, Ca or C by Moody's is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated C by Moody's or S&P is the lowest rated debt that is not
in default as to principal or interest, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Lower quality debt securities are also generally considered to be subject to
greater risk than securities with higher ratings with regard to a deterioration
of general economic conditions. These foreign debt securities are the equivalent
of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting it, such as its inability to meet specific
projected business forecasts or the unavailability of additional financing.
Similarly, certain emerging market governments that issue lower quality debt
securities are among the largest debtors to commercial banks, foreign
governments and supranational organizations such as the World Bank and may not
be able or willing to make principal and/or interest repayments as they come
due. The risk of loss due to default by the issuer is significantly greater for
the holders of lower quality securities because such securities are generally
unsecured and may be subordinated to the claims of other creditors of the
issuer.
Lower quality debt securities frequently have call or buy-back features that
would permit an issuer to call or repurchase the security from the Fund. In
addition, the Fund may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and the Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing its portfolio. The Fund may also acquire lower quality debt securities
during an initial underwriting or that are sold without registration under
applicable securities laws. Such securities involve special considerations and
risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include (1) potential adverse publicity, (2) heightened sensitivity to general
economic or political conditions and (3) the likely adverse impact of a major
economic recession.
The Fund may also incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and the Fund may have limited legal recourse in the event of a
default. Debt securities issued by governments in emerging markets can differ
from debt obligations issued by private entities in that remedies from defaults
generally must be pursued in the courts of the defaulting government, and legal
recourse is therefore somewhat
Prospectus Page 14
<PAGE>
AIM DEVELOPING MARKETS FUND
diminished. Political conditions, in terms of a government's willingness to meet
the terms of its debt obligations, also are of considerable significance. There
can be no assurance that the holders of commercial bank debt may not contest
payments to the holders of debt securities issued by governments in emerging
markets in the event of default by the governments under commercial bank loan
agreements.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
CURRENCY RISK. Because the Fund may invest substantially in securities
denominated in currencies other than the U.S. dollar, and since the Fund may
hold foreign currencies, it will be affected favorably or unfavorably by
exchange control regulations or changes in the exchange rates between such
currencies and the U.S. dollar. Changes in currency exchange rates will affect
the net asset value of the Fund's shares and also may affect the value of
dividends and interest earned by the Fund and gains and losses realized by it.
Currencies generally are evaluated on the basis of fundamental economic criteria
(e.g., relative inflation and interest rate levels and trends, growth rate
forecasts, balance of payments status and economic policies) as well as
technical and political data. Exchange rates are determined by the forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in dollars.
Many of the currencies of emerging market countries have experienced steady
devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Any devaluations in the currencies
in which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries also may have fixed currencies whose values against the U.S.
dollar are not independently determined. In addition, there is a risk that
certain countries may restrict the free conversion of their currencies into
other currencies. Further, certain currencies may not be internationally traded.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Fund is authorized to
enter into options, futures and forward currency transactions. These
transactions involve certain risks, which include: (1) dependence on the
Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of forward contracts, options,
futures contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which the Fund invests; (4) lack of assurance that a liquid secondary market
will exist for any particular option, futures contract or option thereon at any
particular time; (5) the possible loss of principal under certain conditions;
and (6) the possible inability of the Fund to purchase or sell a portfolio
security at a time when it would otherwise be favorable for it to do so, or the
possible need for the Fund to sell a security at a disadvantageous time, due to
the need for the Fund to maintain "cover" or to set aside securities in
connection with hedging transactions.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may have difficulty disposing of
Assignments and Participations. The liquidity of such securities is limited, and
the Fund anticipates that such securities could be sold only to a limited number
of institutional investors. The lack of a liquid secondary market could have an
adverse impact on the value of such securities and on the Fund's ability to
dispose of particular Assignments or Participations when necessary to meet its
liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for the Fund to assign a value to those securities for purposes of
valuing its portfolio and calculating its net asset value.
Prospectus Page 15
<PAGE>
AIM DEVELOPING MARKETS FUND
SOVEREIGN DEBT. The Fund may invest in sovereign debt securities of emerging
market governments, including Brady Bonds. Investments in such securities
involve special risks. The issuer of the debt or the governmental authorities
that control the repayment of the debt may be unable or unwilling to repay
principal or interest when due in accordance with the terms of such debt.
Periods of economic uncertainty may result in the volatility of market prices of
sovereign debt obligations and in turn the Fund's net asset value, to a greater
extent than the volatility inherent in domestic fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's investments.
Emerging markets are faced with social and political issues, and some of them
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs and may have other adverse
social, political and economic consequences. Political changes or a
deterioration of a country's domestic economy or balance of trade may affect its
willingness to service its sovereign debt. Although the Sub-adviser intends to
manage the Fund in a manner that will minimize the exposure to such risks, there
can be no assurance that adverse political changes will not cause the Fund to
suffer a loss of interest or principal on any of its holdings.
In recent years, some of the emerging market countries in which the Fund expects
to invest have encountered difficulties in servicing their sovereign debt
obligations. Some of these countries have withheld payments of interest and/or
principal of sovereign debt. These difficulties have also led to agreements to
restructure external debt obligations -- in particular, commercial bank loans --
typically by rescheduling principal payments, reducing interest rates and
extending new credits to finance interest payments on existing debt. In the
future, holders of emerging market sovereign debt securities may be requested to
participate in similar rescheduling of such debt. Certain emerging market
countries are among the largest debtors to commercial banks and foreign
governments. Currently, Brazil, Mexico and Argentina are the largest debtors
among developing countries. At times certain emerging market countries have
declared moratoria on the payment of principal and interest on external debt;
such a moratorium is currently in effect in certain emerging market countries.
There is no bankruptcy proceeding by which a creditor may collect in whole or in
part sovereign debt on which an emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.
As noted above, sovereign debt obligations issued by emerging market governments
generally are deemed to be the equivalent in terms of quality to securities
rated below investment grade by Moody's and S&P. Such securities are regarded as
Prospectus Page 16
<PAGE>
AIM DEVELOPING MARKETS FUND
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations and involve
major risk exposure to adverse conditions. Some of such securities, with respect
to which the issuer currently may not be paying interest or may be in payment
default, may be comparable to securities rated D by S&P or C by Moody's. The
Fund may have difficulty disposing of and valuing certain sovereign debt
obligations because there may be a limited trading market for such securities.
Because there is no liquid secondary market for many of these securities, the
Fund anticipates that such securities could be sold only to a limited number of
dealers or institutional investors.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment management and administration
agreement with AIM, the investment sub-advisory and sub-administration agreement
between AIM and the Sub-adviser, the agreements with AIM Distributors regarding
distribution of the Fund's shares, the custody agreement and the transfer agency
agreement. The day-to-day operations of the Fund are delegated to the officers
of the Trust, subject always to the investment objectives and policies of the
Fund and to the general supervision of the Trust's Board of Trustees. See "Board
of Trustees and Executive Officers" in the Statement of Additional Information
for information on the Trust's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include
determining the composition of the Fund's portfolio and placing orders to buy,
sell or hold particular securities; furnishing corporate officers and clerical
staff; providing office space, services and equipment; and supervising all
matters relating to the Fund's operation. For these services, the Fund pays AIM
investment management and administration fees, computed daily and paid monthly,
based on its average daily net assets, at the annualized rate of .975% on the
first $500 million, .95% on the next $500 million, .925% on the next $500
million and .90% on amounts thereafter. Out of the aggregate fees payable by the
Fund, AIM pays the Sub-adviser sub-advisory and sub-administration fees equal to
40% of the aggregate fees AIM receives from the Fund. The investment management
and administration fees paid by the Fund are higher than those paid by most
mutual funds. The Fund pays all expenses not assumed by AIM, the Sub-adviser,
AIM Distributors or other agents. AIM has undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 2.00% and 2.50% of the average daily net assets
of the Fund's Class A and Class B shares, respectively.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administrative services agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization
Prospectus Page 17
<PAGE>
AIM DEVELOPING MARKETS FUND
of the Sub-adviser, consummated a purchase agreement with AMVESCAP PLC pursuant
to which AMVESCAP PLC acquired LGT's Asset Management Division, which included
the Sub-adviser and certain other affiliates. As a result of this transaction,
the Sub-adviser is now an indirect wholly owned subsidiary of AMVESCAP PLC.
Prior to the sale, the Sub-adviser and its worldwide asset management affiliates
provided investment management and/or administrative services to institutional,
corporate and individual clients around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES BUSINESS EXPERIENCE
NAME/OFFICE FOR THE FUND PAST FIVE YEARS
- -------------------------- -------------------------- ---------------------------------------------------------------
<S> <C> <C>
Francesco Bertoni Portfolio Manager since Porfolio Manager for the Sub-adviser since June 1998.
London 1998 Investment Director of INVESCO Asset Management Ltd. (London)
("INVESCO London"), an affiliate of the Sub-adviser, since
1994. Portfolio Manager for INVESCO London from 1990 to 1994.
Cheng-Hock Lau Portfolio Manager since Chief Investment Officer for Global Fixed Income for the
New York 1997 Sub-adviser since October 1996. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from
July 1995 to October 1996. Employed by Chancellor Capital
Management, Inc. ("Chancellor Capital"), a predecessor of the
Sub-adviser, from 1995 to October 1996. Senior Vice President
and Senior Portfolio Manager for Fiduciary Trust Company
International from 1993 to 1995. Vice President at Bankers
Trust Company from 1991 to 1993.
</TABLE>
------------------------
In placing securities orders for the Fund's portfolio transactions, the
Sub-adviser seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-adviser may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions may be executed
through affiliates of AIM or the Sub-adviser. High portfolio turnover (over
100%) involves correspondingly greater brokerage commissions and other
transaction costs that the Fund will bear directly and could result in the
realization of net capital gains which would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. Certain Trustees and
officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund directly and through institutions with
Prospectus Page 18
<PAGE>
AIM DEVELOPING MARKETS FUND
whom AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares of the Fund 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 the Fund's average daily net
assets attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges 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 shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay contingent deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.50% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Prospectus Page 19
<PAGE>
AIM DEVELOPING MARKETS FUND
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense 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 the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4 , 1998 the Company acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of thirteen separate and distinct series portfolios of
the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of
Prospectus Page 20
<PAGE>
AIM DEVELOPING MARKETS FUND
the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 21
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
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AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
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AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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<PAGE>
AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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AIM INVESTOR'S GUIDE
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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AIM INVESTOR'S GUIDE
number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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AIM INVESTOR'S GUIDE
the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
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AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
A-14
<PAGE>
AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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<PAGE>
AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
A-16
<PAGE>
AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
A-17
<PAGE>
AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
A-18
<PAGE>
AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
A-19
<PAGE>
AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
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AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
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AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
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YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-27
<PAGE>
AIM DEVELOPING MARKETS FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM EMERGING MARKETS FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Emerging Markets Fund (The
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a diversified portfolio which seeks long-term growth of
capital by investing primarily in equity securities of companies in emerging
markets.
The Fund is designed for long term investors and not as a trading vehicle. The
Fund does not represent a complete investment program, nor is it suitable for
all investors. The Fund may invest significantly in lower quality and unrated
foreign government bonds whose credit quality is generally considered the
equivalent of U.S. corporate debt securities commonly known as "junk bonds."
Investments of this type are subject to a greater risk of loss of principal and
interest. An investment in the Fund should be considered speculative and subject
to special risk factors, related primarily to the Fund's investments in emerging
markets. Purchasers should carefully assess the risks associated with an
investment in the Fund.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information dated
September 8, 1998 has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM EMERGING MARKETS FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 7
Risk Factors.............................................................................. 10
Management................................................................................ 13
Other Information......................................................................... 17
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a diversified series of the Trust.
Investment Objective: The Fund seeks long-term growth of capital.
Principal Investment: The Fund normally invests at least 65% of its total assets in equity securities of companies in
emerging markets.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment man-
agement group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM/GT Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
</TABLE>
Prospectus Page 2
<PAGE>
AIM EMERGING MARKETS FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Shares are offered at net asset value without an initial sales charge and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calender month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors: An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
</TABLE>
Prospectus Page 3
<PAGE>
AIM EMERGING MARKETS FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund will achieve its investment objective. The Fund's net asset
values will fluctuate, reflecting fluctuations in the market value of its portfolio holdings.
The Fund will invest primarily in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
The Fund may invest up to 20% of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM EMERGING MARKETS FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases (as a % of offering price)....................................... 4.75% None
Sales charges on reinvested distributions to shareholders.......................................... None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)............................................................................................. None 5.00%
Redemption charges................................................................................. None None
Exchange fees...................................................................................... None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees...................................................... 0.98% 0.98%
12b-1 distribution and service fees................................................................ 0.50% 1.00%
Other expenses (after reimbursements and waivers).................................................. 0.52% 0.52%
----------- -----------
Total Fund Operating Expenses...................................................................... 2.00% 2.50%
----------- -----------
----------- -----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (4):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS(7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (5).............................................................. $67 $108 $151 $289
Class B Shares
Assuming a complete redemption at end of period (6)......................... $77 $111 $157 [ ]
Assuming no redemption...................................................... $26 $ 79 $135 [ ]
</TABLE>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. ("NASD") rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect AIM's undertaking to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 2.00% and 2.50% of the average daily net assets of the Fund's
Class A and Class B shares, respectively. "Other expenses" include custody,
transfer agency, legal, audit and other operating expenses. Without
reimbursements and waivers, "Other expenses" and "Total Fund Operating
Expenses" would have been 0.70% and 2.18%, respectively, for Class A Shares
and 0.70% and 2.68%, respectively, for Class B Shares of the Fund. See
"Management" herein and the Statement of Additional Information for more
information.
(4) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the Hypothetical Example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
(5) Assumes payment of maximum sales charge by the investor.
(6) Assumes deduction of the applicable contingent deferred sales charge.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM EMERGING MARKETS FUND
(FORMERLY GT GLOBAL EMERGING MARKETS FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM EMERGING MARKETS FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term growth of capital. Under normal
circumstances, the Fund seeks its objective by investing at least 65% of its
total assets in equity securities of companies in emerging markets. The Fund may
invest in the following types of equity securities: common stock, preferred
stock, securities convertible into common stock, rights and warrants to acquire
such securities and substantially similar forms of equity with comparable risk
characteristics. There can be no assurance that the Fund will meet its
investment objectives.
For purposes of the Fund's operations, "emerging markets" consist of all
countries determined by the Sub-adviser to have developing or emerging economies
and markets. These countries generally include every country in the world except
the United States, Canada, Japan, Australia, New Zealand and most countries
located in Western Europe. See "Investment Objective and Policies" in the
Statement of Additional Information for a complete list of all the countries
that the Fund does not consider to be emerging markets.
For purposes of the Fund's policy of normally investing at least 65% of its
total assets in equity securities of issuers in emerging markets, the Fund will
consider investment in the following emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
Although the Fund considers each of the above-listed countries eligible for
investment, it will not be invested in all such markets at all times. Moreover,
investing in some of those markets currently may not be desirable or feasible,
due to the lack of adequate custody arrangements for the Fund's assets, overly
burdensome repatriation and similar restrictions, the lack of organized and
liquid securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus, an issuer in an emerging market is an entity: (i)
for which the principal securities trading market is an emerging market, as
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenues from business in emerging markets, provided that, in the
Sub-adviser's view, the value of such issuer's securities will tend to reflect
emerging market developments to a greater extent than developments elsewhere; or
(iii) organized under the laws of, or with a principal office in, an emerging
market.
The Fund may also invest up to 35% of its total assets in (i) debt securities of
government or corporate issuers in emerging markets; (ii) equity and debt
securities of issuers in developed countries, including the United States; (iii)
securities of issuers in emerging markets not included in the list of emerging
markets above, if investing therein becomes feasible and desirable subsequent to
the date of this Prospectus; and (iv) cash and money market instruments.
The Fund invests in those emerging markets that the Sub-adviser believes have
strongly developing economies and in which the markets are becoming more
sophisticated. In selecting investments, the Sub-adviser seeks to identify those
countries and industries where economic and political factors, including
currency movements, are likely to produce above-average growth rates. The
Sub-adviser then invests in those companies in such countries and industries
that are best positioned and managed to take advantage of these economic and
political factors. The Fund ordinarily will be invested in the securities of
issuers in at least three different emerging markets. In evaluating investments
in securities of issuers in developed markets, the Sub-
Prospectus Page 7
<PAGE>
AIM EMERGING MARKETS FUND
adviser will consider, among other things, the business activities of the issuer
in emerging markets and the impact that developments in emerging markets are
likely to have on the issuer.
The Sub-adviser believes that the issuers of securities in emerging markets
often have sales and earnings growth rates that exceed those in developed
countries and that such growth rates may in turn be reflected in more rapid
share price appreciation. Accordingly, the Sub-adviser believes that the Fund's
policy of investing in equity securities of companies in emerging markets may
enable the Fund to achieve results superior to those produced by mutual funds
with similar objectives that invest solely in equity securities of issuers
domiciled in the United States and/or in other developed markets.
INVESTMENTS IN DEBT SECURITIES. The Fund may invest in debt securities of
governmental and corporate issuers in emerging markets. Emerging market debt
securities often are rated below investment grade or not rated by U.S. rating
agencies. The Fund may invest up to 20% of its total assets in debt securities
rated below investment grade. Investment in below investment grade debt
securities involves a high degree of risk and can be speculative. These debt
securities are the equivalent of high yield, high risk bonds, commonly known as
"junk bonds." See "Risk Factors -- Risks Associated with Debt Securities."
If the rating of a debt security held by the Fund drops below a minimum rating
considered acceptable by the Sub-adviser, the Fund will dispose of any such
security as soon as practicable and consistent with the best interests of the
Fund and its shareholders.
Growth of capital in debt securities may arise as a result of favorable changes
in relative foreign exchange rates, in relative interest rate levels and/ or in
the creditworthiness of issuers. The receipt of income from debt securities
owned by the Fund is incidental to its objective of long-term growth of capital.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic, or
political conditions. Under a defensive strategy, the Fund temporarily may
invest up to 100% of its assets in cash (U.S. dollars, foreign currencies,
multinational currency units such as Euros) and/or high quality debt securities
or money market instruments of U.S. or foreign issuers. In addition, for
temporary defensive purposes, most or all of its investments may be made in the
United States and denominated in U.S. dollars. To the extent the Fund employs a
temporary defensive strategy, it will not be invested so as to achieve directly
its investment objective. In addition, pending investment of proceeds from new
sales of Fund shares or to meet ordinary daily cash needs, the Fund temporarily
may hold cash (U.S. dollars, foreign currencies or multinational currency units)
and may invest any portion of its assets in money market instruments. For a
description of money market instruments in which the Fund may invest, see
"Temporary Defensive Strategies" in the "Investment Objectives and Policies"
section of the Statement of Additional Information.
ADDITIONAL INVESTMENT POLICIES
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Fund may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). Pursuant to the Investment Company Act of 1940 (the "1940
Act"), the Fund generally may invest up to 10% of its total assets in the
aggregate in shares of other investment companies and up to 5% of its total
assets in any one investment company, as long as each investment does not
represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities and
is subject to limitations under the 1940 Act and market availability. The Fund
does not intend to invest in such investment companies unless, in the judgment
of the Sub-adviser, the potential benefits of such investment justify the
payment of any applicable premium or sales charge. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-adviser will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other
Prospectus Page 8
<PAGE>
AIM EMERGING MARKETS FUND
institutional investors. Securities lending allows a Fund to retain ownership of
the securities loaned and, at the same time, enhances the Fund's total return.
At all times a loan is outstanding, the Fund's borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to the value of the borrowed
securities plus any accrued interest or such other collateral as permitted by
the Fund's investment program and regulatory agencies, and as approved by the
Board. The Fund limits its loans of portfolio securities to an aggregate of 30%
of the value of its total assets, measured at the time any such loan is made.
The risks in lending portfolio securities, as with other extensions of secured
credit, consist of possible delays in receiving additional collateral or in
recovery of the loaned securities and possible loss of rights in the collateral
should the borrower fail financially.
PRIVATIZATIONS. The governments in some emerging markets have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain emerging markets, the ability of foreign entities such
as the Fund to participate in privatizations may be limited by local law, or the
terms on which the Fund may be permitted to participate may be less advantageous
than those afforded local investors. There can be no assurance that governments
in emerging markets will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
BORROWING. It is a fundamental policy of the Fund that it may borrow an amount
up to 33 1/3% of its total assets in order to meet redemption requests.
Borrowing may cause greater fluctuation in the value of the Fund's shares than
would be the case if the Fund did not borrow, but also may enable the Fund to
retain favorable securities positions rather than liquidating such positions to
meet redemptions. It is a nonfundamental policy of the Fund that the Fund will
not purchase securities during times when outstanding borrowings represent 5% or
more of the Fund's total assets.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities and forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery to the Fund. If the Fund
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Fund enters into a transaction on a
when-issued or forward commitment basis, the Fund will segregate cash or liquid
securities equal to the value of the when-issued or forward commitment
securities with its custodian bank and will mark to market daily such assets.
There is a risk that the securities may not be delivered and that the Fund may
incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment risk normally associated with the
portfolio. These instruments are often referred to as "derivatives," which may
be defined as financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security, currency or an
index of securities). The Fund may enter into such instruments up to the full
value of its portfolio assets. See "Risk Factors -- Options, Futures and Foreign
Currency Transactions" herein and "Options, Futures and Currency Strategies" in
the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and
Prospectus Page 9
<PAGE>
AIM EMERGING MARKETS FUND
options on such futures contracts to hedge against movements in exchange rates.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets, to securities
denominated in such currencies or to securities of issuers domiciled or
principally engaged in business in such emerging markets. To the extent that
such a market does not exist, the Sub-adviser may not be able to effectively
hedge its investment in such markets.
The Fund may purchase and sell put and call options on securities to hedge
against the risk of fluctuations in the prices of securities held by the Fund or
that the Sub-adviser intends to include in the Fund's portfolio. The Fund also
may purchase and sell put and call options on indices to hedge against overall
fluctuations in the securities markets generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
adversely affect the Fund's portfolio. The Fund also may purchase stock index
futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The Fund
may use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolios against changes in the general level of interest
rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations as
fundamental policies which also may not be changed without shareholder approval.
A complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information may be changed by the Trust's Board of Trustees without shareholder
approval. If a percentage restriction on investment or utilization of assets in
an investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively, in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objective. Investing in the Fund entails a substantial degree of risk and an
investment in the Fund should be considered speculative. Investors are strongly
advised to consider carefully the special risks involved in emerging markets,
which are in addition to the usual risks of investing in developed markets
around the world.
The Fund's net asset value will fluctuate, reflecting fluctuations in the market
value of its portfolio positions and its net currency exposure. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Fund will fluctuate
in response to general market and economic developments, as well as developments
affecting the particular issuers of such securities.
Investing in emerging markets involves risks relating to potential political and
economic instability
Prospectus Page 10
<PAGE>
AIM EMERGING MARKETS FUND
within such markets and the risks of expropriation, nationalization,
confiscation of assets and property or the imposition of restrictions on foreign
investment and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation, the Fund could lose its
entire investment in that market.
Economies in individual emerging markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments positions. Many emerging market countries
have experienced high rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain countries with
emerging markets.
Emerging markets generally are dependent heavily upon international trade and,
accordingly, have been and may continue to be affected adversely by trade
barriers, exchange controls, managed adjustments in relative currency values and
other protectionist measures imposed or negotiated by the countries with which
they trade.
Disclosure and regulatory standards in many respects are less stringent than in
the U.S. and other major markets. There also may be a lower level of monitoring
and regulation of emerging markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited. In
addition, the securities of non-U.S. issuers generally are not registered with
the SEC, nor are the issuers thereof usually subject to the SEC's reporting
requirements. Accordingly, there may be less publicly available information
about foreign securities and issuers than is available with respect to U.S.
securities and issuers. Foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. The Fund's net
investment income and/or capital gains from its foreign investment activities
may be subject to non-U.S. withholding taxes.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result either in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
developed countries. The risk also exists that an emergency situation may arise
in one or more emerging markets as a result of which trading of securities may
cease or may be substantially curtailed and prices for the Fund's portfolio
securities in such markets may not be readily available. Section 22(e) of the
1940 Act permits a registered investment company, such as the Fund, to suspend
redemption of its shares for any period during which an emergency exists, as
determined by the SEC. Accordingly, when the Fund believes that circumstances
dictate, it will promptly apply to the SEC for a determination that such an
emergency exists within the meaning of Section 22(e) of the 1940 Act. During the
period commencing from the Fund's identification of such conditions until the
date of any SEC action, the Fund's portfolio securities in the affected markets
will be valued at fair value determined in good faith by or under the direction
of the Trust's Board of Trustees.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Fund generally will vary inversely with market interest rates. If interest
rates in a market fall, the Fund's debt securities issued by governments or
companies in that market ordinarily will increase in value. If market interest
rates increase, however, the debt securities owned by the Fund in that market
will likely decrease in value.
The Fund may invest up to 20% of its total assets in debt securities rated below
investment grade. Such investments involve a high degree of risk.
Debt rated Baa by Moody's Investors Service, Inc. ("Moody's") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), and
debt rated Ba, B, Caa, Ca or C by Moody's is
Prospectus Page 11
<PAGE>
AIM EMERGING MARKETS FUND
regarded, on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of the
obligation. While such lower quality debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions. Debt rated C by Moody's or S&P is the
lowest rated debt that is not in default as to principal or interest and such
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing. Lower quality debt securities are also
generally considered to be subject to greater risk than securities with higher
ratings with regard to a deterioration of general economic conditions. These
foreign debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. Similarly, certain emerging market governments that issue lower
quality debt securities are among the largest debtors to commercial banks,
foreign governments and supranational organizations such as the World Bank, and
may not be able or willing to make principal and/or interest repayments as they
come due. The risk of loss due to default by the issuer is significantly greater
for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from the Fund. In
addition, the Fund may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and the Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing the Fund's portfolio. The Fund may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession.
The Fund may also incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and the Fund may have limited legal recourse in the event of a
default. Debt securities issued by governments in emerging markets can differ
from debt obligations issued by private entities in that remedies from defaults
generally must be pursued in the courts of the defaulting government, and legal
recourse is therefore somewhat diminished. Political conditions, in terms of a
government's willingness to meet the terms of its debt obligations, also are of
considerable significance. There can be no assurance that the holders of
commercial bank debt may not contest payments to the holders of debt securities
issued by governments in emerging markets in the event of default by the
governments under commercial bank loan agreements.
Prospectus Page 12
<PAGE>
AIM EMERGING MARKETS FUND
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "Illiquid
Securities."
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
CURRENCY RISK. Because the Fund may invest substantially in securities
denominated in currencies other than the U.S. dollar, and since the Fund may
hold foreign currencies, the Fund will be affected favorably or unfavorably by
exchange control regulations or changes in the exchange rates between such
currencies and the U.S. dollar. Changes in currency exchange rates will
influence the value of the Fund's shares, and also may affect the value of
dividends and interest earned by the Fund and gains and losses realized by the
Fund. Currencies generally are evaluated on the basis of fundamental economic
criteria (e.g., relative inflation and interest rate levels and trends, growth
rate forecasts, balance of payments status and economic policies) as well as
technical and political data. Exchange rates are determined by the forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in dollars.
Many of the currencies of emerging market countries have experienced steady
devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Any devaluations in the currencies
in which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries also may have fixed currencies whose values against the U.S.
dollar are not independently determined. In addition, there is a risk that
certain countries may restrict the free conversion of their currencies into
other currencies. Further, certain currencies may not be internationally traded.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of forward contracts, options,
futures contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which the Fund invests; (4) lack of assurance that a liquid secondary market
will exist for any particular option, futures contract or option thereon at any
particular time; (5) the possible loss of principal under certain conditions;
and (6) the possible inability of the Fund to purchase or sell a portfolio
security at a time when it would otherwise be favorable for it to do so, or the
possible need for the Fund to sell a security at a disadvantageous time, due to
the need for the Fund to maintain "cover" or to set aside securities in
connection with hedging transactions.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment management and administration
agreement with
Prospectus Page 13
<PAGE>
AIM EMERGING MARKETS FUND
AIM, the investment sub-advisory and sub-administration agreement between AIM
and the Sub-adviser, the agreements with AIM Distributors regarding distribution
of the Fund's shares, the custody agreement and the transfer agency agreement.
The day to day operations of the Fund are delegated to the officers of the
Trust, subject always to the objective and policies of the Fund and to the
general supervision of the Trust's Board of Trustees. See "Trustees and
Executive Officers" in the Statement of Additional Information for information
on the Trust's Board of Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the Fund's portfolio and
placing orders to buy, sell or hold particular securities; furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
the Fund pays AIM investment management and administration fees, computed daily
and paid monthly, based on its average daily net assets, at the annualized rate
of .975% on the first $500 million, .95% on the next $500 million, .925% on the
next $500 million, and .90% on amounts thereafter. Out of the aggregate fees
payable by the Fund, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-adviser, AIM Distributors or other agents. AIM has
undertaken to limit each Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the annual rate of 2.00% and
2.50% of the average daily net assets of the Fund's Class A and Class B shares,
respectively.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser, 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the Americas, New
York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly-owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
Prospectus Page 14
<PAGE>
AIM EMERGING MARKETS FUND
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- --------------------------- ---------------------- ------------------------------------------------------------------
<S> <C> <C>
Francesco Bertoni Portfolio Manager Portfolio Manager for the Sub-adviser since June 1998. Investment
London since 1998 Director of INVESCO Asset Management Ltd. (London) ("INVESCO
London"), an affiliate of the Sub-adviser, since 1994. Portfolio
Manager for INVESCO London from 1990 to 1994.
Christine Rowley Portfolio Manager Portfolio Manager for the Sub-adviser, INVESCO GT Asset Management
London since 1997 PLC (London) and INVESCO GT Asset Management Asia Ltd. (Hong
Kong), affiliates of the Sub-adviser, since 1992. Analyst with
the Bank of England from 1989 to 1990.
</TABLE>
------------------------
In placing securities orders for the Fund's portfolio transactions, the
Sub-adviser seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-adviser may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions may be executed
through affiliates of AIM or the Sub-adviser. High portfolio turnover (over
100%) involves correspondingly greater brokerage commissions and other
transaction costs that the Fund will bear directly and could result in the
realization of net capital gains which would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998, on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. Certain Trustees and
officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund 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 of the
Fund 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 the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges 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 shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay contingent deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.50% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own
Prospectus Page 15
<PAGE>
AIM EMERGING MARKETS FUND
Class A shares of the Fund. Payments can also be directed by AIM Distributors to
selected institutions who have entered into service agreements with respect to
Class A shares of the Fund and who provide continuing personal services to their
customers who own Class A shares of the Fund. The service fees payable to
selected institutions are calculated at the annual rate of 0.25% of the average
daily net asset value of those Fund shares that are held in such institution's
customers' accounts which were purchased on or after a prescribed date set forth
in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense 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 the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law.
Prospectus Page 16
<PAGE>
AIM EMERGING MARKETS FUND
Financial intermediaries and any other person entitled to receive compensation
for selling Fund shares may receive different compensation for selling shares of
one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the fund with other shares of the Fund and is
entitled to such other shares of the Fund and is entitled to such dividends and
distributions out of the income earned and gain realized on the assets belonging
to the Fund as may be declared by the Board of Trustees. Each share of the Fund
is equal in earnings, assets and voting privileges except that each class
normally has exclusive voting rights with respect to its distribution plan and
bears the expenses, if any, related to the distribution of its shares. Shares of
the Fund, when issued, are fully paid and nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 17
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
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<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
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<PAGE>
AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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<PAGE>
AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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<PAGE>
AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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AIM INVESTOR'S GUIDE
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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AIM INVESTOR'S GUIDE
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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<PAGE>
AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
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AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
A-25
<PAGE>
AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
A-26
<PAGE>
AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-27
<PAGE>
AIM EMERGING MARKETS FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISOR
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL CONSUMER PRODUCTS
AND SERVICES FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Consumer Products and
Services Fund (the "Fund"), which is one of several series investment portfolios
comprising AIM Investment Funds (the "Trust"), an open-end, series, management
investment company. The Fund is a diversified portfolio which seeks long-term
capital growth by investing all of its investable assets in the Global Consumer
Products and Services Portfolio ("Portfolio"), which, in turn, invests primarily
in equity securities of companies throughout the world that manufacture, market,
retail or distribute consumer products and services. The Portfolio's investment
objective is identical to that of the Fund. The investment experience of the
Fund will correspond directly with the investment experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- ---------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL
OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 7
Risk Factors.............................................................................. 11
Management................................................................................ 14
Other Information......................................................................... 17
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund and the Portfolio: The Fund is a diversified series of the Trust. The Portfolio is a diversified series of Global
Investment Portfolio.
Investment Objectives: The Fund seeks long-term capital growth.
Principal Investments: The Fund invests all of its investable assets in the Portfolio, which, in turn, invests primarily in
equity securities of companies throughout the world that manufacture, market, retail or distribute
consumer products and services.
Investment Managers: The Portfolio is managed by AIM Advisors, Inc. ("AIM"), and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calendar month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors: An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"), Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
"How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund or the Portfolio will achieve its investment objective. The
Fund's net asset value will fluctuate, reflecting fluctuations in the market value of the Portfolio's
portfolio holdings. The Portfolio's policy of concentrating its investments in companies in the
consumer products and services industries may cause the Fund's net asset value to fluctuate more than
if it invested in a greater number of industries.
The Portfolio may invest in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Portfolio may engage in certain foreign currency, options and futures transactions to attempt to
hedge against the overall level of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and transaction costs.
The Portfolio may invest up to 20% of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares
(as a % of offering price).................................................... 4.75% None
Sales charges on reinvested distributions to shareholders...................... None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or
sale, whichever is less)...................................................... None 5.00%
Redemption charges............................................................. None None
Exchange fees:................................................................. None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.................................. 0.98% 0.98%
12b-1 distribution and service fees............................................ 0.50% 1.00%
Other expenses (after reimbursements and waivers).............................. 0.51% 0.51%
------- -------
Total Fund Operating Expenses.................................................. 1.99% 2.49%
------- -------
------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (4):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS(7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (5)...................... $67 $107 $150 $269
Class B Shares:
Assuming a complete redemption at end
of period (6)........................ $77 $111 $157 [ ]
Assuming no redemption................ $26 $ 78 $134 [ ]
</TABLE>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect AIM's undertaking to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 2.00% and 2.50% of the average daily net assets of the Fund's
Class A and Class B shares, respectively. "Other expenses" include custody,
transfer agency, legal, audit and other operating expenses. See "Management"
herein and the Statement of Additional Information for more information.
The Board of Trustees of the Trust believes that the aggregate per share
expenses of the Fund and the Portfolio will be approximately equal to the
expenses the Fund would incur if its assets were invested directly in the
type of securities being held by the Portfolio.
(4) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S
DIRECT AND INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The
table and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's or
the Portfolio's projected or actual performance.
(5) Assumes payment of maximum sales charge by the investor.
(6) Assumes deduction of the applicable contingent deferred sales charge.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
(FORMERLY GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all of a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital growth. It seeks its
objective by investing all of its investable assets in the Portfolio, which, in
turn, invests primarily in equity securities of companies throughout the world
that manufacture, market, retail or distribute consumer products and services.
The Portfolio's investment objective is identical to that of the Fund. There can
be no assurance that the Fund or Portfolio will achieve its investment
objective.
At least 65% of the Portfolio's total assets normally will be invested in common
and preferred stocks and warrants to acquire such securities issued by consumer
products and services companies. A "consumer products or services" company is an
entity in which (i) at least 50% of either the revenues or earnings was derived
from activities relating to consumer products or services, or (ii) at least 50%
of the assets was devoted to such activities, based on the company's most recent
fiscal year. The remainder of the Portfolio's assets may be invested in debt
securities issued by consumer products or services companies and/or equity and
debt securities of companies outside the consumer products or services
industries, which, in the opinion of the Sub-adviser, stand to benefit from
developments in such industries.
GLOBAL CONSUMER PRODUCTS AND SERVICES INDUSTRIES INVESTMENT. Examples of
consumer products and services companies include those that manufacture, market,
retail, or distribute: durable goods (such as homes, household goods,
automobiles, boats, furniture and appliances, and computers); non-durable goods
(such as food and beverages and apparel); media, entertainment, broadcasting,
publishing and sports-related goods and services (such as television and radio
broadcast, motion pictures, wireless communications, gaming casinos, theme
parks, restaurants and lodging); and goods and services to companies in the
foregoing industries (such as advertisers, textile companies and distribution
and shipping companies).
The Portfolio expects that a significant portion of its assets may be invested
in the securities of U.S. issuers from time to time, particularly those that
market their products globally. However, consumer products and services
companies of a particular nation or region of the world are often operated and
owned in their local markets, close to their customers. These companies, the
Sub-adviser believes, may offer superior opportunities for capital growth as
compared to their larger, multinational counterparts. Certain global markets may
be more attractive than others from time to time; companies dependent on U.S.
markets, for example, may be outperformed by companies not dependent on U.S.
markets.
The Sub-adviser also believes that the demand for consumer products and services
worldwide will increase along with rising disposable incomes in both developed
and developing nations. Emerging economies, such as those in China, Southeast
Asia, Eastern Europe and Latin America, offer opportunities for the growth and
expansion of consumer markets. These regions currently comprise a growing source
of inexpensive consumer products for export and a growing source of demand for
consumer products and services as the disposable incomes of their populations
increase. In the Sub-adviser's view, these changes are likely to create
investment opportunities in companies, both local and multinational, that are
able to employ innovative manufacturing, marketing, retailing and distribution
methods to open new markets and/or expand existing markets.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. The Portfolio expects that, from
time to time, a significant portion of its assets may be invested in the
securities of domestic issuers. The industry represented in the Portfolio,
however, is a global industry with significant, growing markets outside of the
United States. A sizeable proportion of the companies which comprise the
consumer products and services industries are headquartered outside of the
United States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Portfolio. The Sub-adviser uses its financial
expertise in markets located throughout the world and the substantial global
resources of AMVESCAP PLC in attempting to identify those countries and
companies then providing the greatest potential for long-term
Prospectus Page 7
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
capital appreciation. In this fashion, the Sub-adviser seeks to enable
shareholders to capitalize on the substantial investment opportunities and the
potential for long-term growth of capital presented by the global consumer
products and services industries represented in the Portfolio.
The Sub-adviser allocates the Portfolio's assets among securities of countries
and in currency denominations where opportunities for meeting the Portfolio's
investment objective are expected to be the most attractive. The Portfolio may
invest substantially in securities denominated in one or more currencies. Under
normal conditions, the Portfolio invests in the securities of issuers located in
at least three countries, including the United States; investments in securities
of issuers in any one country, other than the United States, will represent no
more than 50% of the Portfolio's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Portfolio may invest up to
100% of its total assets in cash (U.S. dollars, foreign currencies or
multinational currency units such as Euros) and/or high quality debt securities
or money market instruments of U.S. or foreign issuers. In addition, for
temporary defensive purposes, most or all of the Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Portfolio adopts a temporary defensive posture, it will not be invested so as to
achieve directly its investment objective. In addition, pending investment of
proceeds from new sales of Fund shares or to meet its ordinary daily cash needs,
the Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest in foreign or domestic high quality money market
instruments. For a full description of money market instruments, see "Money
Market Instruments" in the "Investment Objectives and Policies" section of the
Statement of Additional Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Portfolio in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Portfolio to participate in privatizations may be limited by local
law, or the terms on which the Portfolio may be permitted to participate may be
less advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Portfolio may invest up to 10% of
its total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Portfolio
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time, the Portfolio would
continue to pay its own management fees and other expenses. AIM and the
Sub-adviser will waive their advisory fees to the extent that the Portfolio
invests in an Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemptions of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of its shares than would be the case if the Portfolio did not
borrow.
A reverse repurchase agreement is a borrowing transaction in which the Portfolio
transfers possession of a security to another party, such as a bank
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AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
or broker/dealer, in return for cash, and agrees to repurchase the security in
the future at an agreed upon price which includes an interest component. A
"roll" borrowing transaction involves the Portfolio's sale of securities
together with its commitment (for which the Portfolio may receive a fee) to
purchase similar, but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolios to retain ownership of the securities loaned and, at the same
time, enhances the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other collateral as permitted by the Portfolio's investment program and
regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actually receiving or delivering the securities, as the
case may be. No income accrues on securities that have been purchased pursuant
to a forward commitment or on a when-issued basis prior to delivery to the
Portfolio. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to its portfolio positions. The Portfolio also may purchase and sell put
and call options on currencies, futures contracts on currencies and options on
such futures contracts to hedge against movements in exchange rates.
In addition, the Portfolio may purchase and sell put and call options on equity
and debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Portfolio or that the Sub-adviser intends to include in
the Portfolio's holdings. The Portfolio also may purchase and sell put and call
options on stock indexes to hedge against overall fluctuations in the securities
markets generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
affect adversely the Portfolio's holdings. The Portfolio also may
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AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
purchase stock index futures contracts and purchase call options or write put
options on such contracts to hedge against a general stock market or market
sector advance and thereby attempt to lessen the cost of future securities
acquisitions. The Portfolio may use interest rate futures contracts and options
thereon to hedge the debt portion of its portfolio against changes in the
general level of interest rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of that Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by the Trust's
Board of Trustees without shareholder approval. The Fund's policies regarding
concentration and lending, and the percentage of the Fund's assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval. The investment policies of the Fund are identical to the
investment policies of the Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is not
required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in its corresponding
Portfolio's investment objective.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's or Portfolio's investment policies or
restrictions.
The Portfolio is authorized to engage in Short Sales, although it currently has
no intention of doing so, and may purchase American Depository Receipts,
American Depository Shares, Global Depository Receipts and European Depository
Receipts. See "Short Sales" and "Depository Receipts," respectively, in the
Investment Objectives and Policies section of the Statement of Additional
Information.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because a Fund will invest only in its corresponding Portfolio, the Fund's
shareholders will acquire only an indirect interest in the investments of that
Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board of
Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or the shareholders of
the Fund could require the Fund to redeem its interest in the Portfolio. Any
such redemption could result in a distribution in kind of portfolio securities
(as opposed to a cash distribution) by the Portfolio. Should such a distribution
occur, the Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Fund and could
adversely affect its liquidity. Upon redemption, the Board would consider what
action might be taken, including the investment of all the investable assets of
the Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention by the Fund of its own
investment adviser to manage its assets in accordance with its investment
objective, policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in a Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may experience
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AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
different returns than investors in another investment company that invests
exclusively in the Portfolio. As of the date of this Prospectus, the Fund is the
only institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors, if
any, in the Portfolio. For example, as with all open-end investment companies,
if a large investor were to redeem its interest in the Portfolio, (1) the
Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
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RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset values will fluctuate reflecting
fluctuations in the market value of the Portfolio's securities. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure, and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Portfolio will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. In addition,
the value of debt securities held by the Portfolio generally will fluctuate with
changes in the perceived creditworthiness of the issuers of such securities and
interest rates.
Because the Portfolio focuses its investments on the consumer products and
services industries, an investment in it may be more volatile than that of other
investment companies that do not concentrate their investments in such a manner.
Moreover, the value of the shares of the Fund will be especially susceptible to
factors affecting the consumer products and services industries. Accordingly,
the Fund should not be considered a complete investment program.
CONSUMER PRODUCTS AND SERVICES INDUSTRIES. The performance of consumer products
and services companies, relates closely to the actual or perceived performance
of the overall economy, interest rates and consumer confidence. In addition,
changes in demographics and consumer tastes may also affect the demand for, and
success of, particular consumer products and services. Many consumer products
and services companies have unpredictable earnings, due in part to changes in
consumer tastes and intense competition. As a result, such companies may be
subject to increased share price volatility. The consumer products and services
industries may also be subject to greater government regulation, including trade
regulation, than many other industries. Changes in governmental policy and the
need for regulatory approvals may have a material effect on the products and
services offered by companies in the consumer products and services industries.
Such governmental regulations may also hamper the development of new business
opportunities.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Portfolio's interest and dividends from foreign issuers may be
subject to non-U.S. withholding taxes, thereby reducing the Portfolio's net
investment income.
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AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political or social instability, or diplomatic
developments which could affect the Portfolio's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Portfolio may invest in issuers domiciled in "emerging markets." Investing
in emerging market countries involves risks in addition to those risks involved
in foreign investing. Many emerging market countries have experienced high rates
of inflation for many years. In addition, emerging markets generally are
dependent heavily upon international trade and, accordingly, have been and
continue to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. The securities markets of
emerging market countries are substantially smaller, less developed, less liquid
and more volatile than the securities markets of the developed countries. In
addition, issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than issuers in developed
countries.
The Portfolio will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Portfolio and gains and losses realized by the Portfolio.
LOWER QUALITY DEBT SECURITIES. The Portfolio may invest up to 20%, of its total
assets in below investment grade debt securities, that is, rated below BBB by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa
by Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Portfolio will not invest in debt securities
that are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of
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AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
additional financing. The risk of loss due to default by the issuer is
significantly greater for the holders of lower quality securities because such
securities are generally unsecured and may be subordinated to the claims of
other creditors of the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Portfolio may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
In addition, the Portfolio may have difficulty disposing of lower quality
securities because they may have a thin trading market. There may be no
established retail secondary market for many of these securities, and the
Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market also may have an adverse impact on market prices of such instruments and
may make it more difficult for the Portfolio to obtain accurate market
quotations for purposes of valuing its investments. The Portfolio may also
acquire lower quality debt securities during an initial underwriting or which
are sold without registration under applicable securities laws. Such securities
involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Portfolio may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Portfolio may also incur additional expenses to the
extent it is required to seek recovery upon a default in the payment of
principal or interest on portfolio holdings, and the Portfolio may have limited
legal recourse in the event of a default.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Portfolio to
achieve capital appreciation substantially exceeding the appreciation the
Portfolio would realize if it did not make such investments. However, in order
to attempt to limit investment risk, the Portfolio will invest no more than 5%
of its total assets in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Portfolio is
authorized to enter into options, futures and forward currency transactions, the
Portfolio might not enter into any such transactions. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the Portfolio to sell a security at a disadvantageous time, due to the need for
the Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
INVESTING IN SMALLER COMPANIES. While the Portfolio's holdings normally will
include securities of established suppliers of traditional products and
services, the Portfolio may invest in smaller companies which can benefit from
the development of new products and services. These smaller companies may
present greater opportunities for capital appreciation, but may also involve
greater risks than large, established issuers. Such smaller companies may have
limited product lines, markets or financial resources, and their securities may
trade less frequently and in more limited volume than the securities of larger,
more established companies. As
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AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
a result, the prices of the securities of such smaller companies may fluctuate
to a greater degree than the prices of the securities of other issuers.
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AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees and the Board of Trustees of the Portfolio have
overall responsibility for the operation of the Fund and the Portfolio,
respectively. The Boards have approved all significant agreements between the
Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administration agreement with AIM, the investment sub-advisory
and sub-administration agreement between AIM and the Sub-adviser, the agreements
with AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the investment objective and policies of the Fund
and the Portfolio and to the general supervision of the Boards. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the investment managers and administrators to the Fund and the
Portfolio include, but are not limited to, determining the composition of the
investment holdings of the Portfolio and placing orders to buy, sell or hold
particular securities. In addition, AIM and the Sub-adviser provide the
following administration services to the Portfolio and the Fund: furnishing
corporate officers and clerical staff; providing office space, services and
equipment; and supervising all matters relating to the Portfolio's and the
Fund's operation.
For administration services, the Fund pays AIM administration fees computed
daily and payable monthly at the annualized rate of 0.25% of the Fund's average
daily net assets. AIM has appointed the Sub-adviser as the Fund's
sub-administrator. In addition, the Fund bears its pro rata portion of the
investment management and administration fees paid by its corresponding
Portfolio to AIM and the Sub-adviser. The Portfolio pays AIM a fee, based on the
Portfolio's average daily net assets at the annualized rate of .725% on the
first $500 million, .70% on the next $500 million, .675% on the next $500
million and .65% on all amounts thereafter. Out of its aggregate fees payable by
the Fund and the Portfolio, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund and the Portfolio. The investment management and administration fees paid
by the Fund and the Portfolio are higher than those paid by most mutual funds.
The Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM Distributors
or other agents. AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 2.00% and 2.50% of the average daily net assets of the Fund's Class A
and Class B shares, respectively.
The Sub-adviser also serves as the Fund's and the Portfolio's pricing and
accounting agent. For these services the Sub-adviser receives a fee consisting
of 0.03% of the first $5 billion of assets, and 0.02% of the assets in excess of
$5 billion, of the AIM Funds that are sub-advised by the Sub-adviser (other than
AIM Eastern Europe Fund). Each of these funds, including the Fund and the
Portfolio, pays an amount based upon its relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Portfolio pursuant to
an investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP
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AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
PLC acquired LGT's Asset Management Division, which included the Sub-adviser and
certain other affiliates. As a result of this transaction, the Sub-adviser is
now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the
Sub-adviser and its worldwide asset management affiliates provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Portfolio, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Portfolio is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio Manager since Head of [the Theme Funds] for the Sub-adviser since 1997. Portfolio
San Francisco Portfolio inception in Manager for the Sub-adviser since 1994. Analyst for the Sub-adviser
1994 from 1992 to 1994.
</TABLE>
------------------------
In placing orders for the Portfolio's securities transactions, the Sub-adviser
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Sub-adviser may consider a broker/dealer's sale of
shares of the AIM Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. Certain trustees and
officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund 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 of the
Fund 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 the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges 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 shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay contingent deferred sales charges.
Prospectus Page 15
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
DISTRIBUTION PLANS. CLASS A PLAN. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.50% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense 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 the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Prospectus Page 16
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may continue to establish other
funds, each corresponding to a distinct investment portfolio and a distinct
series of the Trust's shares of beneficial interest. Shares of each fund are
entitled to one vote per share (with proportional voting for fractional shares)
and are freely transferable. Shareholders have no preemptive rights. Other than
the automatic conversion of Class B shares to Class A shares, there are no
conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other shares do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Global Investment Portfolio, a Delaware business trust. Under Delaware law, the
Fund and other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the
Prospectus Page 17
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Portfolio may be held liable for the Portfolio's obligations. However, the
Agreement and Declaration of Trust of Global Investment Portfolio disclaims
shareholder liability for acts or obligations of the Portfolio and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Portfolio or a trustee. The Agreement and
Declaration of Trust also provides for indemnification from the Portfolio
property for all losses and expenses of any shareholder held personally liable
for the Portfolio's obligations. Thus the risk of an investor incurring
financial loss on account of such liability is limited to circumstances in which
the Portfolio itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the Fund and
to the Portfolio.
Prospectus Page 18
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
A-1
<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
A-2
<PAGE>
AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
A-3
<PAGE>
AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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AIM INVESTOR'S GUIDE
- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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AIM INVESTOR'S GUIDE
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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AIM INVESTOR'S GUIDE
number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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AIM INVESTOR'S GUIDE
the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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AIM INVESTOR'S GUIDE
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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AIM INVESTOR'S GUIDE
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
A-23
<PAGE>
AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
A-24
<PAGE>
AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
A-25
<PAGE>
AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
A-26
<PAGE>
AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-27
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL FINANCIAL SERVICES FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Financial Services Fund
(the "Fund"), which is one of several series investment portfolios comprising
AIM Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a diversified portfolio which seeks long-term capital
growth by investing all of its investable assets in the Global Financial
Services Portfolio ("Portfolio"), which, in turn, invests primarily in equity
securities of companies throughout the world that operate in the financial
services industries. The Portfolio's investment objective is identical to that
of the Fund. The investment experience of the Fund will correspond directly with
the investment experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 7
Risk Factors.............................................................................. 11
Management................................................................................ 14
Other Information......................................................................... 17
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund and the Portfolio: The Fund is a diversified series of the Trust. The Portfolio is a diversified series of Global
Investment Portfolio.
Investment Objective: The Fund seeks long-term capital growth.
Principal Investments: The Fund invests all of its investable assets in the Portfolio, which, in turn, invests primarily in
equity securities of companies throughout the world that operate in the financial services
industries.
Investment Managers: The Portfolio is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
</TABLE>
<TABLE>
<S> <C> <C>
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calendar month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors: An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund or the Portfolio will achieve its investment objective. The
Fund's net asset value will fluctuate, reflecting fluctuations in the market value of the Portfolio's
portfolio holdings. The Portfolio's policy of concentrating its investments in companies in the
financial services industries may cause the Fund's net asset value to fluctuate more than if it
invested in a greater number of industries.
The Portfolio may invest in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Portfolio may engage in certain foreign currency, options and futures transactions to attempt to
hedge against the overall level of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and transaction costs.
The Portfolio may invest up to 5% of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
SHAREHOLDER TRANSACTION COSTS (2):
<S> <C> <C>
Maximum sales charge on purchases of shares
(as a % of offering price)..................... 4.75% None
Sales charges on reinvested distributions to
shareholders................................... None None
Maximum deferred sales charge (as a % of net
asset value at time of purchase or sale,
whichever is less)............................. None 5.00%
Redemption charges.............................. None None
Exchange fees................................... None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees... 0.98% 0.98%
12b-1 distribution and service fees............. 0.50% 1.00%
Other expenses (after reimbursements and
waivers)....................................... 0.52% 0.52%
------- -------
Total Fund Operating Expenses................... 2.00% 2.50%
------- -------
------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (4):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS(7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (5)...................... $67 $108 $151 $270
Class B Shares:
Assuming a complete redemption at end
of period (6)........................ $77 $111 $157 [ ]
Assuming no redemption................ $26 $ 79 $135 [ ]
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect AIM's undertaking to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 2.00% and 2.50% of the average daily net assets of the Fund's
Class A and Class B shares, respectively. Without reimbursements and
waivers, "Other Expenses" and "Total Fund Operating Expenses" would have
been 0.88% and 2.36%, respectively, for Class A shares and 0.88% and 2.86%,
respectively, for Class B shares of the Fund. "Other expenses" include
custody, transfer agency, legal, audit and other operating expenses. See
"Management" herein and the Statement of Additional Information for more
information.
The Board of Trustees of the Trust believes that the aggregate per share
expenses of the Fund and the Portfolio will be approximately equal to the
expenses the Fund would incur if its assets were invested directly in the
type of securities being held by the Portfolio.
(4) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S
DIRECT AND INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The
table and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's or
the Portfolio's projected or actual performance.
(5) Assumes payment of maximum sales charge by the investor.
(6) Assumes deduction of the applicable contingent deferred sales charge.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM GLOBAL FINANCIAL SERVICES FUND
(FORMERLY GT GLOBAL FINANCIAL SERVICES FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital growth. It seeks its
objective by investing all of its investable assets in the Portfolio, which, in
turn, invests primarily in equity securities of companies throughout the world
that operate in the financial services industries. The Portfolio's investment
objective is identical to that of the Fund. There can be no assurance that the
Fund or Portfolio will achieve its investment objective.
At least 65% of the Portfolio's total assets normally will be invested in common
and preferred stocks and warrants to acquire such securities issued by financial
services companies. A "financial services" company is an entity in which (i) at
least 50% of either the revenues or earnings was derived from financial services
activities, or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the Portfolio's
assets may be invested in debt securities issued by financial services companies
and/or equity and debt securities of companies outside of the financial services
industries, which, in the opinion of the Sub-adviser, stand to benefit from
developments in the financial services industries.
GLOBAL FINANCIAL SERVICES INDUSTRIES INVESTMENT. Examples of financial services
companies include commercial banks and savings institutions and loan
associations and their holding companies; consumer and industrial finance
companies; diversified financial services companies; investment banks; insurance
brokerages; securities brokerage and investment advisory companies; real estate-
related companies; leasing companies; and a variety of firms in all segments of
the insurance field such as multi-line, property and casualty and life insurance
and insurance holding companies.
The Sub-adviser believes an accelerating rate of global economic interdependence
will lead to significant growth in the demand for financial services. In
addition, in the Sub-adviser's view, as the industries evolve, opportunities
will emerge for those companies positioned for the future. Thus, the Sub-adviser
expects that banking and related financial institution consolidation in the
developed countries, increased demand for retail borrowing in developing
countries, a growing need for international trade-based financing, a rising
demand for sophisticated risk management, the proliferating number of liquid
securities markets around the world, and larger concentrations of investable
assets should lead to growth in financial service companies that are positioned
for the future.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. The Portfolio expects that, from
time to time, a significant portion of its assets may be invested in the
securities of domestic issuers. The industry represented in the Portfolio,
however, is a global industry with significant, growing markets outside of the
United States. A sizeable proportion of the companies which comprise the
financial services industries are headquartered outside of the United States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Portfolio. The Sub-adviser uses its financial
expertise in markets located throughout the world and the substantial global
resources of AMVESCAP PLC in attempting to identify those countries and
companies then providing the greatest potential for long-term capital
appreciation. In this fashion, the Sub-adviser seeks to enable shareholders to
capitalize on the substantial investment opportunities and the potential for
long-term growth of capital presented by the global financial services
industries represented in the Portfolio.
The Sub-adviser allocates the Portfolio's assets among securities of countries
and in currency denominations where opportunities for meeting the Portfolio's
investment objective are expected to be the most attractive. The Portfolio may
invest substantially in securities denominated in one or more currencies. Under
normal conditions, the Portfolio invests in the securities of issuers located in
at least three countries, including the United States; investments in securities
of issuers in any one country, other than the United States, will represent no
more than 40% of the Portfolio's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average
Prospectus Page 7
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
per share earnings growth; high return on invested capital; a healthy balance
sheet; sound financial and accounting policies and overall financial strength;
strong competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Portfolio may invest up to
100% of its total assets in cash (U.S. dollars, foreign currencies or
multinational currency units such as Euros) and/or high quality debt securities
or money market instruments of U.S. or foreign issuers. In addition, for
temporary defensive purposes, most or all of the Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Portfolio adopts a temporary defensive posture, it will not be invested so as to
achieve directly its investment objective. In addition, pending investment of
proceeds from new sales of Fund shares or to meet its ordinary daily cash needs,
the Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest in foreign or domestic high quality money market
instruments. For a full description of money market instruments, see "Money
Market Instruments" in the "Investment Objectives and Policies" section of the
Statement of Additional Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Portfolio in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Portfolio to participate in privatizations may be limited by local
law, or the terms on which the Portfolio may be permitted to participate may be
less advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Portfolio may invest up to 10% of
its total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Portfolio
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time, the Portfolio would
continue to pay its own management fees and other expenses. AIM and the
Sub-adviser will waive their advisory fees to the extent that the Portfolio
invests in an Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemptions of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of its shares than would be the case if the Portfolio did not
borrow.
A reverse repurchase agreement is a borrowing transaction in which the Portfolio
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Portfolio's sale of securities together with
its commitment (for which the Portfolio may receive a fee) to purchase similar,
but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolio to retain ownership of the securities loaned and, at the same
time, enhances the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other
Prospectus Page 8
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
collateral as permitted by the Portfolio's investment program and regulatory
agencies, and as approved by the Board. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in recovery of the securities and
possible loss of rights in the collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actually receiving or delivering the securities, as the
case may be. No income accrues on securities that have been purchased pursuant
to a forward commitment or on a when-issued basis prior to delivery to the
Portfolio. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to its portfolio positions. The Portfolio also may purchase and sell put
and call options on currencies, futures contracts on currencies and options on
such futures contracts to hedge against movements in exchange rates.
In addition, the Portfolio may purchase and sell put and call options on equity
and debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Portfolio or that the Sub-adviser intends to include in
the Portfolio's holdings. The Portfolio also may purchase and sell put and call
options on stock indexes to hedge against overall fluctuations in the securities
markets generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
affect adversely the Portfolio's holdings. The Portfolio also may purchase stock
index futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The
Portfolio may use interest rate futures contracts and options thereon to hedge
the debt portion of its portfolio against changes in the general level of
interest rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of
Prospectus Page 9
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information may be changed by the Trust's Board of Trustees without shareholder
approval. The Fund's policies regarding concentration and lending, and the
percentage of the Fund's assets that may be committed to borrowing, are
fundamental policies and may not be changed without shareholder approval. The
investment policies of the Fund are identical to the investment policies of the
Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is not
required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objective.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's or Portfolio's investment policies or
restrictions.
The Portfolio is authorized to engage in Short Sales, although it currently has
no intention of doing so, and may purchase American Depository Receipts,
American Depository Shares, Global Depository Receipts and European Depository
Receipts. See "Short Sales" and "Depository Receipts" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board of
Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or the shareholders of
the Fund could require the Fund to redeem its interest in the Portfolio. Any
such redemption could result in a distribution in kind of portfolio securities
(as opposed to a cash distribution) by the Portfolio. Should such a distribution
occur, the Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Fund and could
adversely affect its liquidity. Upon redemption, the Board would consider what
action might be taken, including the investment of all the investable assets of
the Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention by the Fund of its own
investment adviser to manage its assets in accordance with its investment
objective, policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may experience different
returns than investors in another investment company that invests exclusively in
the Portfolio. As of the date of this Prospectus, the Fund is the only
institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors, if
any, in the Portfolio. For example, as with all open-end investment companies,
if a large investor were to redeem its interest in the Portfolio, (1) the
Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
Prospectus Page 10
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset values will fluctuate reflecting
fluctuations in the market value of the Portfolio's securities positions. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure, and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Portfolio will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. In addition,
the value of debt securities held by the Portfolio generally will fluctuate with
changes in the perceived creditworthiness of the issuers of such securities and
interest rates.
Because the Portfolio focuses its investments on the financial services
industries, an investment in it may be more volatile than that of other
investment companies that do not concentrate their investments in such a manner.
Moreover, the value of the shares of the Fund will be especially susceptible to
factors affecting the financial services industries. Accordingly, the Fund
should not be considered a complete investment program.
FINANCIAL SERVICES INDUSTRIES. Financial services industries may be subject to
greater governmental regulation than many other industries and changes in
governmental policies and the need for regulatory approvals may have a material
effect on the services offered by companies in the financial services
industries. Governmental regulation may limit both the financial commitments
banks can make, including the amounts and types of loans, and the interest rates
and fees they can charge. In addition, governmental regulation in certain
foreign countries may impose interest rate controls, credit controls and price
controls.
Companies in the financial services sector are subject to rapid business
changes, significant competition, value fluctuations due to the concentration of
loans in particular industries significantly affected by economic conditions
(such as real estate or energy) and volatile performance dependent upon the
availability and cost of capital and prevailing interest rates. In addition,
general economic conditions significantly affect these companies. Credit and
other losses resulting from the financial difficulty of borrowers or other third
parties potentially may have an adverse effect on companies in these industries.
Foreign banks, particularly those of Japan, have reported financial difficulties
attributed to increased competition, regulatory changes, and general economic
difficulties.
The financial services area in the United States currently is changing
relatively rapidly as existing distinctions between various financial service
segments become less clear. For instance, recent business combinations have
included insurance, finance, and securities brokerage under single ownership.
Some primarily retail corporations have expanded into securities and insurance
fields. Investment banking, securities brokerage and investment advisory
companies are subject to government regulation and risk due to securities
trading and underwriting activities.
Many of the investment considerations discussed in connection with banks,
savings institutions and loan associations, and finance companies also apply to
insurance companies. The performance of insurance company investments will be
subject to risk from several factors. The earnings of insurance companies will
be affected by interest rates, pricing (including severe pricing competition
from time to time), claims activity, marketing competition and general economic
conditions. Particular insurance lines also will be influenced by specific
matters. Property and casualty insurer profits may be affected by certain
weather catastrophes and other disasters. Life and health insurer profits may be
affected by mortality and morbidity rates. Individual companies may be exposed
to material risks, including reserve inadequacy, problems in investment
portfolios (due to real estate or "junk" bond holdings, for example), and the
inability to collect from reinsurance carriers. Insurance companies are subject
to extensive governmental regulation, including the imposition of maximum rate
levels, which may not be adequate for
some lines of business. Proposed or potential
anti-trust or tax law changes also may affect
Prospectus Page 11
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
adversely insurance companies' policy sales, tax obligations and profitability.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Portfolio's interest and dividends from foreign issuers may be
subject to non-U.S. withholding taxes, thereby reducing the Portfolio's net
investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political or social instability, or diplomatic
developments which could affect the Portfolio's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Portfolio may invest in issuers domiciled in "emerging markets." Investing
in emerging market countries involves risks in addition to those risks involved
in foreign investing. Many emerging market countries have experienced high rates
of inflation for many years. In addition, emerging markets generally are
dependent heavily upon international trade and, accordingly, have been and
continue to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. The securities markets of
emerging market countries are substantially smaller, less developed, less liquid
and more volatile than the securities markets of the developed countries. In
addition, issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than issuers in developed
countries.
The Portfolio will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Portfolio and gains and losses realized by the Portfolio.
LOWER QUALITY DEBT SECURITIES. The Portfolio may invest up to 5% of its total
assets in below investment grade debt securities, that is, rated below BBB by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa
by Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Portfolio will not invest in debt securities
that are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
Prospectus Page 12
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Portfolio may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
In addition, the Portfolio may have difficulty disposing of lower quality
securities because they may have a thin trading market. There may be no
established retail secondary market for many of these securities, and the
Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market also may have an adverse impact on market prices of such instruments and
may make it more difficult for the Portfolio to obtain accurate market
quotations for purposes of valuing its investments. The Portfolio may also
acquire lower quality debt securities during an initial underwriting or which
are sold without registration under applicable securities laws. Such securities
involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Portfolio may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Portfolio may also incur additional expenses to the
extent it is required to seek recovery upon a default in the payment of
principal or interest on portfolio holdings, and the Portfolio may have limited
legal recourse in the event of a default.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Portfolio to
achieve capital appreciation substantially exceeding the appreciation the
Portfolio would realize if it did not make such investments. However, in order
to attempt to limit investment risk, the Portfolio will invest no more than 5%
of its total assets in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Portfolio is
authorized to enter into options, futures and forward currency transactions, the
Portfolio might not enter into any such transactions. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to
Prospectus Page 13
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AIM GLOBAL FINANCIAL SERVICES FUND
use forward currency contracts are different from those needed to select the
securities in which the Portfolio invests; (4) lack of assurance that a liquid
secondary market will exist for any particular option, futures contract or
option thereon at any particular time; (5) the possible loss of principal under
certain conditions; and (6) the possible inability of the Portfolio to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Portfolio to sell a security at a
disadvantageous time, due to the need for the Portfolio to maintain "cover" or
to set aside securities in connection with hedging transactions.
INVESTING IN SMALLER COMPANIES. While the Portfolio's holdings normally will
include securities of established suppliers of traditional products and
services, the Portfolio may invest in smaller companies which can benefit from
the development of new products and services. These smaller companies may
present greater opportunities for capital appreciation, but may also involve
greater risks than large, established issuers. Such smaller companies may have
limited product lines, markets or financial resources, and their securities may
trade less frequently and in more limited volume than the securities of larger,
more established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
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MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees and the Board of Trustees of the Portfolio have
overall responsibility for the operation of the Fund and the Portfolio,
respectively. The Boards have approved all significant agreements between the
Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administration agreement with AIM, the investment sub-advisory
and sub-administration agreement between AIM and the Sub-adviser, the agreements
with AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the investment objective and policies of the Fund
and the Portfolio and to the general supervision of the Boards. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the investment managers and the administrators to the Fund and
the Portfolio include, but are not limited to, determining the composition of
the investment holdings of the Portfolio and placing orders to buy, sell or hold
particular securities. In addition, AIM and the Sub-adviser provide the
following administration services to the Portfolio and the Fund: furnishing
corporate officers and clerical staff; providing office space, services and
equipment; and supervising all matters relating to the Portfolio's and the
Fund's operation.
For administration services, the Fund pays AIM administration fees computed
daily and payable monthly at the annualized rate of 0.25% of the Fund's average
daily net assets. AIM has appointed the Sub-adviser as the Fund's
sub-administrator. In addition, the Fund bears its pro rata portion of the
investment management and administration fees paid by the Portfolio to AIM and
the Sub-adviser. The Portfolio pays AIM a fee, based on the Portfolio's average
daily net assets at the annualized rate of .725% on the first $500 million, .70%
on the next $500 million, .675% on the next $500 million and .65% on all amounts
thereafter. Out of its aggregate fees payable by the Fund and the Portfolio, AIM
pays the Sub-adviser sub-advisory and sub-administration fees equal to 40% of
the aggregate fees AIM receives from the Fund and the Portfolio. The investment
management and administration fees paid by the Fund and the Portfolio are higher
than those paid by most mutual funds. The Fund pays all expenses not assumed by
AIM, the Sub-adviser, AIM Distributors or other agents. AIM has undertaken to
limit the Fund's expenses (exclusive of brokerage commissions,
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<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
taxes, interest and extraordinary expenses) to the annual rate of 2.00% and
2.50% of the average daily
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AIM GLOBAL FINANCIAL SERVICES FUND
net assets of the Fund's Class A and Class B shares, respectively.
The Sub-adviser also serves as the Fund's and the Portfolio's pricing and
accounting agent. For these services the Sub-adviser receives a fee consisting
of 0.03% of the first $5 billion of assets, and 0.02% of the assets in excess of
$5 billion, of the AIM Funds that are sub-advised by the Sub-adviser (other than
AIM Eastern Europe Fund). Each of these funds, including the Fund and the
Portfolio, pays an amount based upon its relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Portfolio pursuant to
an investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Portfolio, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Portfolio is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
A. James Ellman Portfolio Manager since Portfolio Manager for the Sub-adviser since 1995. Analyst for the
San Francisco 1995 Sub-adviser from 1994 to 1995.
</TABLE>
------------------------
In placing orders for the Portfolio's securities transactions, the Sub-adviser
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Sub-adviser may consider a broker/dealer's sale of
shares of the AIM Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B
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AIM GLOBAL FINANCIAL SERVICES FUND
shares of the Fund. Certain Trustees and officers of the Trust are affiliated
with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund 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 of the
Fund 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 the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges 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 shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay contingent deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.50% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute
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AIM GLOBAL FINANCIAL SERVICES FUND
an asset-based sales charge. Amounts paid in accordance with the Class B Plan
with respect to the Fund may be used to finance any activity primarily intended
to result in the sale of Class B shares of the Fund.
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense 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 the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
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OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which
Prospectus Page 17
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AIM GLOBAL FINANCIAL SERVICES FUND
means that the holders of a majority of the shares voting for the election of
Trustees can elect all the Trustees. A Trustee may be removed at any meeting of
the shareholders of the Trust by a vote of the shareholders owning at least
two-thirds of the outstanding shares. Any Trustee may call a special meeting of
shareholders for any purpose. Furthermore, Trustees shall promptly call a
meeting of shareholders solely for the purpose of removing one or more Trustees
when requested in writing to do so by shareholders holding 10% of the Company's
outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund when issued are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Global Investment Portfolio, a Delaware business trust. Under Delaware law, the
Fund and other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However, the
Agreement and Declaration of Trust of Global Investment Portfolio disclaims
shareholder liability for acts or obligations of the Portfolio and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Portfolio or a trustee. The Agreement and
Declaration of Trust also provides for indemnification from the Portfolio
property for all losses and expenses of any shareholder held personally liable
for the Portfolio's obligations. Thus the risk of an investor incurring
financial loss on account of such liability is limited to circumstances in which
the Portfolio itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the Fund and
to the Portfolio.
Prospectus Page 18
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
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HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
A-1
<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
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AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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AIM INVESTOR'S GUIDE
- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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AIM INVESTOR'S GUIDE
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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AIM INVESTOR'S GUIDE
number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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AIM INVESTOR'S GUIDE
the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
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AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
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AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
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AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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<PAGE>
AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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<PAGE>
AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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<PAGE>
AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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<PAGE>
AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
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AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
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AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
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AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
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<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL GOVERNMENT INCOME FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Government Income Fund
(the "Fund"), which is one of several series investment portfolios comprising
AIM Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a non-diversified portfolio which seeks a high level of
current income by investing primarily in high quality U.S. and foreign
government debt securities. The Fund's secondary objectives are capital
appreciation and protection of principal through active management of its
maturity structure and currency exposure.
The Fund is designed for long-term investors and not as a trading vehicle, does
not represent a complete investment program and is not suitable for all
investors. An investment in the Fund involves risk factors that should be
reviewed carefully by potential investors.
This Prospectus sets forth concisely information about the Fund that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information, dated September 8,
1998, has been filed with the Securities and Exchange Commission ("SEC") and is
incorporated herein by reference. The Statement of Additional Information is
available without charge upon written request to the Trust at 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173 or by calling 1-800-347-4246. The SEC
maintains a Web site at http://www.sec.gov that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Fund. Additional information about the Fund may also
be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objectives and Policies........................................................ 7
Risk Factors.............................................................................. 12
Management................................................................................ 15
Other Information......................................................................... 18
Appendix A -- Description of Debt Ratings................................................. 21
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of the Trust.
Investment Objectives: The Fund primarily seeks high current income and secondarily seeks capital appreciation and
protection of principal.
Principal Investments: The Fund invests primarily in high quality U.S. and foreign government debt obligations.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment man-
agement group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calendar month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors: An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"), Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on a monthly
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund will achieve its investment objectives. The Fund's net asset
value will fluctuate, reflecting fluctuations in the market value of its portfolio holdings. The
value of debt securities held by the Fund generally fluctuates inversely with interest rate
movements.
The Fund will invest in foreign securities. Investments in foreign securities involve risks relating
to political and economic developments abroad and the differences between the regulations to which
U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
See "Investment Objectives and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares (as a % of offering price)............................... 4.75% None
Sales charges on reinvested distributions to shareholders............................................ None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)............................................................................................... None 5.00%
Redemption charges................................................................................... None None
Exchange fees........................................................................................ None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees........................................................ 0.73% 0.73%
12b-1 distribution and service fees.................................................................. 0.35% 1.00%
Other expenses....................................................................................... 0.43% 0.43%
------- -------
Total Fund Operating Expenses...................................................................... 1.51% 2.16%
------- -------
------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (6):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS(7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (4)................................................................... $62 $93 $126 $220
Class B Shares
Assuming a complete redemption at end of period (5)................................ $74 $101 $140 [ ]
Assuming no redemption............................................................. $22 $68 $117 [ ]
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997. "Other
expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
(6) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
The table and the assumption in the Hypothetical Example of a 5% annual
return are required by regulation of the SEC applicable to all mutual funds;
the 5% annual return is not a prediction of and does not represent the
Fund's projected or actual performance.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM GLOBAL GOVERNMENT INCOME FUND
(FORMERLY GT GLOBAL GOVERNMENT INCOME FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield reflects investment
income net of expenses over the relevant period attributable to a Fund share,
expressed as an annualized percentage of the maximum offering price per share
for Class A shares and net asset value per share for Class B shares.
Prospectus Page 6
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
Yield is a function of the type and quality of the Fund's investments, the
maturity of the securities held in the Fund's portfolio and the operating
expense ratio of the Fund. A shareholder's investment in the Fund is not insured
or guaranteed. These factors should be carefully considered by the investor
before making an investment in the Fund.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of any Fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
The Fund seeks a high level of current income by investing primarily in high
quality debt securities of the U.S. and foreign governments, their agencies and
instrumentalities. Its secondary objectives are capital appreciation and
protection of principal through active management of its maturity structure and
currency exposure. There can be no assurance that the Fund will achieve its
investment objective.
At least 65% of the Fund's total assets normally are invested in debt
obligations issued or guaranteed by the U.S. or foreign governments (including
foreign states, provinces or municipalities) or their agencies, authorities or
instrumentalities including mortgage-backed securities issued by agencies or
instrumentalities of the U.S. Government or by foreign governments. For purposes
of this policy, the Fund considers debt obligations of supranational entities
organized or supported by several national governments, such as the World Bank
and the Asian Development Bank, to be "government securities."
The Fund invests primarily in high quality government debt securities. "High
quality" debt securities are those rated in the top two ratings categories of
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's, a division of
The McGraw-Hill Companies, Inc. ("S&P"), or, if not rated, determined to be of
comparable quality by the Sub-adviser. A description of Moody's and S&P ratings
is included in the Appendix to this Prospectus.
The Fund currently contemplates that it will invest principally in obligations
of the United States, Canada, Japan, the Western European nations, New Zealand
and Australia, as well as in multinational currency units. Under normal market
conditions, the Fund invests in issues of not less than three different
countries; investments in the securities of any one country, other than the
United States, normally represent no more than 40% of the Fund's total assets.
The Fund will not invest in a foreign currency or in securities denominated in a
foreign currency if such currency is not at the time of investment considered by
the Sub-adviser to be fully exchangeable into U.S. dollars (or a multinational
currency unit) without legal restriction.
The Fund may also invest up to 35% of its total assets in: (1) foreign
government securities that are not high quality but are rated at least
"investment grade," i.e., rated within the four highest ratings categories of
Moody's or S&P or, if not rated, determined by the Sub-adviser to be of
comparable quality; (2) corporate debt obligations of U.S. or foreign issuers
rated at least investment grade by Moody's or S&P, including debt obligations
convertible into equity securities or having attached warrants or rights to
purchase equity securities; (3) privately issued mortgage-backed and asset-
backed securities that are rated at least investment grade by Moody's or S&P, or
if unrated, determined by the Sub-adviser to be of comparable quality; and (4)
common stocks, preferred stocks and warrants to acquire such securities,
provided that the Fund will not invest more than 20% of its total assets in such
securities.
Prospectus Page 7
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
GENERAL POLICIES
ASSET ALLOCATION. The Fund invests in debt obligations allocated among diverse
markets and denominated in various currencies, including U.S. dollars, or in
multinational currency units such as Euros. The Fund is designed for investors
who wish to accept the risks entailed in such investments, which are different
from those associated with a portfolio consisting entirely of securities of U.S.
issuers denominated in U.S. dollars. The Fund may purchase securities that are
issued by the government or a company or financial institution of one country
but denominated in the currency of another country (or a multinational currency
unit).
The Sub-adviser allocates the assets of the Fund in securities of issuers in
countries and in currency denominations where the combination of fixed income
market returns, the price appreciation potential of fixed income securities and
currency exchange rate movements will present opportunities primarily for high
current income and secondarily for capital appreciation (and in the case of the
Fund, secondarily for capital appreciation and protection of principal). In so
doing, the Sub-adviser intends to take full advantage of the different yield,
risk and return characteristics that investment in the fixed income markets of
different countries can provide for U.S. investors. Fundamental economic
strength, credit quality and currency and interest rate trends are the principal
determinants of the emphasis given to various country, geographic and industry
sectors within the Fund. Securities held by the Fund may be invested without
limitation as to maturity.
The Sub-adviser selects securities of particular issuers on the basis of its
views as to the best values then currently available in the marketplace. Such
values are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the local and world
economies, movements in the general level and term of interest rates, currency
values, political developments and variations in the supply of funds available
for investment in the world bond market relative to the demands placed upon it.
The Sub-adviser generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation, interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. The Sub-adviser may seek to protect the Fund
against such negative currency movements through the use of sophisticated
investment techniques. See "Options, Futures and Forward Currency Transactions."
According to the Sub-adviser, as of the date of this Prospectus, more than 50%
of the value of all outstanding government debt obligations throughout the world
is represented by obligations denominated in currencies other than the U.S.
dollar. Moreover, from time to time, the debt securities of issuers located
outside the United States have substantially outperformed the debt obligations
of U.S. issuers. Accordingly, the Sub-adviser believes that the Fund's policy of
investing in debt securities throughout the world may enable the achievement of
results superior to those produced by mutual funds with similar objectives to
those of the Fund that invest solely in debt securities of U.S. issuers.
The Fund is designed for investors who wish to accept the risks entailed in such
investments, which are different from those associated with a portfolio
consisting entirely of securities of U.S. issuers denominated in U.S. dollars.
TEMPORARY DEFENSIVE STRATEGIES. The Sub-adviser may employ a temporary defensive
investment strategy if it determines such a strategy to be warranted due to
market, economic or political conditions. Pursuant to such a defensive strategy,
the Fund temporarily may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and/or invest up to 100% of its assets in high
quality debt securities or money market instruments of U.S. or foreign issuers.
In addition, for temporary defensive purposes, most or all of the Fund's
investments may be made in the United States and denominated in U.S. dollars. To
the extent the Fund employ a temporary defensive strategy, it will not be
invested so as to achieve directly its investment objectives. In addition,
pending investment of proceeds from new sales of Fund shares or to meet ordinary
daily cash needs, the Fund may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and may invest in high quality foreign or domestic
money market instruments. For a full description of money market instruments,
see "Selection of Debt Investments" in the "Investment Objectives and Policies"
section of the Statement of Additional Information.
BRADY BONDS. The Fund may invest in "Brady Bonds," which are debt restructurings
that provide for the exchange of cash and loans for newly issued bonds. Brady
Bonds have been issued by the countries of Albania, Argentina, Brazil, Bulgaria,
Prospectus Page 8
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
Costa Rica, Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria,
Panama, Peru, Philippines, Poland, Uruguay, Venezuela and Vietnam and are
expected to be issued by other emerging market countries. As of the date of this
Prospectus, the Fund is not aware of the occurrence of any payment defaults on
Brady Bonds. Investors should recognize, however, that Brady Bonds do not have a
long payment history. In addition, Brady Bonds are often rated below investment
grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time of issuance and is adjusted at
regular intervals thereafter.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The Fund may invest in
mortgage-backed and asset-backed securities of U.S. and foreign issuers,
including privately issued mortgage-backed and asset-backed securities.
Mortgage-backed securities represent direct or indirect interests in pools of
underlying mortgage loans that are secured by real property. Investors typically
receive payments out of the interest on and principal of the underlying
mortgages. Asset-backed securities are similar to mortgage-backed securities,
except that the underlying assets are other financial assets or financial
receivables, such as motor vehicle installment sales contracts, home equity
loans, leases of various types of real and personal property, and receivables
from credit cards. Any mortgage-backed and asset-backed securities purchased by
the Fund will be subject to the same rating requirements that apply to its other
investments. In addition, privately issued mortgage-backed and asset-backed
securities purchased by the Fund will be subject to the limitation of the Fund
which allows no more than 35% of its total assets to be invested in securities
of non-governmental issuers.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities and forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery of the securities. If the
Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, the Fund will
segregate cash or liquid securities equal to the value of the when-issued or
forward commitment securities with its custodian and will mark to market daily
such assets. There is a risk that the securities may not be delivered and that
the Fund may incur a loss. The Fund may invest up to 5% of its total assets in a
combination of securities purchased on a when-issued basis or with respect to
which it has entered into forward commitment agreements.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of Fund
shares. The Fund also may borrow up to 5% of its total assets for temporary or
emergency purposes other than to meet redemptions. However, the Fund will not
borrow for investment purposes, nor will the Fund purchase securities while
borrowings are outstanding.
The Fund may also enter into reverse repurchase agreements with a bank or
recognized securities dealer. Under a reverse repurchase agreement, the Fund
would sell securities and agree to repurchase them at a particular price at a
future date. At the time the Fund enters into a reverse repurchase agreement, it
will establish and maintain a segregated account with an approved custodian
containing cash or liquid securities having a value not less than the repurchase
price, including accrued interest. Reverse repurchase agreements involve the
risk that the market value of the securities retained in lieu of sale by the
Fund may decline below the price of the securities the Fund has sold but is
obligated to repurchase. In the event the
Prospectus Page 9
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
buyer of securities under a reverse repurchase agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or receiver may receive an
extension of time to determine whether to enforce the Fund's obligation to
repurchase the securities, and the Fund's use of the proceeds of the reverse
repurchase agreement may effectively be restricted pending such decision.
The Fund also may enter into "dollar rolls," in which the Fund sells fixed
income securities for delivery in the current month and simultaneously contracts
to repurchase substantially similar (same type, coupon and maturity) securities
on a specified future date. During the roll period, the Fund would forego
principal and interest paid on such securities. The Fund would be compensated by
the difference between the current sales price and the forward price for the
future purchase, as well as by the interest earned on the cash proceeds of the
initial sale. See "Investment Objectives and Policies" in the Statement of
Additional Information.
Reverse repurchase agreements and dollar rolls will be treated as borrowings and
will be deducted from the Fund's assets for purposes of calculating compliance
with the Fund's borrowing limitation. See "Investment Limitations" in the
Statement of Additional Information.
SECURITIES LENDING. The Fund may lend its respective portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhances the Fund's total return. At all times a loan is outstanding, the Fund
requires the borrower to maintain with the Fund's custodian, collateral
consisting of cash, U.S. government securities, or certain irrevocable letters
of credit equal to at least the value of the borrowed securities, plus any
accrued interest or such other collateral as permitted by the Fund's investment
program and regulatory agencies, and as approved by the Board. The Fund limits
its loans of portfolio securities to an aggregate of 30% of the value of its
total assets, measured at the time any such loan is made. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the loaned
securities and possible loss of rights in the collateral should the borrower
fail financially.
ZERO COUPON SECURITIES. The Fund may invest in certain zero coupon securities
that are "stripped" U.S. Treasury notes and bonds. It may also invest in zero
coupon and other deep discount securities issued by foreign governments and
domestic and foreign corporations, including certain Brady Bonds and other
foreign debt and in payment-in-kind securities. Zero coupon securities pay no
interest to holders prior to maturity, and payment-in-kind securities pay
interest in the form of additional securities. However, a portion of the
original issue discount on zero coupon securities and the "interest" on
payment-in-kind securities will be included in the Fund's income. Accordingly,
for the Fund to continue to qualify for tax treatment as a regulated investment
company and to avoid a certain excise tax (see "Taxes" in the Statement of
Additional Information), it may be required to distribute an amount that is
greater than the total amount of cash it actually receives. These distributions
must be made from the Fund's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund will not be able to purchase additional
income-producing securities with cash used to make such distributions, and its
current income ultimately may be reduced as a result. Zero coupon and
payment-in-kind securities usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS. The Fund may utilize combinations of futures on
bonds and forward currency contracts to create investment positions that have
substantially the same characteristics as bonds of the same type as those on
which the futures contracts are written. Investment positions of this type are
generally referred to as "synthetic securities."
For example, in order to establish a synthetic security position for the Fund
that is comparable to owning a Japanese government bond, the Sub-adviser might
purchase futures contracts on Japanese government bonds in the desired principal
amount and purchase forward currency contracts for Japanese Yen in an amount
equal to the then current purchase price for such bonds in the Japanese cash
market, with each contract having approximately the same delivery date.
The Sub-adviser might roll over the futures and forward currency contract
positions before taking delivery in order to continue the Fund's investment
position, or the Sub-adviser might close out those positions, thus effectively
selling the synthetic security. Further, the amount of each contract might be
adjusted in response to market conditions and the forward currency contract
might be changed
Prospectus Page 10
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
in amount or eliminated in order to hedge against currency fluctuations.
The Sub-adviser would create synthetic security positions for the Fund when it
believes that it can obtain a better yield or achieve cost savings in comparison
to purchasing actual bonds or when comparable bonds are not readily available in
the market. Synthetic security positions are subject to the risk that changes in
the value of purchased futures contracts may differ from changes in the value of
the bonds that might otherwise have been purchased in the cash market. Also,
while the Sub-adviser believes that the cost of creating synthetic security
positions generally will be materially lower than the cost of acquiring
comparable bonds in the cash market, the Fund will incur transaction costs in
connection with each purchase of a futures or forward currency contract. The use
of futures contracts and forward currency contracts to create synthetic security
positions also is subject to substantially the same risks as those that exist
when these instruments are used in connection with hedging strategies. See
"Options, Futures and Forward Currency Transactions" below and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies, and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the Fund's investment. The Fund may enter into such instruments
up to the full value of its portfolio assets. See "Risk Factors -- Options,
Futures and Currency Transactions" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. The Fund may also purchase and sell put and call
options on currencies, futures contracts on currencies and options on such
futures contracts to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on securities
to hedge against the risk of fluctuations in the prices of securities held by
the Fund or that the Sub-adviser intends to include in the Fund's portfolio. The
Fund also may purchase and sell put and call options on indices to hedge against
overall fluctuations in the securities markets generally or in a specific market
sector.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or market sector decline that could adversely affect the Fund's
portfolio. The Fund also may purchase index futures contracts and purchase call
options or write put options on such contracts to hedge against a general market
or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. The Fund may use interest rate futures contracts and
options thereon to hedge its portfolio against changes in the general level of
interest rates.
OTHER INDEXED SECURITIES. The Fund may invest in certain indexed securities,
which are securities whose prices are indexed to the prices of other securities,
securities indices, currencies, precious metals or other commodities, or other
financial indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined by
reference to a specific instrument or statistic. The performance of indexed
securities depends to a great extent on the performance of the security,
currency, or other instrument to which they are indexed, and may also be
influenced by interest rate changes in the United States and abroad. At the same
time, indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more volatile
than the underlying instruments. New forms of indexed securities continue to be
developed. The Fund may invest in such securities to the extent consistent with
its investment objectives.
OTHER INFORMATION. The Fund's investment objectives may not be changed without
the approval of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed
Prospectus Page 11
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
without shareholder approval. A complete description of these limitations is
included in the Statement of Additional Information. The Fund's other investment
policies described herein and in the Statement of Additional Information may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. See "Investment Objectives and Policies -- Short
Sales" in the Statement of Additional Information.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objectives. The Fund's net asset value will fluctuate, reflecting fluctuations
in the market value of its portfolio positions and its net currency exposure.
The value of fixed income securities held by the Fund generally fluctuates
inversely with interest rate movements. Longer term bonds held by the Fund are
subject to greater interest rate risk.
NON-DIVERSIFIED CLASSIFICATION. The Fund is classified under the Investment
Company Act of 1940 (the "1940 Act") as a "non-diversified" fund. As a result,
the Fund will be able to invest in a fewer number of issuers than if it were
classified under the 1940 Act as a "diversified" fund. To the extent that the
Fund invests in a smaller number of issuers, the value of the Fund's shares may
fluctuate more widely and the Fund may be subject to greater investment and
credit risk with respect to its portfolio.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally are not registered with the SEC, nor
are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. In addition, certain costs
attributable to foreign investing, such as custody charges, are higher than
those attributable to domestic investing. Securities of some foreign companies
are less liquid and their prices may be more volatile than securities of
comparable domestic companies. The Fund's interest and dividends from foreign
issuers may be subject to non-U.S. withholding taxes, thereby reducing its net
investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic
developments which could affect the investments of the Fund in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
CURRENCY RISK. Since the Fund normally invests substantially in securities
denominated in currencies other than the U.S. dollar, and because it may hold
foreign currencies, it will be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rates between such currencies and
the U.S. dollar. Changes in currency exchange rates will influence the value of
the Fund's shares, and also may affect the value of dividends and interest
earned by the Fund and gains and losses realized by the Fund. Currencies
generally are evaluated on the basis of fundamental economic criteria (e.g.,
relative inflation and interest rate levels and trends, growth rate forecasts,
balance of payments status and economic policies) as well as technical and
political data. The exchange rates between the U.S. dollar and other currencies
are determined by supply and demand in the currency exchange markets, the
international
Prospectus Page 12
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
balance of payments, governmental intervention, speculation and other economic
and political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The yield characteristics of
mortgage-backed and asset-backed securities differ from those of traditional
bonds. Among the major differences are that interest and principal payments are
made more frequently (usually monthly) and that principal may be prepaid at any
time because the underlying mortgage loans or other assets generally may be
prepaid at any time. Generally, prepayments on fixed-rate mortgage loans will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. Mortgage-backed and asset-backed securities may also
decrease in value as a result of increasing market interest rates and, because
of prepayments, may benefit less than other bonds from declining interest rates.
Reinvestments of prepayments may occur at lower interest rates than the original
investment, thus adversely affecting the yield of the Fund. Actual prepayment
experience may cause the yield of a mortgage-backed security to differ from what
was assumed when the Fund purchased the security. The market for privately
issued mortgage-backed and asset-backed securities is smaller and less liquid
than the market for U.S. government mortgage-backed securities.
Foreign mortgage-backed securities markets are substantially smaller than U.S.
markets, but have been established in several countries, including Germany,
Denmark, Sweden, Canada and Australia, and may be developed elsewhere. Foreign
mortgage-backed securities generally are structured similar to domestic
mortgage-backed securities, and they normally present substantially similar
investment risks as well as the other risks normally associated with foreign
securities.
SOVEREIGN DEBT. The Fund may invest in sovereign debt securities of emerging
market governments, including Brady Bonds. Investments in such securities
involve special risks. The issuer of the debt or the governmental authorities
that control the repayment of the debt may be unable or unwilling to repay
principal or interest when due in accordance with the terms of such debt.
Periods of economic uncertainty may result in the volatility of market prices of
sovereign debt obligations and in turn the Fund's net asset value, to a greater
extent than the volatility inherent in domestic fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's investments.
Emerging markets are faced with social and political issues and some of them
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs, and may have other adverse
social, political and economic consequences. Political changes or a
deterioration of a country's domestic economy or balance of trade may affect the
willingness of countries to service their sovereign debt. Although the
Sub-adviser intends to manage the Fund in a manner that will minimize the
exposure to such risks, there can be no assurance that adverse political changes
will not cause the Fund to suffer a loss of interest or principal on any of its
holdings.
In recent years, some of the emerging market countries in which the Fund expects
to invest have
Prospectus Page 13
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
encountered difficulties in servicing their sovereign debt obligations. Some of
these countries have withheld payments of interest and/or principal of sovereign
debt. These difficulties have also led to agreements to restructure external
debt obligations -- in particular, commercial bank loans, typically by
rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. In the future, holders of
emerging market sovereign debt securities may be requested to participate in
similar rescheduling of such debt. Certain emerging market countries are among
the largest debtors to commercial banks and foreign governments. Currently,
Brazil, Mexico and Argentina are the largest debtors among developing countries.
At times certain emerging market countries have declared moratoria on the
payment of principal and interest on external debt; such a moratorium is
currently in effect in certain emerging market countries. There is no bankruptcy
proceeding by which a creditor may collect in whole or in part sovereign debt on
which an emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Fund may invest involve great risk. As noted above, sovereign debt
obligations issued by emerging market governments generally are deemed to be the
equivalent in terms of quality to securities rated below investment grade by
Moody's and S&P. Such securities are regarded as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations and involve major risk exposure to
adverse conditions. Some of such securities, with respect to which the issuer
currently may not be paying interest or may be in payment default, may be
comparable to securities rated D by S&P or C by Moody's. The Fund may have
difficulty disposing of and valuing certain sovereign debt obligations because
there may be a limited trading market for such securities. Because there is no
liquid secondary market for many of these securities, the Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; (4) lack of assurance
that a liquid secondary market will exist for any particular option, futures
contract or option thereon at any particular time; (5) the possible loss of
principal under certain conditions; and (6) the possible inability of the Fund
to purchase or sell a portfolio security at a time when it would otherwise be
favorable for it to do so, or the possible need for the Fund to sell a security
at a disadvantageous time, due to the need for the Fund to maintain "cover" or
to set aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets, in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
Prospectus Page 14
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust and persons or companies furnishing services to the Fund,
including the investment management and administrative services agreement with
AIM, the investment sub-advisory and sub-administration agreement between AIM
and the Sub-adviser, the agreements with AIM Distributors regarding distribution
of the Fund's shares, the custody agreement and the transfer agency agreement.
The day-to-day operations of the Fund are delegated to the officers of the
Trust, subject always to the investment objectives and policies of the Fund and
to the general supervision of the Trust's Board. See "Trustees and Executive
Officers" in the Statement of Additional Information for information on the
Trustees of the Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the investment portfolio of
the Fund and placing orders to buy, sell or hold particular securities. In
addition, AIM and the Sub-adviser provide the following administration services
to the Fund: furnishing corporate officers and clerical staff; providing office
space, services and equipment; and supervising all matters relating to the
Fund's operation.
The Fund pays AIM investment management and administration fees computed daily
and payable monthly, based on the average daily net assets, for such services at
the annualized rate of .725% on the first $500 million, .70% on the next $1
billion, .675% on the next $1 billion, and .65% on amounts thereafter. Out of
the aggregate fees payable by the Fund, AIM pays the Sub-adviser sub-advisory
and sub-administration fees equal to 40% of the aggregate fees AIM receives from
the Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-adviser, AIM Distributors or other agents. The Fund pays
all expenses not assumed by AIM, the Sub-adviser, AIM Distributors or any other
agents. AIM has undertaken to limit the expenses of the Class A and Class B
shares of the Fund (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the maximum annual rate of 1.85% and 2.50% of the
average daily net assets of the Fund's Class A and Class B shares.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets. The Sub-adviser also serves as the Fund's pricing and
accounting agent. For these services the Sub-adviser receives a fee at an annual
rate derived by applying 0.03% to the first $5 billion of assets of the AIM
Funds that are sub-advised by the Sub-adviser and 0.02% to the assets in excess
of $5 billion and applying that rate on the Fund's average daily net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser, 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the Americas, New
York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the
Prospectus Page 15
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
Sub-adviser is now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to
the sale, the Sub-adviser and its worldwide asset management affiliates provided
investment management and/or administrative services to institutional, corporate
and individual clients around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices, including investment offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong,
London, Singapore, Sydney, Tokyo and Toronto. In managing the Fund, the
Sub-adviser employs a team approach, taking advantage of its investment
resources around the world.
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau Portfolio Manager since Chief Investment Officer for Global Fixed Income for the Sub-adviser
New York 1996 since October 1996. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from July
1995 to October 1996. Employed by Chancellor Capital Management,
Inc. ("Chancellor Capital"), a predecessor of the Sub-Adviser, from
1995 to October 1996. Senior Vice President and Senior Portfolio
Manager for Fiduciary Trust Company International from 1993 to
1995. Vice President at Bankers Trust Company from 1991 to 1993.
David B. Hughes Portfolio Manager since Head of Global Fixed Income, North America, for the Sub- adviser
New York 1998 since January 1998. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from July
1995 to December 1997. Employed by Chancellor Capital from July
1995 to October 1996. Assistant Vice President of Fiduciary Trust
Company International from 1994 to 1995. Assistant Treasurer at the
Bankers Trust Company from 1991 to 1994.
</TABLE>
------------------------
In placing orders for the Fund's securities transactions, the Sub-adviser seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-adviser may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions for the Fund may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. Certain Trustees and
officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund directly and through institutions with
Prospectus Page 16
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
whom AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares of the Fund 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 the Fund's average daily net
assets attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges 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 shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay contingent deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Prospectus Page 17
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense 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 the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Company acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares. Shares of each fund are entitled to one vote per share (with
proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that Class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of
Prospectus Page 18
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 19
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
APPENDIX A
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the four
categories shown:
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 edged." 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 risk appear somewhat
larger than the 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
some time 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.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the four categories
shown:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
Prospectus Page 20
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
Prospectus Page 21
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
A-1
<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
A-2
<PAGE>
AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
A-3
<PAGE>
AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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AIM INVESTOR'S GUIDE
- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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AIM INVESTOR'S GUIDE
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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AIM INVESTOR'S GUIDE
number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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AIM INVESTOR'S GUIDE
the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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AIM INVESTOR'S GUIDE
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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AIM INVESTOR'S GUIDE
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
A-24
<PAGE>
AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
A-25
<PAGE>
AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
A-26
<PAGE>
AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-27
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL GROWTH & INCOME FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Growth & Income Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a nondiversified portfolio which seeks long-term capital
appreciation together with current income. The Fund invests in a global
portfolio of both equity and debt securities, in such relative proportions as
deemed most appropriate by the Fund's investment sub-adviser, INVESCO (NY), Inc.
(the "Sub-adviser"), in view of then-current economic and market conditions.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information dated
September 8, 1998 has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 7
Management................................................................................ 11
Other Information......................................................................... 14
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of the Trust.
Investment Objective: The Fund seeks long-term capital appreciation together with current income.
Principal Investments: The Fund invests primarily in blue-chip equity securities and high quality government bonds of
issuers located in the United States and throughout the world.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by the
Sub-adviser. AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate and individual
clients around the world. AIM and the Sub-adviser are both indirect wholly owned subsidiaries of
AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment management group that
has a significant presence in the institutional and retail segment of the investment management
industry in North America and Europe, and a growing presence in Asia. AIM was organized in 1976 and,
together with its subsidiaries, currently advises approximately 90 investment company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calendar month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors: An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"), Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on a quarterly
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund will achieve its investment objective. The Fund's net asset value
will fluctuate, reflecting fluctuations in the market value of its portfolio holdings. The value of
debt securities held by the Fund generally fluctuates inversely with interest rate movements. Cer-
tain investment grade debt securities may possess speculative qualities.
The Fund may invest in foreign securities. Investments in foreign securities involve risks relating
to political and economic developments abroad and the differences between the regulations to which
U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
See "Investment Objective and Policies."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
TRANSFER OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares (as a % of offering price)............................. 5.50% None
Sales charges on reinvested distributions to shareholders.......................................... None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)........................................................................................... None 5.00%
Redemption charges................................................................................. None None
Exchange Fees...................................................................................... None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees...................................................... 0.97% 0.97%
12b-1 distribution and service fees................................................................ 0.35% 1.00%
Other expenses (after reimbursements and waivers).................................................. 0.32% 0.32%
----------- -----------
Total Fund Operating Expenses........................................................................ 1.64% 2.29%
----------- -----------
----------- -----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (6):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
TEN
ONE THREE FIVE YEARS
YEAR YEARS YEARS (7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (4)........................................................................ $71 $104 $140 $240
Class B Shares:
Assuming a complete redemption at end of period (5)................................... $75 $105 $147 [ ]
Assuming no redemption................................................................ $23 $ 72 $124 [ ]
</TABLE>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase; the charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
(6) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the example of a 5% annual return are required by regulation of the SEC
applicable to all mutual funds. The 5% annual return is not a prediction of
and does not represent the Fund's projected or actual performance.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM GLOBAL GROWTH & INCOME FUND
(FORMERLY GT GLOBAL GROWTH & INCOME FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield reflects investment
income net of expenses over the relevant period attributable to a Fund share,
expressed as an annualized percentage of the maximum offering price per share
for Class A shares and net asset value per share for Class B shares.
Yield is a function of the type and quality of the Fund's investments, the
maturity of the securities held in the Fund's portfolio and the operating
expense ratio of the Fund. A shareholder's investment in the Fund is not insured
or guaranteed. These factors should be carefully considered by the investor
before making an investment in the Fund.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital appreciation together with
current income. The Fund seeks its objective by investing in a global portfolio
of both equity and debt securities, allocated among diverse international
markets. There is no assurance that the Fund will achieve its investment
objective.
At least 65% of the Fund's total assets normally will be invested in a
combination of blue-chip equity securities and high quality government bonds.
The Fund considers an equity security to be "blue chip" if: (i) during the
issuer's most recent fiscal year the security offered an above average dividend
yield relative to the latest reported dividend yield on the Morgan Stanley
Capital International World Index; AND (ii) the total equity market
capitalization of the issuer is at least $1 billion. Government bonds are deemed
to be high quality if at the time of the Fund's investment they are rated within
one of the two highest ratings categories of Moody's Investors Service, Inc.
("Moody's") or by Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. ("S&P"), or, if not rated, are deemed to be of equivalent quality in the
judgment of the Sub-adviser.
Up to 35% of the Fund's total assets may be invested in other equity securities
and investment grade government and corporate debt obligations which the
Sub-adviser believes will assist the Fund in achieving its objective.
"Investment grade" debt securities are those rated within one of the four
highest ratings categories of Moody's or S&P, or, if not rated, deemed to be of
equivalent quality in the judgment of the Sub-adviser.
Equity securities that the Fund may purchase include common stocks, preferred
stocks and warrants to acquire such stocks and other equity securities.
Government bonds that the Fund may purchase include debt obligations issued or
guaranteed by the United States or foreign governments (including foreign
states, provinces or municipalities) or their agencies, authorities or
instrumentalities and debt obligations of supranational entities organized or
supported by several national governments, such as the World Bank and the Asian
Development Bank. The debt obligations held by the Fund may include debt
obligations convertible into equity securities or having attached warrants or
rights to purchase equity securities. The Fund may purchase securities that are
issued by the government or a corporation or financial institution of one nation
but denominated in the currency of another nation (or a multinational currency
unit).
According to the Sub-adviser, as of the date of this Prospectus, more than 50%
of the total equity market capitalization worldwide is represented by non-U.S.
equity securities, and more than 50% of the value of all outstanding government
debt obligations throughout the world is represented by obligations denominated
in currencies other than the U.S. dollar. Moreover, from time to time the equity
and debt securities of issuers located outside the United States have
substantially outperformed the equity and debt securities of U.S. issuers.
Accordingly, the Sub-adviser believes that the Fund's policy of investing in a
global portfolio of equity and debt securities may enable the achievement of
long-term results superior to those produced by mutual funds with similar
objectives to that of the Fund that invest solely in U.S. equity and debt
securities.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. Consistent with the Fund's
investment objective, the Sub-adviser employs a conservative investment style in
managing the Fund's assets. In so doing the Sub-adviser attempts to limit
volatility and risk to capital. The Sub-adviser allocates the Fund's assets
among securities of countries and in currency denominations where opportunities
for meeting the Fund's investment objective are expected to be the most
attractive. The Sub-adviser attempts to identify those countries and industries
where economic and political factors are likely to produce above-average growth
rates and to further identify companies in such countries and industries that
are best positioned and managed to benefit from these factors.
The Fund currently contemplates that it will invest principally in securities of
issuers in the United States, Canada, Japan, Western Europe, New Zealand and
Australia. The Fund may invest substantially in securities denominated in one or
more currencies. Under normal conditions, the
Prospectus Page 7
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
Fund invests in issuers of not less than three different countries and issuers
of any one country, other than the United States, will represent no more than
40% of the Fund's total assets.
The relative proportions of equity and debt securities held by the Fund at any
one time will vary, depending upon the Sub-adviser's assessment of global
political and economic conditions and the relative strengths and weaknesses of
the world equity and debt markets. To enable the Fund to respond to general
economic changes and market conditions around the world, the Fund is authorized
to invest up to 100% of its total assets in either equity securities or debt
securities.
In selecting equity securities for investment, the Sub-adviser attempts to
identify and acquire only securities it deems to represent high or improving
investment quality. Securities representing high investment quality generally
will include those of well-known, established and successful issuers that the
Sub-adviser believes will continue to be successful in the future. Securities
representing improving investment quality may include those of an issuer that
has improved its sales or earnings or of an issuer the balance sheet and
financial condition of which is improving. The Sub-adviser seeks to avoid
investing in equity securities that appear overly speculative or risky, even if
they have attractive features or investment potential.
In evaluating debt securities considered for the Fund, the Sub-adviser analyzes
their yield, maturity, issue classification and quality characteristics, coupled
with expectations regarding local and world economies, movements in the general
level and term of interest rates, currency values, political developments, and
variations in the supply of funds available for investment in the world bond
market relative to the demands placed upon it. There are no limitations on the
maximum or minimum maturities of the debt securities considered by the Fund or
on the average weighted maturity of the debt portion of the Fund's portfolio.
Should the rating of a debt security be revised while such security is owned by
the Fund, the Sub-adviser will evaluate what action, if any, is appropriate with
respect to such security.
The Sub-adviser generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation and interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. The Fund may seek to protect itself against
negative currency movements by engaging in hedging techniques through the use of
options, futures and forward currency contracts.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Fund may hold cash (U.S.
dollars, foreign currencies or multinational currency units such as Euros) and/
or invest any portion or all of its assets in high quality money market
instruments of U.S. or foreign issuers. In addition, for temporary defensive
purposes, most or all of the Fund's investments may be made in the United States
and denominated in U.S. dollars. To the extent the Fund adopts a temporary
defensive posture, it will not be invested so as to directly achieve its
investment objective. In addition, pending investment of proceeds from new sales
of Fund shares or in order to meet ordinary daily cash needs, the Fund may hold
cash (U.S. dollars, foreign currencies or multinational currency units) and may
invest in foreign or domestic high quality money market instruments. For a full
description of money market instruments, see "Money Market Instruments" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of Fund
shares. The Fund also may borrow up to 5% of its total assets for temporary or
emergency purposes other than to meet redemptions. The Fund may borrow up to
33 1/3% of its total assets. However, the Fund will not purchase securities
while borrowings in excess of 5% of the Fund's total assets are outstanding. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
Prospectus Page 8
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. The Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. While a loan is outstanding, the borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to at least 100% of the value of the
borrowed securities, plus any accrued interest or such other collateral as
permitted by the Fund's investment program and regulatory agencies, and as
approved by the Board. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Fund's net investment income from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing the Fund's net investment
income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic or
economic developments which could affect the Fund's investments in those
countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, rate of savings and capital reinvestment, resource
self-sufficiency and balance of payments positions. Investments in foreign
government securities involve special risks, including the risk that the
government issuers may be unable or unwilling to repay principal and interest
when due.
The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. To attempt to increase
return, the Fund may write call options on securities. This strategy will be
employed only when, in the opinion of the Sub-adviser, the size of the premium
the Fund receives for writing the option is adequate to compensate the Fund
against the risk that appreciation in the underlying security may not be fully
realized if the option is exercised. The Fund also is authorized to write put
options to attempt to enhance return, although it does not have the current
intention of so doing.
The Fund may also use forward currency contracts, futures contracts, options on
securities, options on currencies, options on indices and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with the Fund's investments. These instruments
are often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency, or an index of securities). The
Fund may enter into such instruments up to the full value of its portfolio
assets. See "Options, Futures and Currency Strategies" in the Statement of
Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar, or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. The Fund also may purchase and sell put and call
options on currencies, futures contracts on
Prospectus Page 9
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
currencies and options on such futures contracts to hedge the Fund's portfolio
against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-adviser intends to include in the
Fund's portfolio. The Fund also may purchase and sell put and call options on
stock indices to hedge against overall fluctuations in the securities markets or
in a specific market sector.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or a specific market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general market or market sector advance and thereby attempt to lessen the cost
of future securities acquisitions. Similarly, the Fund may use interest rate
futures contracts and options thereon to hedge the debt portion of its portfolio
against changes in the general level of interest rates.
Although the Fund is authorized to enter into options, futures and forward
currency transactions, the Fund might not enter into any such transactions.
Options, futures and foreign currency transactions involve certain risks, which
include: (1) dependence on the Sub-adviser's ability to predict movements in the
prices of individual securities, fluctuations in the general securities markets
and movements in interest rates and currency markets; (2) imperfect correlation,
or even no correlation, between movements in the price of forward contracts,
options, futures contracts or options thereon and movements in the price of the
currency or security hedged or used for cover; (3) the fact that the skills and
techniques needed to trade options, futures contracts and options thereon or to
use forward currency contracts are different from those needed to select the
securities in which the Fund invests; (4) the lack of assurance that a liquid
secondary market will exist for any particular option, futures contract or
option thereon at any particular time; (5) the possible loss of principal under
certain conditions; and (6) the possible inability of the Fund to purchase or
sell a portfolio security at a time when it would otherwise be favorable for it
to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
OTHER POLICIES AND RISKS. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions. Equity securities,
particularly common stocks, generally represent the most junior position in an
issuer's capital structure, and entitle holders to an interest in the assets of
an issuer, if any, remaining after all more senior claims have been satisfied.
The value of equity securities held by the Fund will fluctuate in response to
general market and economic developments, as well as developments affecting the
particular issuers of such securities. In addition, the value of debt securities
held by the Fund generally will fluctuate with changes in the perceived
creditworthiness of the issuers of such securities and movements in interest
rates. Investment grade debt securities rated Baa by Moody's are described by
Moody's as having speculative characteristics, and therefore may be affected by
economic conditions and changes in the circumstances of their issuers to a
greater extent than higher rated bonds.
The Fund may invest up to 15% of its net assets in illiquid securities and other
securities for which no readily available market exists. The Fund may also
invest up to 5% of its total assets in a combination of securities purchased on
a when-issued basis or with respect to which it has entered into forward
commitment agreements.
The Fund is classified under the Investment Company Act of 1940, as amended
("1940 Act") as a "non-diversified" fund. As a result, the Fund will be able to
invest in a fewer number of issuers than if it were classified under the 1940
Act as a "diversified" fund. To the extent that the Fund invests in a smaller
number of issuers, the value of the Fund's shares may fluctuate more widely and
the Fund may be subject to greater investment and credit risk with respect to
its portfolio.
OTHER INFORMATION. The Fund's investment objective may not be changed without
the approval of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the
Prospectus Page 10
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
Statement of Additional Information. Unless specifically noted, the Fund's
investment policies described in this Prospectus and in the Statement of
Additional Information may be changed by the Trust's Board of Trustees without
shareholder approval. The Fund's policies regarding lending, and the percentage
of Fund assets that may be committed to borrowing, are fundamental policies and
may not be changed without shareholder approval. If a percentage restriction on
investment or utilization of assets in an investment policy or restriction is
adhered to at the time an investment is made, a later change in percentage
ownership of a security or kind of securities resulting from changing market
values or a similar type of event will not be considered a violation of the
Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively, in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment management and administration
agreement with AIM, the investment sub-advisory and sub-administration agreement
between AIM and the Sub-adviser, the agreements with AIM Distributors regarding
distribution of the Fund's shares, the custody agreement and the transfer agency
agreement. The day-to-day operations of the Fund are delegated to the officers
of the Trust, subject always to the objective and policies of the Fund and to
the general supervision of the Trust's Board of Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the Fund's portfolio and
placing orders to buy, sell or hold particular securities; furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
the Fund pays AIM investment management and administration fees, computed daily
and paid monthly, based on the average daily net assets, at the annualized rate
of .975% on the first $500 million, .95% on the next $500 million, .925% on the
next $500 million and .90% on amounts thereafter. Out of the aggregate fees
payable by the Fund, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-adviser, AIM Distributors or other agents. AIM has
undertaken to limit the Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the annual rate of 1.75% and
2.40% of the average daily net assets of the Fund's Class A and Class B shares,
respectively.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser, 50 California Street, 27th
Floor, San
Prospectus Page 11
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
Francisco, California 94111, and 1166 Avenue of the Americas, New York, New York
10036, serves as the sub-adviser to the Fund pursuant to an investment
sub-advisory and sub-administration agreement dated as of May 29, 1998. Prior to
May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset Management, Inc.
On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the former indirect
parent organization of the Sub-adviser, consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included the Sub-adviser and certain other affiliates. As a
result of this transaction, the Sub-adviser is now an indirect wholly owned
subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and its worldwide
asset management affiliates provided investment management and/or administrative
services to institutional, corporate and individual clients around the world
since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ----------------------- ------------------------ ---------------------------------------------------------------------
<S> <C> <C>
Michael Lindsell Portfolio Manager since Head of Investment Strategy for Global Equities for the Sub-adviser
London 1998 and INVESCO GT Asset Management PLC (London) ("GT Asset Management")
since 1996. Chief Investment Officer for Japan for INVESCO GT Asset
Management Asia Ltd. (Hong Kong) ("GT Asset Management Asia") and
Portfolio Manager for the Sub-adviser from 1992 to 1996. Director of
Warburg Asset Management (Tokyo) prior thereto. GT Asset Management
and GT Asset Management Asia are affiliates of the Sub-adviser.
Michael McDonagh Portfolio Manager since Portfolio Manager for GT Asset Management since 1992 and for the
London 1998 Sub-adviser since October 1988. Portfolio Manager for GT Asset
Management Asia from 1992 to 1997.
Paul Griffiths Portfolio Manager since Head of Global Fixed Income for the Sub-adviser and GT Asset
London 1995 Management since June 1997. Portfolio Manager from 1994 to 1997.
Global Bond Fund Manager for Lazard Investors from 1993 to 1994.
Global Bond Fund Manager for Sanwa International PLC from 1991 to
1993.
</TABLE>
In placing securities orders for the Fund's portfolio transactions, the
Sub-adviser seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-adviser may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions may be executed
through affiliates of AIM or the Sub-adviser.
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of
Prospectus Page 12
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
the Fund (individually referred to as a "Distribution Agreement" or collectively
as the "Distribution Agreements.") with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
Class A and Class B shares of the Fund. Certain Trustees and officers of the
Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund 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 of the
Fund 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 the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges 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 shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay contingent deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of
Prospectus Page 13
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
the average daily net assets attributable to the Fund's Class B shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class B shares of
the Fund. Any amounts not paid as a service fee would constitute an asset-based
sales charge. Amounts paid in accordance with the Class B Plan with respect to
the Fund may be used to finance any activity primarily intended to result in the
sale of Class B shares of the Fund.
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense 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 the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998 the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that Class. The shares of the Fund and the
Trust's other funds will be voted in the aggregate on other
Prospectus Page 14
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
matters, such as the election of Trustees and ratification of the selection of
the Trust's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 15
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
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<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
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<PAGE>
AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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<PAGE>
AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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<PAGE>
AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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AIM INVESTOR'S GUIDE
- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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AIM INVESTOR'S GUIDE
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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AIM INVESTOR'S GUIDE
the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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AIM INVESTOR'S GUIDE
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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AIM INVESTOR'S GUIDE
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
A-24
<PAGE>
AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
A-25
<PAGE>
AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
A-26
<PAGE>
AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-27
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL HEALTH CARE FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Health Care Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a diversified portfolio which seeks long-term capital
appreciation by investing primarily in equity securities of health care
companies throughout the world.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL HEALTH CARE FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 7
Risk Factors.............................................................................. 10
Management................................................................................ 13
Other Information......................................................................... 16
</TABLE>
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a diversified series of the Trust.
Investment Objective: Fund seeks long-term capital appreciation.
Principal Investments: The Fund invests primarily in equity securities of health care companies throughout the world.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and are sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment man-
agement group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM/GT Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL HEALTH CARE FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
redemptions made within six years from the date such shares were purchased. Class B shares
automatically convert to Class A shares of the Fund eight years following the end of the calendar
month in which a purchase was made. Class B shares are subject to higher expenses than Class A
shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors: An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "'Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds") Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL HEALTH CARE FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund will achieve its investment objective. The Fund's net asset value
will fluctuate, reflecting fluctuations in the market value of its portfolio holdings. The Fund's
policy of concentrating its investments in companies in its particular industries may cause the
Fund's net asset value to fluctuate more than if it invested in a greater number of industries.
The Fund may invest in foreign securities. Investments in foreign securities involve risks relating
to political and economic developments abroad and the differences between the regulations to which
U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
The Fund may invest up to 5% of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL HEALTH CARE FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B share of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
SHAREHOLDER TRANSACTION COSTS (2):
<S> <C> <C>
Maximum sales charge on purchases of shares
(as a % of offering price)..................... 4.75% None
Sales charges on reinvested distributions to
shareholders................................... None None
Maximum deferred sales charge (as a % of net
asset value at time of purchase or sale,
whichever is less)............................. None 5.00%
Redemption charges.............................. None None
Exchange fees................................... None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees... 0.97% 0.97%
12b-1 distribution and service fees............. 0.50% 1.00%
Other expenses (after reimbursements and
waivers)....................................... 0.33% 0.33%
------- -------
Total Fund Operating Expenses................... 1.80% 2.30%
------- -------
------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (6):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS(7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (4)............................................................................ $65 $102 $141 $250
Class B Shares:
Assuming a complete redemption at end of period (5)......................................... $75 $105 $147 [ ]
Assuming no redemption...................................................................... $24 $ 73 $124 [ ]
</TABLE>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997. "Other
expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
(6) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the Hypothetical Example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM GLOBAL HEALTH CARE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM GLOBAL HEALTH CARE FUND
(FORMERLY GT GLOBAL HEALTH CARE FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM GLOBAL HEALTH CARE FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital appreciation. It seeks its
objective by investing primarily in equity securities of health care companies
throughout the world. There can be no assurance that the Fund will achieve its
investment objective.
At least 65% of the Fund's total assets normally will be invested in common and
preferred stocks, and warrants to acquire such securities, issued by health care
companies. A "health care" company is an entity in which (i) at least 50% of
either the revenues or earnings was derived from health care activities, or (ii)
at least 50% of the assets was devoted to such activities, based on the
company's most recent fiscal year. The remainder of the Fund's assets may be
invested in debt securities issued by health care companies and/or equity and
debt securities of companies outside of the health care industry, which, in the
opinion of the Sub-adviser, stand to benefit from developments in the health
care industries.
GLOBAL HEALTH CARE INDUSTRIES INVESTMENT. Examples of health care companies
include those that are substantially engaged in the design, manufacture or sale
of products or services used for or in connection with health care or medicine.
Such firms may include pharmaceutical companies; firms that design, manufacture,
sell or supply medical, dental and optical products, hardware or services;
companies involved in biotechnology, medical diagnostic, and biochemical
research and development; and companies involved in the ownership and/or
operation of health care facilities.
The Fund expects that, from time to time, a significant portion of its assets
may be invested in the securities of U.S. issuers. Health care industries,
however, are global industries with significant, growing markets outside of the
United States. A sizeable portion of the companies which comprise the health
care industries are headquartered outside of the United States, and many
important pharmaceutical and biotechnology discoveries and technological
breakthroughs have occurred outside of the United States, primarily in Japan,
the United Kingdom and Western Europe.
The Sub-adviser believes that the global health care industries offer attractive
long-term supply/ demand dynamics. While the United States, Western Europe, and
Japan presently account for a substantial portion of health care expenditures,
this should change dramatically in the coming decade if the populations of
developing countries devote an increasing percentage of income to health care.
Additionally, the Sub-adviser believes demographics on aging point to a
significant increase in demand from the industrialized nations, as the elderly
account for a growing proportion of worldwide health care spending. Finally, in
the Sub-adviser's view, technology will continue to expand the range of products
and services offered, with new drugs, medical devices and surgical procedures
addressing medical conditions previously considered untreatable.
In addition to these underlying trends, the United States is presently
experiencing a period of rapid and profound change in its own health care
system, marked by the rise of managed care, the formation of health care
delivery networks, and widespread consolidation across all segments of the
industry. The Sub-adviser believes that this transition offers investment
opportunities in those companies acting as consolidators or otherwise gaining
market share at the expense of less efficient competitors.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION.
The Fund expects that, from time to time, a significant portion of its assets
may be invested in the securities of domestic issuers. The industry represented
in the Fund, however, is a global industry with significant, growing markets
outside of the United States. A sizeable proportion of the companies which
comprise the health care industries are headquartered outside of the United
States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Fund. The Sub-adviser uses its financial expertise in
markets located throughout the world and the substantial global resources of
AMVESCAP PLC in attempting to identify those countries and companies then
providing the greatest potential for long-term capital appreciation. In this
fashion, the Sub-adviser seeks to
Prospectus Page 7
<PAGE>
AIM GLOBAL HEALTH CARE FUND
enable shareholders to capitalize on the substantial investment opportunities
and the potential for long-term growth of capital presented by the global
industries represented in the Fund.
The Sub-adviser allocates the Fund's assets among securities of countries and in
currency denominations where opportunities for meeting the Fund's investment
objective are expected to be the most attractive. The Fund may invest
substantially in securities denominated in one or more currencies. Under normal
conditions, the Fund invests in the securities of issuers located in at least
three countries, including the United States; investments in securities of
issuers in any one country, other than the United States, will represent no more
than 50% of the Fund's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Fund may invest up to 100%
of its total assets in cash (U.S. dollars, foreign currencies or multinational
currency units such as Euros) and/or high quality debt securities or money
market instruments of U.S. or foreign issuers. In addition, for temporary
defensive purposes, most or all of the Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Fund adopts a
temporary defensive posture, it will not be invested so as to achieve directly
its investment objective. In addition, pending investment of proceeds from new
sales of Fund shares or to meet its ordinary daily cash needs, the Fund may hold
cash (U.S. dollars, foreign currencies or multinational currency units) and may
invest in foreign or domestic high quality money market instruments. For a full
description of money market instruments, see "Money Market Instruments" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Fund to participate in privatizations may be limited by local law,
or the terms on which the Fund may be permitted to participate may be less
advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Fund may invest up to 10% of its
total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Fund would
bear its ratable share of that investment company's expenses, including its
advisory and administration fees. At the same time, the Fund would continue to
pay its own management fees and other expenses. AIM and the Sub-adviser will
waive their advisory fees to the extent that the Fund invests in an Affiliated
Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemptions of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
Prospectus Page 8
<PAGE>
AIM GLOBAL HEALTH CARE FUND
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. The Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. While a loan is outstanding, the borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to at least the value of the
borrowed securities, plus any accrued interest or such other collateral as
permitted by the Fund's investment program and regulatory agencies, and as
approved by the Board. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, the Fund will
segregate cash or liquid securities equal to the value of the when-issued or
forward commitment securities with its custodian and will mark to market daily
such assets. There is a risk that the securities may not be delivered and that
the Fund may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Fund may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on such futures
contracts to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-adviser intends to include in the
Fund's portfolio. The Fund also may purchase and sell put and call options on
stock indexes to hedge against overall fluctuations in the securities markets
generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
affect adversely the Fund's holdings. The Fund also may purchase stock index
futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The Fund
may use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
Prospectus Page 9
<PAGE>
AIM GLOBAL HEALTH CARE FUND
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by the Trust's
Board of Trustees without shareholder approval. The Fund's policies regarding
concentration and lending, and the percentage of the Fund's assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively, in the Investment
Objectives and Policies section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset values will fluctuate reflecting fluctuations in
the market value of the Fund's portfolio positions. Equity securities,
particularly common stocks, generally represent the most junior position in an
issuer's capital structure, and entitle holders to an interest in the assets of
an issuer, if any, remaining after all more senior claims have been satisfied.
The value of equity securities held by the Fund will fluctuate in response to
general market and economic developments, as well as developments affecting the
particular issuers of such securities. In addition, the value of debt securities
held by the Fund generally will fluctuate with changes in the perceived
creditworthiness of the issuers of such securities and interest rates.
Because the Fund focuses its investments on particular industries, an investment
in each may be more volatile than that of other investment companies that do not
concentrate their investments in such a manner. Moreover, the value of the
shares of the Fund will be especially susceptible to factors affecting the
industries in which it focuses. Accordingly, the Fund should not be considered a
complete investment program.
HEALTH CARE INDUSTRIES. Health care industries generally are subject to
substantial governmental regulation. Changes in governmental policy or
regulation could have a material effect on the demand for products and services
offered by companies in the health care industries and therefore could affect
the performance of the Fund. Regulatory approvals are generally required before
new drugs and medical devices or procedures may be introduced and before the
acquisition of additional facilities by health care providers. In addition, the
products and services offered by such companies may be subject to rapid
obsolescence caused by technological and scientific advances.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs
Prospectus Page 10
<PAGE>
AIM GLOBAL HEALTH CARE FUND
attributable to foreign investing, such as custody charges, are higher than
those attributable to domestic investing. Securities of some foreign companies
are less liquid and their prices may be more volatile than securities of
comparable domestic companies. The Fund's interest and dividends from foreign
issuers may be subject to non-U.S. withholding taxes, thereby reducing the
Fund's net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic
developments which could affect the Fund's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Fund may invest in issuers domiciled in "emerging markets." Investing in
emerging market countries involves risks in addition to those risks involved in
foreign investing. Many emerging market countries have experienced high rates of
inflation for many years. In addition, emerging markets generally are dependent
heavily upon international trade and, accordingly, have been and continue to be
affected adversely by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. The securities markets of emerging
market countries are substantially smaller, less developed, less liquid and more
volatile than the securities markets of the developed countries. In addition,
issuers in emerging markets typically are subject to a greater degree of change
in earnings and business prospects than issuers in developed countries.
The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Funds' shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund.
LOWER QUALITY DEBT SECURITIES. The Fund may invest up to 5% of its total assets
in below investment grade debt securities, that is, rated below BBB by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa by
Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Fund will not invest in debt securities that
are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience
Prospectus Page 11
<PAGE>
AIM GLOBAL HEALTH CARE FUND
financial stress. During such periods, such issuers may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
service its debt obligations may also be adversely affected by specific
developments affecting the issuer, such as the issuer's inability to meet
specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Fund. If an issuer exercises these provisions in a declining
interest rate market, the Fund may have to replace the security with a lower
yielding security, resulting in a decreased return for investors. In addition,
the Fund may have difficulty disposing of lower quality securities because they
may have a thin trading market. There may be no established retail secondary
market for many of these securities, and the Fund anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market also may have an adverse impact
on market prices of such instruments and may make it more difficult for the Fund
to obtain accurate market quotations for purposes of valuing the Fund's
portfolio investments. The Fund may also acquire lower quality debt securities
during an initial underwriting or which are sold without registration under
applicable securities laws. Such securities involve special considerations and
risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Fund may also incur additional expenses to the extent it
is required to seek recovery upon a default in the payment of principal or
interest on portfolio holdings, and the Fund may have limited legal recourse in
the event of a default.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Fund to achieve
capital appreciation substantially exceeding the appreciation the Fund would
realize if it did not make such investments. However, in order to attempt to
limit investment risk, the Fund will invest no more than 5% of its total assets
in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; (4) lack of assurance
that a liquid secondary market will exist for any particular option, futures
contract or option thereon at any particular time; (5) the possible loss of
principal under certain conditions; and (6) the possible inability of the Fund
to purchase or sell a portfolio security at a time when it would otherwise be
favorable for it to do so, or the possible need for the Fund to sell a security
at a disadvantageous time, due to the need for the Fund to maintain "cover" or
to set aside securities in connection with hedging transactions.
INVESTING IN SMALLER COMPANIES. While the Fund's portfolio normally will include
securities of established suppliers of traditional products and services, the
Fund may invest in smaller companies which can benefit from the development of
new products and services. These smaller companies may present greater
opportunities for capital appreciation, but may also involve greater risks than
large, established issuers. Such smaller companies
Prospectus Page 12
<PAGE>
AIM GLOBAL HEALTH CARE FUND
may have limited product lines, markets or financial resources, and their
securities may trade less frequently and in more limited volume than the
securities of larger, more established companies. As a result, the prices of the
securities of such smaller companies may fluctuate to a greater degree than the
prices of the securities of other issuers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment management and administration
agreement with AIM, the investment sub-advisory and sub-administration agreement
between AIM and the Sub-adviser, the agreements with AIM Distributors regarding
distribution of the Fund's shares, the custody agreement and the transfer agency
agreement. The day-to-day operations of the Fund is delegated to the officers of
the Trust, subject always to the investment objective and policies of the Fund
and to the general supervision of the Trust's Board of Trustees. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the investment portfolio of
the Fund and placing orders to buy, sell or hold particular securities. In
addition, AIM and the Sub-adviser provide the following administration services
to the Fund: furnishing corporate officers and clerical staff; providing office
space, services and equipment; and supervising all matters relating to the
Funds' operation.
For investment management and administration services provided to the Fund, the
Fund pays AIM a fee computed daily and paid monthly based on the Fund's average
daily net assets at the annualized rate of .975% on the first $500 million, .95%
on the next $500 million, .925% on the next $500 million and .90% on amounts
thereafter. Out of the aggregate fees payable by the Fund, AIM pays the
Sub-adviser sub-advisory and sub-administration fees equal to 40% of the
aggregate fees AIM receives from the Fund. The investment management and
administration fees paid by the Fund are higher than those paid by most mutual
funds.
The Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM Distributors
or other agents. AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 2.00% and 2.50% of the average daily net assets of the Fund's Class A
and Class B shares, respectively.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the Americas, New
York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain
Prospectus Page 13
<PAGE>
AIM GLOBAL HEALTH CARE FUND
other affiliates. As a result of this transaction, the Sub-adviser is now an
indirect wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the
Sub-adviser and its worldwide asset management affiliates provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Michael Yellen Portfolio Manager since Portfolio Manager for the Sub-adviser since 1996. Research analyst
San Francisco 1996 for the Sub-adviser from 1994 to 1996. Securities analyst and
Co-Portfolio Manager for Franklin Resources, Inc. (San Mateo, CA)
from 1991 to 1994.
</TABLE>
------------------------
In placing orders for the Fund's securities transactions, the Sub-adviser seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-adviser may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions may be executed through affiliates of
AIM or the Sub-adviser. High portfolio turnover (over 100%) involves
correspondingly greater brokerage commissions and other transaction costs that
the Funds will bear directly and could result in the realization of net capital
gains which would be taxable when distributed to shareholders. See "Dividends,
Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into Master Distribution Agreement, dated May
29, 1998 on behalf of Class A shares of the Fund, and has entered into a Master
Distribution Agreement, dated May 29, 1998, on behalf of Class B shares of the
Fund (individually referred to as a "Distribution Agreement" or collectively as
the "Distribution Agreements") with AIM Distributors, a registered broker-dealer
and a wholly owned subsidiary of AIM, to act as the distributor of Class A and
Class B shares of the Fund. Certain Trustees and officers of the Trust are
affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund 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 of the
Fund 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 the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges 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 shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay contingent deferred sales charges.
Prospectus Page 14
<PAGE>
AIM GLOBAL HEALTH CARE FUND
DISTRIBUTION PLANS. CLASS A PLAN. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.50% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense 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 the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Prospectus Page 15
<PAGE>
AIM GLOBAL HEALTH CARE FUND
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealer as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of any class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may continue to establish other
funds, each corresponding to a distinct investment portfolio and a distinct
series of the Trust's shares at beneficial interest. Shares of each fund are
entitled to one vote per share (with proportional voting for fractional shares)
and are freely transferable. Shareholders have no preemptive rights. Other than
the automatic conversion of Class B shares to Class A shares, there are no
conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges, except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 16
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
A-1
<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
A-2
<PAGE>
AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
A-3
<PAGE>
AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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AIM INVESTOR'S GUIDE
- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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AIM INVESTOR'S GUIDE
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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AIM INVESTOR'S GUIDE
number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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AIM INVESTOR'S GUIDE
the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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AIM INVESTOR'S GUIDE
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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AIM INVESTOR'S GUIDE
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
A-24
<PAGE>
AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
A-25
<PAGE>
AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
A-26
<PAGE>
AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-27
<PAGE>
AIM GLOBAL HEALTH CARE FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL HIGH INCOME FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global High Income Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-ended, series, management investment
company. The Fund is a non-diversified portfolio which primarily seeks high
current income and secondarily seeks capital appreciation by investing all of
its investable assets in the Global High Income Portfolio ("Portfolio"), which,
in turn, invests primarily in the debt securities of issuers located in emerging
markets. The Portfolio's investment objectives are identical to those of the
Fund.
The investment experience of the Fund will correspond directly with the
investment experience of the Portfolio.
THE PORTFOLIO INVESTS UP TO 100% OF ITS TOTAL ASSETS, IN LOWER QUALITY AND
UNRATED FOREIGN GOVERNMENT BONDS WHOSE CREDIT QUALITY IS GENERALLY CONSIDERED
THE EQUIVALENT OF U.S. CORPORATE DEBT SECURITIES COMMONLY KNOWN AS "JUNK BONDS."
INVESTMENTS OF THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF PRINCIPAL AND
INTEREST. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN
INVESTMENT IN THE FUND. SEE "INVESTMENT OBJECTIVES AND POLICIES" AND "RISK
FACTORS."
This Prospectus sets forth concisely information about the Fund that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information, dated September 8,
1998, has been filed with the Securities and Exchange Commission ("SEC") and is
incorporated herein by reference. The Statement of Additional Information is
available without charge upon written request to the Trust at 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173 or by calling 1-800-347-4246. The SEC
maintains a Web site at http:// www.sec.gov that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Fund. Additional information about the Fund may also
be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL HIGH INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objectives and Policies........................................................ 7
Risk Factors.............................................................................. 14
Management................................................................................ 19
Other Information......................................................................... 23
Appendix A -- Description of Debt Ratings................................................. 25
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund and the Portfolio: The Fund is a non-diversified series of the Trust. The Portfolio is a non- diversified, open-end
management investment company.
Investment Objectives: The Fund primarily seeks high current income and secondarily seeks capital appreciation.
Principal Investments: The Fund invests all of its investable assets in the Portfolio, which, in turn, invests primarily in
debt securities of issuers located in emerging markets.
Investment Managers: The Portfolio is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL HIGH INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calendar month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors: An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, " The AIM Family
of Funds"). Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL HIGH INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on a monthly
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund or the Portfolio will achieve its investment objectives. The
Fund's net asset value will fluctuate, reflecting fluctuations in the market value of its or its
corresponding Portfolio's portfolio holdings. The value of debt securities held by the Portfolio
generally fluctuates inversely with interest rate movements.
The Portfolio will invest in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
or the Portfolio's net asset value, earnings and gains and losses realized on sales of securities.
Securities of foreign companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. The Portfolio will normally invest at least 65% of its total
assets in debt securities of issuers in emerging markets. Such investments entail greater risks than
investing in securities of issuers in developed markets.
The Portfolio may engage in certain foreign currency, options and futures transactions to attempt to
hedge against the overall level of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and transaction costs.
The Portfolio may invest up to 100% of its total assets in debt securities rated below investment
grade or, if not rated, determined by the Sub-adviser to be of comparable quality. Investments of
this type are subject to greater risk of loss of principal and interest.
See "Investment Objectives and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL HIGH INCOME FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares (as a % of offering price)............................... 4.75% None
Sales charges on reinvested distributions to shareholders............................................ None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)............................................................................................... None 5.00%
Redemption charges................................................................................... None None
Exchange fees........................................................................................ None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees........................................................ 0.90% 0.90%
12b-1 distribution and service fees.................................................................. 0.35% 1.00%
Other expenses....................................................................................... 0.33% 0.33%
------- -------
Total Fund Operating Expenses...................................................................... 1.58% 2.23%
------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (6):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS(7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (4)................................................................... $63 $95 $130 $227
Class B Shares
Assuming a complete redemption at end of period (5)................................ $74 $103 $144 [ ]
Assuming no redemption............................................................. $23 $70 $121 [ ]
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997. "Other
expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. The Board of Trustees of the Trust
believes that the aggregate per share expenses of the Fund and the Portfolio
will be less than or approximately equal to the expenses which the Fund
would incur if the assets of the Fund were invested directly in the type of
securities being held by the Portfolio.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
(6) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN. The table and the assumption in the Hypothetical Example
of a 5% annual return are required by regulation of the SEC applicable to
all mutual funds; the 5% annual return is not a prediction of and does not
represent the Fund's or the Portfolio's projected or actual performance.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM GLOBAL HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM GLOBAL HIGH INCOME FUND
(FORMERLY GT GLOBAL HIGH INCOME FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield reflects investment
income net of expenses over the relevant period attributable to a Fund share,
expressed as an annualized percentage of the maximum offering price per share
for Class A shares and net asset value per share for Class B shares.
Yield is a function of the type and quality of the Fund's investments, the
maturity of the securities held in the Fund's portfolio and the operating
expense ratio of the Fund. A shareholder's investment in the Fund is not insured
or guaranteed. These factors should be carefully considered by the investor
before making an investment in the Fund.
Prospectus Page 6
<PAGE>
AIM GLOBAL HIGH INCOME FUND
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
The Fund primarily seeks high current income, and secondarily seeks capital
appreciation. It seeks its objectives by investing all of its investable assets
in the Portfolio, which in turn seeks the same objectives as the Fund by
normally investing at least 65% of its total assets in debt securities of
issuers in emerging markets. There can be no assurance that the Fund or the
Portfolio will achieve its investment objectives.
The Portfolio intends to invest in the following types of debt securities:
bonds, notes and debentures of emerging market governments; securities issued or
guaranteed by such governments' agencies or instrumentalities; securities issued
or guaranteed by the central banks of emerging market countries; and securities
issued by other banks and companies in such countries and securities denominated
in or indexed to the currencies of emerging markets. Under current market
conditions, the Portfolio expects its investments in emerging market securities
to consist substantially of Brady Bonds (see "General Policies -- Brady Bonds,"
below) and other sovereign debt securities.
The Portfolio may also invest up to 35% of its total assets in (1) equity
securities of issuers in emerging markets included in the list below under the
caption "Emerging Markets"; (2) equity and debt securities of issuers in
developed countries, including the United States; (3) securities of issuers in
emerging markets not included in the emerging markets list, if investing therein
becomes feasible and desirable subsequent to the date of this Prospectus; and
(4) cash and money market instruments. In evaluating investments in securities
of issuers in developed markets, the Sub-adviser will consider, among other
things, the business activities of the issuer in emerging markets and the impact
that developments in emerging markets are likely to have on the issuer's
financial condition.
Under normal circumstances, substantially all of the Portfolio's assets will be
invested in debt securities of both governmental and corporate issuers in
emerging markets. Emerging markets debt securities generally are considered to
have a credit quality below investment grade, as defined above. Lower quality
securities involve a high degree of risk and are predominantly speculative.
These debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds." See "Risk Factors." Many emerging market debt
securities are not rated by U.S. ratings agencies such as Moody's and S&P. The
Portfolio's ability to achieve its investment objectives is thus more dependent
on the Sub-adviser's credit analysis. The Portfolio may invest in securities
that are in default as to payment of principal and/or interest.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, investors
should be aware that the Fund, unlike mutual funds that directly acquire and
manage their own portfolios of securities, seeks to achieve its investment
objectives by investing all of its investable assets in the Portfolio, which is
a separate investment company. Because the Fund will invest only in the
Portfolio, the Fund's shareholders will acquire only an indirect interest in the
investments of the Portfolio.
The Fund may redeem its investment from the Portfolio at any time, if the Board
of Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment
objectives, policies or limitations that is not approved by the Board or the
shareholders of the Fund could require the Fund to redeem its interest in the
Portfolio. Any such redemption could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. In
addition, a distribution in kind could result in a less diversified portfolio of
investments for the Fund and could adversely
Prospectus Page 7
<PAGE>
AIM GLOBAL HIGH INCOME FUND
affect its liquidity. Upon redemption, the Board would consider what action
might be taken, including the investment of all the investable assets of the
Fund in another pooled investment entity having substantially the same
investment objectives as the Fund or the retention by the Fund of its own
investment adviser to manage its assets in accordance with its investment
objectives, policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may experience different
returns than investors in another investment company that invests exclusively in
the Portfolio. As of the date of this Prospectus, the Fund is the only
institutional investor in the Portfolio.
Investors in the Fund should be aware that the Fund's investment in the
Portfolio may be materially affected by the actions of other large investors, if
any, in the Portfolio. For example, as with all open-end investment companies,
if a large investor were to redeem its interest in the Portfolio, (1) the
Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
GENERAL POLICIES
ASSET ALLOCATION. The Portfolio invests in debt obligations allocated among
diverse markets and denominated in various currencies, including U.S. dollars,
or in multinational currency units such as Euros. The Fund is designed for
investors who wish to accept the risks entailed in such investments, which are
different from those associated with a portfolio consisting entirely of
securities of U.S. issuers denominated in U.S. dollars. The Portfolio may
purchase securities that are issued by the government or a company or financial
institution of one country but denominated in the currency of another country
(or a multinational currency unit).
The Sub-adviser allocates the assets of the Portfolio in securities of issuers
in countries and in currency denominations where the combination of fixed income
market returns, the price appreciation potential of fixed income securities and
currency exchange rate movements will present opportunities primarily for high
current income and secondarily for capital appreciation. In so doing, the Sub-
adviser intends to take full advantage of the different yield, risk and return
characteristics that investment in the fixed income markets of different
countries can provide for U.S. investors. Fundamental economic strength, credit
quality and currency and interest rate trends are the principal determinants of
the emphasis given to various country, geographic and industry sectors within
the Portfolio. Securities held by the Portfolio may be invested in without
limitation as to maturity.
The Sub-adviser selects securities of particular issuers on the basis of its
views as to the best values then currently available in the marketplace. Such
values are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the local and world
economies, movements in the general level and term of interest rates, currency
values, political developments and variations in the supply of funds available
for investment in the world bond market relative to the demands placed upon it.
The Sub-adviser generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation, interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. The Sub-adviser may seek to protect the
Portfolio against such negative currency movements through the use of
sophisticated investment techniques. See "Options, Futures and Forward Currency
Transactions" and "Swaps, Caps, Floors and Collars."
According to the Sub-adviser, as of the date of this Prospectus, more than 50%
of the value of all outstanding government debt obligations throughout the world
is represented by obligations denominated in currencies other than the U.S.
dollar. Moreover, from time to time, the debt securities of issuers located
outside the United States have substantially outperformed the debt obligations
of U.S. issuers. Accordingly, the Sub-adviser believes that the Portfolio's
policy of
Prospectus Page 8
<PAGE>
AIM GLOBAL HIGH INCOME FUND
investing in debt securities of issuers in emerging markets may enable the
achievement of results superior to those produced by mutual funds with similar
objectives to those of the Fund and the Portfolio that invest solely in debt
securities of U.S. issuers.
The Fund is designed for investors who wish to accept the risks entailed in such
investments, which are different from those associated with a portfolio
consisting entirely of securities of U.S. issuers denominated in U.S. dollars.
TEMPORARY DEFENSIVE STRATEGIES. The Sub-adviser may employ a temporary defensive
investment strategy if it determines such a strategy to be warranted due to
market, economic or political conditions. Pursuant to such a defensive strategy,
the Portfolio temporarily may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and/or invest up to 100% of its respective assets
in high quality debt securities or money market instruments of U.S. or foreign
issuers. In addition, for temporary defensive purposes, most or all of the
Portfolio's investments may be made in the United States and denominated in U.S.
dollars. To the extent the Portfolio employs a temporary defensive strategy, it
will not invest so as to achieve directly its investment objectives. In
addition, pending investment of proceeds from new sales of Fund shares or to
meet ordinary daily cash needs, the Portfolio may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest in high
quality foreign or domestic money market instruments. For a full description of
money market instruments, see "Selection of Debt Investments" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
EMERGING MARKET SECURITIES. The Portfolio considers "emerging markets" to
consist of all countries determined by the Sub-adviser to have developing or
emerging economies and markets. These countries generally include every country
in the world except the United States, Canada, Japan, Australia, New Zealand and
most countries located in Western Europe. The Portfolio will consider investment
in the following emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
The Portfolio will not be invested in all such markets at all times. Moreover,
investing in some of those markets currently may not be desirable or feasible,
due to the lack of adequate custody arrangements, overly burdensome repatriation
requirements and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus and the Statement of Additional Information, an
issuer in an emerging market is an entity: (i) for which the principal
securities trading market is an emerging market, as defined above; (ii) that
(alone or on a consolidated basis) derives 50% or more of its total revenue from
either goods produced, sales made or services performed in emerging markets; or
(iii) organized under the laws of, or with a principal office in, an emerging
market.
BRADY BONDS. The Portfolio may invest in "Brady Bonds," which are debt
restructurings that provide for the exchange of cash and loans for newly issued
bonds. Brady Bonds have been issued by the countries of Albania, Argentina,
Brazil, Bulgaria, Costa Rica, Dominican Republic, Ecuador, Ivory Coast, Jordan,
Mexico, Nigeria, Panama, Peru, Philippines, Poland, Uruguay, Venezuela and
Vietnam and are expected to be issued by other emerging market countries. As of
the date of this Prospectus, the Portfolio is not aware of the occurrence of any
payment defaults on Brady Bonds. Investors should recognize, however, that Brady
Bonds do not have a long payment history. In addition, Brady Bonds are often
rated below investment grade.
Prospectus Page 9
<PAGE>
AIM GLOBAL HIGH INCOME FUND
The Portfolio may invest in either collateralized or uncollateralized Brady
Bonds. U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed
rate par bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time of issuance and is adjusted at
regular intervals thereafter.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Portfolio may invest in fixed and
floating rate loans ("Loans") arranged through private negotiations between a
foreign entity and one or more financial institutions ("Lenders"). The majority
of the Portfolio's investments in Loans in emerging markets is expected to be in
the form of participations in Loans ("Participations") and assignments of
portions of Loans from third parties ("Assignments"). Participations typically
will result in the Portfolio having a contractual relationship only with the
Lender, not with the borrower government. The Portfolio will have the right to
receive payments of principal, interest and any fees to which it is entitled
only from the Lender selling the Participation and only upon receipt by the
Lender of the payments from the borrower. In connection with purchasing
Participations, the Portfolio generally will have no right to enforce compliance
by the borrower with the terms of the loan agreement relating to the loan ("Loan
Agreement"), nor any rights of set-off against the borrower, and the Portfolio
may not directly benefit from any collateral supporting the Loan in which it has
purchased the Participation. As a result, the Portfolio will assume the credit
risk of both the borrower and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the
Portfolio may be treated as a general creditor of the Lender and may not benefit
from any set-off between the Lender and the borrower. The Portfolio will acquire
Participations only if the Lender interpositioned between the Portfolio and the
borrower is determined by the Sub-adviser to be creditworthy. When the Portfolio
purchases Assignments from Lenders, the Portfolio will acquire direct rights
against the borrower on the Loan. However, since Assignments are arranged
through private negotiations between potential assignees and assignors, the
rights and obligations acquired by the Portfolio as the purchaser of an
Assignment may differ from, and be more limited than, those held by the
assigning Lender.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities and forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery of the
securities. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
The Portfolio may also sell securities on a "when, as and if issued" basis for
hedging purposes. Under such a transaction, the Portfolio is required to deliver
at a future date a security it does not presently hold, but which it has a right
to receive if the security is issued. Issuance of the security may not occur, in
which case the Portfolio would have no obligation to the other party, and would
not receive payment for the sale. Selling securities on a "when, as and if
issued" basis may reduce risk of loss to the extent that such a sale wholly or
partially offsets unfavorable price movements on the investments being hedged.
However, such sales also limit the amount the Portfolio can receive if the
"when, as and if issued" security is in fact issued.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio is
authorized to borrow money from banks in an amount up to 33 1/3% of its total
assets (including the amount borrowed), less all liabilities and indebtedness
other
Prospectus Page 10
<PAGE>
AIM GLOBAL HIGH INCOME FUND
than the borrowings and may use the proceeds of such borrowings for investment
purposes. The Portfolio will borrow for investment purposes only when the
Sub-adviser believes that such borrowings will benefit the Portfolio after
taking into account considerations such as the costs of the borrowing and the
likely investment returns on the securities purchased with the borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Portfolio creates the opportunity for increased
net income and appreciation but, at the same time, involves special risk
considerations. For example, leveraging might exaggerate changes in the net
asset value of Fund shares and in the yield realized by the Portfolio. Although
the principal amount of such borrowings will be fixed, the Portfolio's assets
may change in value during the time the borrowing is outstanding. By leveraging
the Portfolio, changes in net asset values, higher or lower, may be greater in
degree than if leverage was not employed. To the extent the income derived from
the assets obtained with borrowed funds exceeds the interest and other expenses
that the Portfolio will have to pay, the Portfolio's net income will be greater
than if borrowing was not used. Conversely, if the income from the assets
obtained with borrowed funds is not sufficient to cover the cost of borrowing,
the net income of the Portfolio will be less than if borrowing were not used,
and therefore the amount available for distribution to shareholders as dividends
will be reduced. The Portfolio each expects that some of its borrowings may be
made on a secured basis.
In addition to the foregoing borrowings, the Portfolio may borrow money for
temporary or emergency purposes or payments in an amount not exceeding 5% of the
value of its total assets (not including the amount borrowed) provided that the
total amount borrowed by the Portfolio for any purpose does not exceed 33 1/3%
of its total assets.
The Portfolio may also enter into reverse repurchase agreements with a bank or
recognized securities dealer. Under a reverse repurchase agreement, the
Portfolio would sell securities and agree to repurchase them at a particular
price at a future date. At the time the Portfolio enters into a reverse
repurchase agreement, it will establish and maintain a segregated account with
an approved custodian containing cash or liquid securities having a value not
less than the repurchase price, including accrued interest. Reverse repurchase
agreements involve the risk that the market value of the securities retained in
lieu of sale by the Portfolio may decline below the price of the securities the
Portfolio has sold but is obligated to repurchase. In the event the buyer of
securities under a reverse repurchase agreement files for bankruptcy or becomes
insolvent, such buyer or its trustee or receiver may receive an extension of
time to determine whether to enforce the Portfolio's obligation to repurchase
the securities, and the Portfolio's use of the proceeds of the reverse
repurchase agreement may effectively be restricted pending such decision.
The Portfolio also may enter into "dollar rolls," in which the Portfolio sells
fixed income securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar (same type, coupon and maturity)
securities on a specified future date. During the roll period, the Portfolio
would forego principal and interest paid on such securities. The Portfolio would
be compensated by the difference between the current sales price and the forward
price for the future purchase, as well as by the interest earned on the cash
proceeds of the initial sale. See "Investment Objectives and Policies" in the
Statement of Additional Information.
Reverse repurchase agreements and dollar rolls will be treated as borrowings and
will be deducted from the Portfolio's assets for purposes of calculating
compliance with the Portfolio's borrowing limitation. See "Investment
Limitations" in the Statement of Additional Information.
SECURITIES LENDING. The Portfolio may lend its respective portfolio securities
to broker/dealers or to other institutional investors. Securities lending allows
a Fund to retain ownership of the securities loaned and, at the same time,
enhances a Fund's total return. At all times a loan is outstanding, the
Portfolio requires the borrower to maintain with the Portfolio's custodian,
collateral consisting of cash, U.S. government securities, or certain
irrevocable letters of credit equal to at least the value of the borrowed
securities, plus any accrued interest or such other collateral as permitted by a
Fund's investment program and regulatory agencies, and as approved by the Board.
The Portfolio limits its loans of portfolio securities to an aggregate of 30% of
the value of its total assets, measured at the time any such loan is made. The
risks in lending portfolio securities, as with other extensions of secured
credit, consist of possible delays in receiving additional collateral or in
recovery of the loaned securities and possible loss of rights in the collateral
should the borrower fail financially.
Prospectus Page 11
<PAGE>
AIM GLOBAL HIGH INCOME FUND
ZERO COUPON SECURITIES. The Portfolio may invest in certain zero coupon
securities that are "stripped" U.S. Treasury notes and bonds. They also may
invest in zero coupon and other deep discount securities issued by foreign
governments and domestic and foreign corporations, including certain Brady Bonds
and other foreign debt and in payment-in-kind securities. Zero coupon securities
pay no interest to holders prior to maturity, and payment-in-kind securities pay
interest in the form of additional securities. However, a portion of the
original issue discount on zero coupon securities and the "interest" on
payment-in-kind securities will be included in the Portfolio's income.
Accordingly, for a Fund to continue to qualify for tax treatment as a regulated
investment company and to avoid a certain excise tax (see "Taxes" in the
Statement of Additional Information), it may be required to distribute an amount
that is greater than its share of the total amount of cash the Portfolio
actually receives. These distributions must be made from the Fund's, or its
share of the Portfolio's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Portfolio will not be able to purchase
additional income-producing securities with cash used to make such
distributions, and its current income ultimately may be reduced as a result.
Zero coupon and payment-in-kind securities usually trade at a deep discount from
their face or par value and will be subject to greater fluctuations of market
value in response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS. The Portfolio may utilize combinations of futures
on bonds and forward currency contracts to create investment positions that have
substantially the same characteristics as bonds of the same type as those on
which the futures contracts are written. Investment positions of this type are
generally referred to as "synthetic securities."
For example, in order to establish a synthetic security position the Portfolio
that is comparable to owning a Japanese government bond, the Sub-adviser might
purchase futures contracts on Japanese government bonds in the desired principal
amount and purchase forward currency contracts for Japanese Yen in an amount
equal to the then current purchase price for such bonds in the Japanese cash
market, with each contract having approximately the same delivery date.
The Sub-adviser might roll over the futures and forward currency contract
positions before taking delivery in order to continue the Portfolio's investment
position, or the Sub-adviser might close out those positions, thus effectively
selling the synthetic security. Further, the amount of each contract might be
adjusted in response to market conditions and the forward currency contract
might be changed in amount or eliminated in order to hedge against currency
fluctuations.
The Sub-adviser would create synthetic security positions for the Portfolio when
it believes that it can obtain a better yield or achieve cost savings in
comparison to purchasing actual bonds or when comparable bonds are not readily
available in the market. Synthetic security positions are subject to the risk
that changes in the value of purchased futures contracts may differ from changes
in the value of the bonds that might otherwise have been purchased in the cash
market. Also, while the Sub-adviser believes that the cost of creating synthetic
security positions generally will be materially lower than the cost of acquiring
comparable bonds in the cash market, the Portfolio will incur transaction costs
in connection with each purchase of a futures or forward currency contract. The
use of futures contracts and forward currency contracts to create synthetic
security positions also is subject to substantially the same risks as those that
exist when these instruments are used in connection with hedging strategies. See
"Options, Futures and Forward Currency Transactions" below and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies, and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the Portfolio's investment. The Portfolio also may enter into
interest rate, currency and index swaps and purchase or sell related caps,
floors and collars and other similar instruments. See "Swaps, Caps, Floors and
Collars" below. These instruments are often referred to as "derivatives," which
may be defined as financial instruments whose performance is derived, at least
in part, from the performance of another asset (such as a security, currency or
an index of securities). The Portfolio may enter into such instruments up to the
full value of its portfolio assets. See "Risk Factors -- Options, Futures and
Forward Currency Transactions" herein and "Options, Futures and Currency
Prospectus Page 12
<PAGE>
AIM GLOBAL HIGH INCOME FUND
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to the Portfolio's portfolio positions. The Portfolio also may purchase
and sell put and call options on currencies, futures contracts on currencies and
options on such futures contracts to hedge against movements in exchange rates.
In addition, the Portfolio may purchase and sell put and call options on
securities to hedge against the risk of fluctuations in the prices of securities
held by the Portfolio or that the Sub-adviser intends to include in the
Portfolio's holdings. The Portfolio also may purchase and sell put and call
options on indices to hedge against overall fluctuations in the securities
markets generally or in a specific market sector.
Further, the Portfolio may sell index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general market or market sector decline that could adversely affect the
Portfolio's holdings. The Portfolio also may purchase index futures contracts
and purchase call options or write put options on such contracts to hedge
against a general market or market sector advance and thereby attempt to lessen
the cost of future securities acquisitions. The Portfolio may use interest rate
futures contracts and options thereon to hedge its portfolio against changes in
the general level of interest rates.
SWAPS, CAPS, FLOORS AND COLLARS. The Portfolio may enter into interest rate,
currency and index swaps, and purchase or sell related caps, floors and collars
and other derivative instruments. The Portfolio expects to enter into these
transactions primarily to preserve a return or spread on a particular investment
or portion of its portfolio, to protect against currency fluctuations, as a
technique for managing the portfolio's duration (I.E., the price sensitivity to
changes in interest rates) or to protect against any increase in the price of
securities the Portfolio anticipates purchasing at a later date. The Portfolio
intends to use these transactions as hedges, and neither will sell interest rate
caps or floors if it does not own securities or other instruments providing an
income stream roughly equivalent to what the Portfolio may be obligated to pay.
Interest rate swaps involve the exchange by the Portfolio with another party of
their respective commitments to pay or receive interest (for example, an
exchange of floating rate payments for fixed rate payments) with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount based on changes in the values of the reference
indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a combination of a
cap and a floor that preserves a certain return within a predetermined range of
interest rates or values.
INDEXED COMMERCIAL PAPER. The Portfolio may invest without limitation in
commercial paper which is indexed to certain specific foreign currency exchange
rates. The terms of such commercial paper provide that its principal amount is
adjusted upwards or downwards (but not below zero) at maturity to reflect
changes in the exchange rate between two currencies while the obligation is
outstanding. The Portfolio will purchase such commercial paper with the currency
in which it is denominated and, at maturity, will receive interest and principal
payments thereon in that currency, but the amount of principal payable by the
issuer at maturity will change in proportion to the change (if any) in the
exchange rate between the two specified currencies between the date the
instrument is issued and the date the instrument matures. While such commercial
paper entails the risk of loss of principal, the potential for realizing gains
as a result of changes in foreign currency exchange rates enables the Portfolio
to hedge against a decline in the U.S. dollar value of investments denominated
in foreign currencies while seeking to provide an attractive money market rate
of return. The Portfolio will not purchase such commercial paper for
speculation.
OTHER INDEXED SECURITIES. The Portfolio may invest in certain other indexed
securities, which are securities whose prices are indexed to the prices of
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AIM GLOBAL HIGH INCOME FUND
other securities, securities indices, currencies, precious metals or other
commodities, or other financial indicators. Indexed securities typically, but
not always, are debt securities or deposits whose value at maturity or coupon
rate is determined by reference to a specific instrument or statistic. The
performance of indexed securities depends to a great extent on the performance
of the security, currency, or other instrument to which they are indexed, and
may also be influenced by interest rate changes in the United States and abroad.
At the same time, indexed securities are subject to the credit risks associated
with the issuer of the security, and their values may decline substantially if
the issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments. New forms of indexed securities
continue to be developed. The Portfolio may invest in such securities to the
extent consistent with its investment objectives.
OTHER INFORMATION. The Fund's investment objectives may not be changed without
the approval of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this prospectus
and in the Statement of Additional Information are not fundamental policies and
may be changed by the Company's Board of Trustees without shareholder approval.
The investment policies of the Fund are identical to the investment policies of
the portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is not
required to change the investment objectives, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objectives.
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. See "Investment Objectives and Policies -- Short
Sales" in the Statement of Additional Information.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Portfolio's investment policies or restrictions.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objectives. The Portfolio's net asset value will fluctuate,
reflecting fluctuations in the market value of its portfolio positions and its
net currency exposure. The value of fixed income securities held by the
Portfolio generally fluctuates inversely with interest rate movements. Longer
term bonds held by the Portfolio are subject to greater interest rate risk.
NON-DIVERSIFIED CLASSIFICATION. The Fund and the Portfolio are classified under
the Investment Company Act of 1940 (the "1940 Act") as a "non-diversified" fund.
As a result, the Portfolio will be able to invest in a fewer number of issuers
than if it were classified under the 1940 Act as a "diversified" fund. To the
extent that the Portfolio invests in a smaller number of issuers, the value of
the Fund's shares may fluctuate more widely and the Portfolio may be subject to
greater investment and credit risk with respect to the portfolios.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally are not registered with the SEC, nor
are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform
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AIM GLOBAL HIGH INCOME FUND
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. Securities of some foreign
companies are less liquid and their prices may be more volatile than securities
of comparable domestic companies. The Portfolio's interest and dividends from
foreign issuers may be subject to non-U.S. withholding taxes, thereby reducing
their net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political or social instability, or diplomatic
developments which could affect the investments of the Portfolio in those
countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, rate of savings and capital reinvestment, resource
self-sufficiency and balance of payments positions.
CURRENCY RISK. Since the Portfolio normally invests substantially in securities
denominated in currencies other than the U.S. dollar, and because they may hold
foreign currencies, they will be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rates between such currencies and
the U.S. dollar. Changes in currency exchange rates will influence the value of
the Fund's shares, and also may affect the value of dividends and interest
earned by the Fund and gains and losses realized by the Fund. Currencies
generally are evaluated on the basis of fundamental economic criteria (e.g.,
relative inflation and interest rate levels and trends, growth rate forecasts,
balance of payments status and economic policies) as well as technical and
political data. The exchange rates between the U.S. dollar and other currencies
are determined by supply and demand in the currency exchange markets, the
international balance of payments, governmental intervention, speculation and
other economic and political conditions. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, a decline in the exchange rate of the
currency would adversely affect the value of the security expressed in U.S.
dollars.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Portfolio should be
considered speculative. Investors are strongly advised to consider carefully the
special risks involved in emerging markets, which are in addition to the usual
risks of investing in developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Portfolio could lose its entire investment in that market.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to
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AIM GLOBAL HIGH INCOME FUND
emerging markets. Such markets have different settlement and clearance
procedures. In certain markets there have been times when settlements have been
unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. The inability of the Portfolio to make
intended securities purchases due to settlement problems could cause the
Portfolio to forego attractive investment opportunities. Inability to dispose of
a portfolio security caused by settlement problems could result either in losses
to the Portfolio due to subsequent declines in value of the portfolio security
or, if the Portfolio has entered into a contract to sell the security, could
result in possible liability to the purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Portfolio's portfolio securities in
such markets may not be readily available. Section 22(e) of the 1940 Act permits
a registered investment company to suspend redemption of its shares for any
period during which an emergency exists, as determined by the SEC. Accordingly,
when the Portfolio believes that appropriate circumstances warrant, it will
promptly apply to the SEC for a determination that an emergency exists within
the meaning of Section 22(e) of the 1940 Act. During the period commencing from
the Portfolio's identification of such conditions until the date of SEC action,
the portfolio securities of the Portfolio in the affected markets will be valued
at fair value as determined in good faith by or under the direction of the
Trust's or the Portfolio's Boards of Trustees.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Portfolio may have difficulty disposing
of Assignments and Participations. The liquidity of such securities is limited
and the Portfolio anticipates that such securities could be sold only to a
limited number of institutional investors. The lack of a liquid secondary market
could have an adverse impact on the value of such securities and on the
Portfolio's ability to dispose of particular Assignments or Participations when
necessary to meet the Portfolio's liquidity needs or in response to a specific
economic event, such as a deterioration in the creditworthiness of the borrower.
The lack of a liquid secondary market for Assignments and Participations also
may make it more difficult for the Portfolio to assign a value to those
securities for purposes of valuing the Portfolio's portfolio and calculating its
net asset value.
SOVEREIGN DEBT. The Portfolio may invest in sovereign debt securities of
emerging market governments, including Brady Bonds. Investments in such
securities involve special risks. The issuer of the debt or the governmental
authorities that control the repayment of the debt may be unable or unwilling to
repay principal or interest when due in accordance with the terms of such debt.
Periods of economic uncertainty may result in the volatility of market prices of
sovereign debt obligations and in turn a Fund's net asset value, to a greater
extent than the volatility inherent in domestic fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Portfolio's
investments. Emerging markets are faced with social and political issues and
some of them have experienced high rates of inflation in recent years and have
extensive internal debt. Among other effects, high inflation and internal debt
service requirements may adversely affect the cost and availability of future
domestic sovereign borrowing to finance governmental programs, and may have
other adverse social, political and economic consequences. Political changes or
a deterioration of a
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AIM GLOBAL HIGH INCOME FUND
country's domestic economy or balance of trade may affect the willingness of
countries to service their sovereign debt. Although the Sub-adviser intends to
manage the Portfolio in a manner that will minimize the exposure to such risks,
there can be no assurance that adverse political changes will not cause the
Portfolio to suffer a loss of interest or principal on any of its holdings.
In recent years, some of the emerging market countries in which the Portfolio
expects to invest have encountered difficulties in servicing their sovereign
debt obligations. Some of these countries have withheld payments of interest
and/or principal of sovereign debt. These difficulties have also led to
agreements to restructure external debt obligations -- in particular, commercial
bank loans, typically by rescheduling principal payments, reducing interest
rates and extending new credits to finance interest payments on existing debt.
In the future, holders of emerging market sovereign debt securities may be
requested to participate in similar rescheduling of such debt. Certain emerging
market countries are among the largest debtors to commercial banks and foreign
governments. Currently, Brazil, Mexico and Argentina are the largest debtors
among developing countries. At times certain emerging market countries have
declared moratoria on the payment of principal and interest on external debt;
such a moratorium is currently in effect in certain emerging market countries.
There is no bankruptcy proceeding by which a creditor may collect in whole or in
part sovereign debt on which an emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Portfolio may invest involve great risk. As noted above, sovereign debt
obligations issued by emerging market governments generally are deemed to be the
equivalent in terms of quality to securities rated below investment grade by
Moody's and S&P. Such securities are regarded as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations and involve major risk exposure to
adverse conditions. Some of such securities, with respect to which the issuer
currently may not be paying interest or may be in payment default, may be
comparable to securities rated D by S&P or C by Moody's. The Portfolio may have
difficulty disposing of and valuing certain sovereign debt obligations because
there may be a limited trading market for such securities. Because there is no
liquid secondary market for many of these securities, the Portfolio anticipates
that such securities could be sold only to a limited number of dealers or
institutional investors.
LOWER QUALITY DEBT SECURITIES. Under normal market conditions the Portfolio may
invest up to 100% of the Portfolio's total assets in debt securities rated below
investment grade. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest quality debt that is not in default as to
principal or interest and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than higher quality securities with regard to a deterioration of general
economic conditions. These securities are the equivalent of high yield, high
risk bonds, commonly known as "junk bonds." As noted above, the Portfolio may
invest in debt securities rated below C, which are in default as to principal
and/or interest.
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit quality in
Prospectus Page 17
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AIM GLOBAL HIGH INCOME FUND
response to subsequent events, so that an issuer's current financial condition
may be better or worse than a rating indicates. See "Appendix A" for a
discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Portfolio may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
In addition, the Portfolio may have difficulty disposing of lower quality
securities because there may be a thin trading market for such securities. There
may be no established retail secondary market for many of these securities, and
the Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market also may have an adverse impact on market prices of such instruments and
may make it more difficult for the Portfolio to obtain accurate market
quotations for purposes of valuing the securities in the Portfolio. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may also decrease the values and liquidity of lower quality
securities, especially in a thinly traded market. The Portfolio also may acquire
lower quality debt securities during an initial underwriting or may acquire
lower quality debt securities which are sold without registration under
applicable securities laws. Such securities involve special considerations and
risks.
Factors having an adverse effect on the market value of lower rated securities
or their equivalents purchased by the Portfolio will adversely impact net asset
value of the Fund. See "Risk Factors" in the Statement of Additional
Information. In addition to the foregoing, such factors may include: (i)
potential adverse publicity; (ii) heightened sensitivity to general economic or
political conditions; and (iii) the likely adverse impact of a major economic
recession. The Portfolio also may incur additional expenses to the extent it is
required to seek recovery upon a default in the payment of principal or interest
on its portfolio holdings, and the Portfolio may have limited legal recourse in
the event of a default. Debt securities issued by governments in emerging
markets can differ from debt obligations issued by private entities in that
remedies from defaults generally must be pursued in the courts of the defaulting
government, and legal recourse is therefore somewhat diminished. Political
conditions, in terms of a government's willingness to meet the terms of its debt
obligations, also are of considerable significance. There can be no assurance
that the holders of commercial bank debt may not contest payments to the holders
of debt securities issued by governments in emerging markets in the event of
default by the governments under commercial bank loan agreements.
As of October 31, 1997, the Portfolio had 86.59% of its total net assets in debt
securities that received a rating from Moody's and 10.29% of its total net
assets in debt securities that were not so rated. In addition, the Portfolio had
3.12%, of its total net assets in cash and net receivables. The Portfolio had
the following percentages of its total net assets invested in rated securities:
Aaa -- 7.99%, Aa -- 0.00%, A -- 0.00%, Baa -- 13.11%, Ba -- 48.56%, B -- 16.93%,
Caa -- 0.00%, Ca -- 0.00%, C -- 0.00%. Included under the unrated category are
securities held by the Portfolio's total net assets which have been determined
by the Sub-adviser to be of comparable quality to securities in the following
rating categories: Ba -- 3.22%; and B -- 7.07%. It should be noted that the
allocation of the investments of the Portfolio by rating on
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AIM GLOBAL HIGH INCOME FUND
any given date will vary and should not be considered representative of the
future portfolio composition of the Portfolio.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Portfolio is
authorized to enter into options, futures and forward currency transactions, the
Portfolio might not enter into any such transactions. In addition, issuers in
emerging markets typically are subject to a greater degree of change in earnings
and business prospects than issuers in developed countries. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the Portfolio to sell a security at a disadvantageous time, due to the need for
the Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets, in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
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MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's and the Portfolio's Boards of Trustees have overall responsibility
for the operation of the Fund and the Portfolio, respectively. The Trust's and
Portfolio's Boards of Trustees have approved all significant agreements between
the Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administration agreement with AIM, the investment sub-advisory
and sub-administration agreement between AIM and the Sub-adviser, the agreements
with AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the objective and policies of the Fund and the
Portfolio and to the general supervision of the Boards. See "Trustees and
Executive Officers" in the Statement of Additional Information for information
on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Portfolio's investment managers and administrators include,
but are not limited to, determining the composition of the investment holdings
of the Portfolio and placing orders to buy, sell or hold particular securities.
In addition, AIM and the Sub-adviser provide the following administration
services to the Fund and the Portfolio: furnishing corporate officers and
clerical staff; providing office space, services and equipment; and supervising
all matters relating to the Portfolio's operation.
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AIM GLOBAL HIGH INCOME FUND
The Fund pays AIM administration fees at the annualized rate of 0.25% of the
Fund's average daily net assets. AIM has appointed the Sub-adviser as the Fund's
sub-administrator. In addition, the Fund bears its pro rata portion of the
investment management and administration fees paid by the Portfolio to AIM and
the Sub-adviser. The Portfolio pays AIM such fees, based on the average daily
net assets of the Portfolio at the annualized rate of .475% on the first $500
million, .45% on the next $1 billion, .425% on the next $1 billion and .40% on
amounts thereafter, plus 2% of the Portfolio's total investment income as stated
in the Portfolio's Statement of Operations, calculated in accordance with
generally accepted accounting principles, adjusted daily for currency
revaluations, on a marked to market basis, of the Portfolio's assets; provided,
however, that during any fiscal year this amount shall not exceed 2% of the
Portfolio's total investment income calculated in accordance with generally
accepted accounting principles. Out of its aggregate fees payable by the Fund
and the Portfolio, AIM pays the Sub-adviser sub-advisory and sub-administration
fees equal to 40% of the aggregate fees AIM receives from the Fund and the
Portfolio. The investment management and administration fees paid by the Fund
and the Portfolio are higher than those paid by most mutual funds. The Fund and
Portfolio pay all expenses not assumed by AIM, the Sub-adviser, AIM Distributors
or other agents. AIM has undertaken to limit the expenses of the Class A and
Class B shares of the Fund (and the Fund's pro-rata portion of the Portfolio's
expenses) to the maximum annual rate of 2.25% and 2.85% of the average daily net
assets of the Fund's Class A and Class B shares, respectively.
The Sub-adviser also serves as the Fund's and the Portfolio's pricing and
accounting agent. For these services the Sub-adviser receives a fee consisting
of 0.03% of the first $5 billion of assets, and 0.02% of the assets in excess of
$5 billion, of the AIM Funds that are sub-advised by the Sub-adviser (other than
AIM Eastern Europe Fund). Each of these funds, including the Fund and the
Portfolio, pays an amount based upon its relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Portfolio pursuant to
an investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices, including investment offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong,
London, Singapore, Sydney, Tokyo and Toronto. In managing the Fund and the
Portfolio, the Sub-adviser employs a team approach, taking advantage of its
investment resources around the world.
Prospectus Page 20
<PAGE>
AIM GLOBAL HIGH INCOME FUND
The investment professionals primarily responsible for the portfolio management
of the Portfolio are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau Portfolio Manager since Chief Investment Officer for Global Fixed Income for the Sub-adviser
New York 1997 since October 1996. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from July
1995 to October 1996. Employed by Chancellor Capital Management,
Inc. ("Chancellor Capital"), a predecessor of the Sub-Adviser, from
1995 to October 1996. Senior Vice President and Senior Portfolio
Manager for Fiduciary Trust Company International from 1993 to
1995. Vice President at Bankers Trust Company from 1991 to 1993.
Craig Munro Portfolio Manager since Portfolio Manager for the Sub-adviser since August 1997. Vice
New York 1998 President and Senior Analyst in the Emerging Markets Group of the
Global Fixed Income Division of Merrill Lynch Asset Management from
1993 to August 1997.
</TABLE>
------------------------
In placing orders for the Portfolio's securities transactions, the Sub-adviser
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Sub-adviser may consider a broker/dealer's sale of
shares of the AIM Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions for the Portfolio may be
executed through affiliates of AIM or the Sub-adviser. High portfolio turnover
(over 100%) involves correspondingly greater brokerage commissions and other
transaction costs that the Fund or the Portfolio will bear directly and could
result in the realization of net capital gains which would be taxable when
distributed to shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. Certain Trustees and
officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund 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 of the
Fund 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 the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges 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 shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay contingent deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to
Prospectus Page 21
<PAGE>
AIM GLOBAL HIGH INCOME FUND
compensate AIM Distributors for the purpose of financing any activity that is
intended to result in the sale of Class A shares of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense 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 the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
Prospectus Page 22
<PAGE>
AIM GLOBAL HIGH INCOME FUND
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust.
From time to time, the Trust may establish other funds, each corresponding to a
distinct investment portfolio and a distinct series of the Trust's shares of
beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that Class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a Delaware business
trust. Under Delaware law, the Fund and other entities that invest in the
Portfolio enjoy the same limitations of liability extended to shareholders of
private, for-profit corporations. There is a remote possibility, however, that
under certain circumstances an investor in the Portfolio may be held liable for
the Portfolio's
Prospectus Page 23
<PAGE>
AIM GLOBAL HIGH INCOME FUND
obligations. However, the Agreement and Declaration of Trust of the Portfolio
disclaims shareholder liability for acts or obligations of the Portfolio and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Portfolio or a trustee. The
Agreement and Declaration of Trust also provides for indemnification from the
Portfolio property for all losses and expenses of any shareholder held
personally liable for the Portfolio's obligations. Thus the risk of an investor
incurring financial loss on account of such liability is limited to
circumstances in which the Portfolio itself would be unable to meet its
obligations and where the other party was held not to be bound by the
disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of Fund shareholders and will cast its vote as
instructed by Fund shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
COUNSEL The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the Fund and
to the Portfolio.
Prospectus Page 24
<PAGE>
AIM GLOBAL HIGH INCOME FUND
APPENDIX A
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
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 edged." 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 risk appear somewhat
larger than the 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
some time 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.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are 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 which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Prospectus Page 25
<PAGE>
AIM GLOBAL HIGH INCOME FUND
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
Prospectus Page 26
<PAGE>
AIM GLOBAL HIGH INCOME FUND
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
Prospectus Page 27
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
A-1
<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
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AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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AIM INVESTOR'S GUIDE
- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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AIM INVESTOR'S GUIDE
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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AIM INVESTOR'S GUIDE
number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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AIM INVESTOR'S GUIDE
the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
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AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
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AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
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AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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<PAGE>
AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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<PAGE>
AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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<PAGE>
AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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<PAGE>
AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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<PAGE>
AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
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AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
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AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
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AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
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<PAGE>
AIM GLOBAL HIGH INCOME FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL INFRASTRUCTURE FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global High Infrastructure Fund
(the "Fund"), which is one of several series investment portfolios comprising
AIM Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a diversified portfolio which seeks long-term capital
growth by investing all of its investable assets in the Global Infrastructure
Portfolio ("Portfolio"), which, in turn, invests primarily in equity securities
of companies throughout the world that design, develop or provide products and
services significant to a country's infrastructure. The Portfolio's investment
objective is identical to that of the Fund. The investment experience of the
Fund will correspond directly with the investment experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. Additional information
about the Fund may also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 7
Risk Factors.............................................................................. 11
Management................................................................................ 14
Other Information......................................................................... 17
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund and the Portfolio: The Fund is a diversified series of the Trust. The Portfolio is a diversified series of Global
Investment Portfolio.
Investment Objective: The Fund seeks long-term capital growth.
Principal Investments: The Fund invests all of its investable assets in the Portfolio, which, in turn, invests primarily in
equity securities of companies throughout the world that design, develop or provide products and
services significant to a country's infrastructure.
Investment Managers: The Portfolio is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution agreements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calendar month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The
distributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"), Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
date such shares were purchased will not be subject to any contingent deferred sales charge. See "How
to Redeem Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund or the Portfolio will achieve its investment objective. The
Fund's net asset value will fluctuate, reflecting fluctuations in the market value of the Portfolio's
portfolio holdings. The Portfolio's policy of concentrating its investments in companies that design,
develop or provide products and services significant to a country's infrastructure may cause the
Fund's net asset value to fluctuate more than if it invested in a greater number of industries.
The Portfolio may invest in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Portfolio may engage in certain foreign currency, options and futures transactions to attempt to
hedge against the overall level of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and transaction costs.
The Portfolio may invest up to 20%, of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
SHAREHOLDER TRANSACTION COSTS (2):
<S> <C> <C>
Maximum sales charge on purchases of shares
(as a % of offering price).......................... 4.75% None
Sales charges on reinvested distributions to
shareholders........................................ None None
Maximum deferred sales charge (as a % of net asset
value at time of purchase or sale, whichever is
less)............................................... None 5.00%
Redemption charges................................... None None
Exchange fees........................................ None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees........ 0.98% 0.98%
12b-1 distribution and service fees.................. 0.50% 1.00%
Other expenses (after reimbursements and waivers).... 0.52% 0.52%
------- -------
Total Fund Operating Expenses........................ 2.00% 2.50%
------- -------
------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (6):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
TEN
ONE THREE FIVE YEARS
YEAR YEARS YEARS (7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (4)........................... $67 $108 $151 $270
Class B Shares:
Assuming a complete redemption at end of
period (5)................................ $77 $111 $157 [ ]
Assuming no redemption..................... $26 $ 79 $135 [ ]
<FN>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997
restated to reflect AIM's undertaking to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 2.00% and 2.50% of the average daily net
assets of the Fund's Class A and Class B shares, respectively. Without
reimbursements and waivers, "Other Expenses" and "Total Fund Operating
Expenses" would have been 0.60% and 2.08%, respectively, for Class A shares
and 0.60% and 2.58%, respectively, for Class B shares of the Fund. "Other
expenses" include custody, transfer agency, legal, audit and other
operating expenses. See "Management" herein and the Statement of Additional
Information for more information.
The Board of Trustees of the Trust believes that the aggregate per share
expenses of the Fund and the Portfolio will be approximately equal to the
expenses the Fund would incur if its assets were invested directly in the
type of securities being held by the Portfolio.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
(6) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S
DIRECT AND INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The
table and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds. The
5% annual return is not a prediction of and does not represent the Fund's
or the Portfolio's projected or actual performance.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
</TABLE>
Prospectus Page 5
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM GLOBAL INFRASTRUCTURE FUND
(FORMERLY GT GLOBAL INFRASTRUCTURE FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INFRASTRUCTURE FUND
The Fund's investment objective is long-term capital growth. It seeks its
objective by investing all of its investable assets in the Portfolio, which, in
turn, invests primarily in equity securities of companies throughout the world
that design, develop or provide products and services significant to a country's
infrastructure. The Portfolio's investment objective is identical to that of the
Fund. There can be no assurance that the Fund or Portfolio will achieve its
investment objective.
At least 65% of the Portfolio's total assets normally will be invested in common
and preferred stocks and warrants to acquire such securities issued by
infrastructure companies. An "infrastructure" company is an entity in which (i)
at least 50% of either the revenues or earnings was derived from infrastructure
activities, or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the Portfolio's
assets may be invested in debt securities issued by infrastructure companies
and/or equity and debt securities of companies outside of the infrastructure
industries, which, in the opinion of the Sub-adviser, stand to benefit from
developments in the infrastructure industries.
GLOBAL INFRASTRUCTURE INDUSTRIES INVESTMENT. Examples of infrastructure
companies include those engaged in designing, developing or providing the
following products and services: electricity production; oil, gas, and coal
exploration, development, production and distribution; water supply, including
water treatment facilities; nuclear power and other alternative energy sources;
transportation, including the construction or operation of transportation
systems; steel, concrete, or similar types of products; communications equipment
and services (including equipment and services for both data and voice
transmission); mobile communications and cellular radio/paging; emerging
technologies combining telephone, television and/or computer systems; and other
products and services, which, in the Sub-adviser's judgment, constitute services
significant to the development of a country's infrastructure.
The Sub-adviser believes that a country's infrastructure is one key to the
long-term success of that country's economy. The Sub-adviser believes that
adequate energy, transportation, water, and communications systems are essential
elements for long-term economic growth. The Sub-adviser believes that many
developing nations, especially in Asia and Latin America, plan to make
significant expenditures to the development of their infrastructure in the
coming years, which is expected to facilitate increased levels of services and
manufactured goods.
In the developed countries of North America, Europe, Japan and the Pacific Rim,
the Sub-adviser expects that the replacement and upgrade of transportation and
communications systems should stimulate growth in the infrastructure industries
of those countries. In addition, in the Sub-adviser's view, deregulation of
telecommunications and electric and gas utilities in many countries is promoting
significant changes in these industries.
The Sub-adviser believes that strong economic growth in developing countries and
infrastructure replacement, upgrade, and deregulation in more developed
countries provide an environment for favorable investment opportunities in
infrastructure companies worldwide. In addition, the long-term growth rates of
certain foreign countries' economies may be substantially higher than the
long-term growth rate of the U.S. economy. An integral aspect of certain foreign
countries' economies may be the development or improvement of their
infrastructure.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. The Portfolio expects that, from
time to time, a significant portion of its assets may be invested in the
securities of domestic issuers. The industry represented in the Portfolio,
however, is a global industry with significant, growing markets outside of the
United States. A sizeable proportion of the companies which comprise the
infrastructure industries are headquartered outside of the United States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Portfolio. The Sub-adviser uses its financial
expertise in markets
Prospectus Page 7
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
located throughout the world and the substantial global resources of AMVESCAP
PLC in attempting to identify those countries and companies then providing the
greatest potential for long-term capital appreciation. In this fashion, the
Sub-adviser seeks to enable shareholders to capitalize on the substantial
investment opportunities and the potential for long-term growth of capital
presented by the global infrastructure industry represented in the Portfolio.
The Sub-adviser allocates the Portfolio's assets among securities of countries
and in currency denominations where opportunities for meeting the Portfolio's
investment objective are expected to be the most attractive. The Portfolio may
invest substantially in securities denominated in one or more currencies. Under
normal conditions, the Portfolio invests in the securities of issuers located in
at least three countries, including the United States; investments in securities
of issuers in any one country, other than the United States, will represent no
more than 50% of the Portfolio's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Portfolio may invest up to
100% of its total assets in cash (U.S. dollars, foreign currencies or
multinational currency units such as Euros) and/or high quality debt securities
or money market instruments of U.S. or foreign issuers. In addition, for
temporary defensive purposes, most or all of the Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Portfolio adopts a temporary defensive posture, it will not be invested so as to
achieve directly its investment objective. In addition, pending investment of
proceeds from new sales of Fund shares or to meet its ordinary daily cash needs,
the Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest in foreign or domestic high quality money market
instruments. For a full description of money market instruments, see "Money
Market Instruments" in the "Investment Objectives and Policies" section of the
Statement of Additional Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Portfolio in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Portfolio to participate in privatizations may be limited by local
law, or the terms on which the Portfolio may be permitted to participate may be
less advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Portfolio may invest up to 10% of
its total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Portfolio
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time, the Portfolio would
continue to pay its own management fees and other expenses. AIM and the
Sub-adviser will waive their advisory fees to the extent that the Portfolio
invests in an Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemptions of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of its shares than would be the case if the Portfolio did not
borrow.
Prospectus Page 8
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
A reverse repurchase agreement is a borrowing transaction in which the Portfolio
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Portfolio's sale of securities together with
its commitment (for which the Portfolio may receive a fee) to purchase similar,
but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolio to retain ownership of the securities loaned and, at the same
time, enhances the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other collateral as permitted by the Portfolio's investment program and
regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actually receiving or delivering the securities, as the
case may be. No income accrues on securities that have been purchased pursuant
to a forward commitment or on a when-issued basis prior to delivery to the
Portfolio. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to its portfolio positions. The Portfolio also may purchase and sell put
and call options on currencies, futures contracts on currencies and options on
such futures contracts to hedge against movements in exchange rates.
In addition, the Portfolio may purchase and sell put and call options on equity
and debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Portfolio or that the Sub-adviser intends to include in
the Portfolio's holdings. The Portfolio also may purchase and sell put and call
options on stock indexes to hedge against overall fluctuations in the securities
markets generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write
Prospectus Page 9
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
call options on such futures contracts to protect against a general stock market
decline or a decline in a specific market sector that could affect adversely the
Portfolio's holdings. The Portfolio also may purchase stock index futures
contracts and purchase call options or write put options on such contracts to
hedge against a general stock market or market sector advance and thereby
attempt to lessen the cost of future securities acquisitions. The Portfolio may
use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by the Trust's
Board of Trustees without shareholder approval. The Fund's policies regarding
concentration and lending, and the percentage of the Fund's assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval. The investment policies of the Fund are identical to the
investment policies of the Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is not
required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objective.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's or Portfolio's investment policies or
restrictions.
The Portfolio is authorized to engage in Short Sales, although it currently has
no intention of doing so, and may purchase American Depository Receipts,
American Depository Shares, Global Depository Receipts and European Depository
Receipts. See "Short Sales" and "Depository Receipts," respectively in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board of
Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or the shareholders of
the Fund could require the Fund to redeem its interest in the Portfolio. Any
such redemption could result in a distribution in kind of portfolio securities
(as opposed to a cash distribution) by the Portfolio. Should such a distribution
occur, the Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Fund and could
adversely affect its liquidity. Upon redemption, the Board would consider what
action might be taken, including the investment of all the investable assets of
the Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention by the Fund of its own
investment adviser to manage its assets in accordance with its investment
objective, policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as
Prospectus Page 10
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
the Fund and may charge different sales commissions. Therefore, investors in the
Fund may experience different returns than investors in another investment
company that invests exclusively in the Portfolio. As of the date of this
Prospectus, the Fund is the only institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors, if
any, in the Portfolio. For example, as with all open-end investment companies,
if a large investor were to redeem its interest in the Portfolio, (1) the
Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset values will fluctuate reflecting
fluctuations in the market value of the Portfolio's securities positions. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure, and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Portfolio will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. In addition,
the value of debt securities held by the Portfolio generally will fluctuate with
changes in the perceived creditworthiness of the issuers of such securities and
interest rates.
Because the Portfolio focuses its investments on the infrastructure industries,
an investment in it may be more volatile than that of other investment companies
that do not concentrate their investments in such a manner. Moreover, the value
of the shares of the Fund will be especially susceptible to factors affecting
the infrastructure industries. Accordingly, the Fund should be considered a
complete investment program.
INFRASTRUCTURE INDUSTRIES. Infrastructure industries may be subject to greater
political, environmental and other governmental regulation than many other
industries. The nature of such regulation continues to evolve in both the United
States and foreign countries, and changes in governmental policy and the need
for regulatory approvals may have a material effect on the products and services
offered by companies in the infrastructure industries. Electric, gas, water and
most telecommunications companies in the United States, for example, are subject
to both federal and state regulation affecting permitted rates of return and the
kinds of services that may be offered. Governmental regulation may also hamper
the development of new technologies.
In addition, many infrastructure companies have historically been subject to the
risks attendant to increases in fuel and other operating costs, high interest
costs on borrowed funds, costs associated with compliance with environmental and
other safety regulations and changes in the regulatory climate. Further,
competition is intense for many infrastructure companies. As a result, many of
these companies may be adversely affected in the future and such companies may
be subject to increased share price volatility. In addition, many companies have
diversified into oil and gas exploration and development, and therefore returns
may be more sensitive to energy prices. Other infrastructure companies, such as
water supply companies, are in a highly fragmented industry due to local
ownership. Generally these companies are mature and are experiencing little or
no growth. Changes in prevailing interest rates may also affect the
Infrastructure Fund's share values because prices of equity and debt securities
of infrastructure companies often tend to increase when interest rates decline
and decrease when interest rates rise.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less
Prospectus Page 11
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
In addition, certain costs attributable to foreign investing, such as custody
charges, are higher than those attributable to domestic investing. Securities of
some foreign companies are less liquid and their prices may be more volatile
than securities of comparable domestic companies. The Portfolio's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing the Portfolio's net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political or social instability, or diplomatic
developments which could affect the Portfolio's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Portfolio may invest in issuers domiciled in "emerging markets." Investing
in emerging market countries involves risks in addition to those risks involved
in foreign investing. Many emerging market countries have experienced high rates
of inflation for many years. In addition, emerging markets generally are
dependent heavily upon international trade and, accordingly, have been and
continue to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. The securities markets of
emerging market countries are substantially smaller, less developed, less liquid
and more volatile than the securities markets of the developed countries. In
addition, issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than issuers in developed
countries.
The Portfolio will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Portfolio and gains and losses realized by the Portfolio.
LOWER QUALITY DEBT SECURITIES. The Portfolio may invest up to 20%, of its total
assets in below investment grade debt securities, that is, rated below BBB by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa
by Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Portfolio will not invest in debt securities
that are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition,
Prospectus Page 12
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
lower quality debt securities tend to be more sensitive to economic conditions
and generally have more volatile prices than higher quality securities. Issuers
of lower quality securities are often highly leveraged and may not have
available to them more traditional methods of financing. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of lower quality securities may experience financial stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific developments affecting
the issuer, such as the issuer's inability to meet specific projected business
forecasts or the unavailability of additional financing. The risk of loss due to
default by the issuer is significantly greater for the holders of lower quality
securities because such securities are generally unsecured and may be
subordinated to the claims of other creditors of the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Portfolio may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
In addition, the Portfolio may have difficulty disposing of lower quality
securities because they may have a thin trading market. There may be no
established retail secondary market for many of these securities, and the
Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market also may have an adverse impact on market prices of such instruments and
may make it more difficult for the Portfolio to obtain accurate market
quotations for purposes of valuing its investments. The Portfolio may also
acquire lower quality debt securities during an initial underwriting or which
are sold without registration under applicable securities laws. Such securities
involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Portfolio may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Portfolio may also incur additional expenses to the
extent it is required to seek recovery upon a default in the payment of
principal or interest on portfolio holdings, and the Portfolio may have limited
legal recourse in the event of a default.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Portfolio to
achieve capital appreciation substantially exceeding the appreciation the
Portfolio would realize if it did not make such investments. However, in order
to attempt to limit investment risk, the Portfolio will invest no more than 5%
of its total assets in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Portfolio is
authorized to enter into options, futures and forward currency transactions, the
Portfolio might not enter into any such transactions. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the Portfolio to sell a security at a disadvantageous time, due to the need for
the Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
Prospectus Page 13
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
INVESTING IN SMALLER COMPANIES. While the Portfolio's holdings normally will
include securities of established suppliers of traditional products and
services, the Portfolio may invest in smaller companies which can benefit from
the development of new products and services. These smaller companies may
present greater opportunities for capital appreciation, but may also involve
greater risks than large, established issuers. Such smaller companies may have
limited product lines, markets or financial resources, and their securities may
trade less frequently and in more limited volume than the securities of larger,
more established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees and the Board of Trustees of the Portfolio have
overall responsibility for the operation of the Fund and the Portfolio,
respectively. The Boards have approved all significant agreements between the
Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administration agreement with AIM, the investment sub-advisory
and sub-administration agreement between AIM and the Sub-adviser, the agreements
with AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the investment objective and policies of the Fund
and the Portfolio and to the general supervision of the Boards. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the investment managers to the Fund and the Portfolio include,
but are not limited to, determining the composition of the investment holdings
of the Portfolio and placing orders to buy, sell or hold particular securities.
In addition, AIM and the Sub-adviser provide the following administration
services to the Portfolio and the Fund: furnishing corporate officers and
clerical staff; providing office space, services and equipment; and supervising
all matters relating to the Portfolio's and the Fund's operation.
For administration services, the Fund pays AIM administration fees computed
daily and payable monthly at the annualized rate of 0.25% of the Fund's average
daily net assets. AIM has appointed the Sub-adviser as the Fund's
sub-administrator. In addition, the Fund bears its pro rata portion of the
investment management and administration fees paid by its corresponding
Portfolio to AIM and the Sub-adviser. The Portfolio pays AIM a fee, based on the
Portfolio's average daily net assets at the annualized rate of .725% on the
first $500 million, .70% on the next $500 million, .675% on the next $500
million and .65% on all amounts thereafter. Out of its aggregate fees payable by
the Fund and Portfolio, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund and Portfolio. The investment management and administration fees paid by
the Fund and the Portfolio are higher than those paid by most mutual funds. The
Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM Distributors or
other agents. AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 2.00% and 2.50% of the average daily net assets of the Fund's Class A
and Class B shares, respectively.
The Sub-adviser also serves as the Fund's and the Portfolio's pricing and
accounting agent. For these services the Sub-adviser receives a fee consisting
of 0.03% of the first $5 billion of assets, and 0.02% of the assets in excess of
$5 billion, of the AIM Funds that are sub-advised by the Sub-adviser (other than
AIM Eastern Europe Fund). Each of these funds, including the Fund and the
Portfolio, pays an amount based upon its relative net assets.
Prospectus Page 14
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Portfolio pursuant to
an investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Portfolio, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Portfolio is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Brian T. Nelson Portfolio Manager since Portfolio Manager for the Sub-adviser since September 1997. Senior
San Francisco 1997 Equity Research Analyst for the Sub-adviser from October 1996 to
September 1997. Employed by Chancellor Capital Management, Inc., a
predecessor of the Sub-adviser, from 1995 to October 1996. Equity
Research Analyst and Co-Portfolio Manager for Franklin Resources,
Inc. (San Mateo, CA) from 1988 to 1995.
</TABLE>
------------------------
In placing orders for the Portfolio's securities transactions, the Sub-adviser
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Sub-adviser may consider a broker/dealer's sale of
shares of the AIM Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Funds will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. Certain Trustees and
officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of
Prospectus Page 15
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
the Fund 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 of the Fund 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
the Fund's average daily net assets attributable to Class B shares attributable
to the sales efforts of AIM Distributors. In the event the Class B shares
Distribution Agreement is terminated, AIM Distributors would continue to receive
payments of asset based sales charges 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 shares master distribution
plan (as defined in the plan) would terminate all payments to AIM Distributors.
Termination of the Class B shares distribution plan or Distribution Agreement
does not affect the obligation of Class B shareholders to pay contingent
deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Company has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.50% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Prospectus Page 16
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense 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 the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of
Prospectus Page 17
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Global Investment Portfolio, a Delaware business trust. Under Delaware law, the
Fund and other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However, the
Agreement and Declaration of Trust of Global Investment Portfolio disclaims
shareholder liability for acts or obligations of the Portfolio and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Portfolio or a trustee. The Agreement and
Declaration of Trust also provides for indemnification from the Portfolio
property for all losses and expenses of any shareholder held personally liable
for the Portfolio's obligations. Thus the risk of an investor incurring
financial loss on account of such liability is limited to circumstances in which
the Portfolio itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the Fund and
to the Portfolio.
Prospectus Page 18
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
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<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
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<PAGE>
AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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AIM INVESTOR'S GUIDE
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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AIM INVESTOR'S GUIDE
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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<PAGE>
AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
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AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
A-25
<PAGE>
AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
A-26
<PAGE>
AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-27
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL RESOURCES FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Resources Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-ended, series, management investment
company. The Fund is a diversified portfolio which seeks long-term capital
growth by investing all of its investable assets in the Global Resources
Portfolio ("Portfolio"), which, in turn, invests primarily in equity securities
of companies throughout the world that own, explore or develop natural resources
and other basic commodities or supply goods and services to such companies. The
Portfolio's investment objective is identical to that of the Fund. The
investment experience of the Fund will correspond directly with the investment
experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL RESOURCES FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 7
Risk Factors.............................................................................. 11
Management................................................................................ 14
Other Information......................................................................... 17
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund and the Portfolio: The Fund is a diversified series of the Trust. The Portfolio is a diversified series of the Global
Investment Portfolio.
Investment Objective: The Fund seeks long-term capital growth.
Principal Investments: The Fund invests all of its investable assets in the Portfolio, which, in turn, invests primarily in
equity securities of companies throughout the world that own, explore or develop natural resources
and other basic commodities or supply goods and services to such companies.
Investment Managers: The Portfolio is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class shares have different distribution arrangements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL RESOURCES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calendar month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors: An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL RESOURCES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
deferred sales charge. See "How to Redeem Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund or the Portfolio will achieve its investment objective. The
Fund's net asset value will fluctuate, reflecting fluctuations in the market value of the Portfolio's
portfolio holdings. The Portfolio's policy of concentrating its investments in companies in the
natural resources industries may cause the Fund's net asset value to fluctuate more than if it
invested in a greater number of industries.
The Portfolio may invest in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Portfolio may engage in certain foreign currency, options and futures transactions to attempt to
hedge against the overall level of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and transaction costs.
The Portfolio may invest up to 20%, of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL RESOURCES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
SHAREHOLDER TRANSACTION COSTS (2):
<S> <C> <C>
Maximum sales charge on purchases of shares
(as a % of offering price).................................................... 4.75% None
Sales charges on reinvested distributions to shareholders...................... None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or
sale, whichever is less)...................................................... None 5.00%
Redemption charges............................................................. None None
Exchange fees:................................................................. None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.................................. 0.98% 0.98%
12b-1 distribution and service fees............................................ 0.50% 1.00%
Other expenses (after reimbursements and waivers).............................. 0.52% 0.52%
----------- -----------
Total Fund Operating Expenses.................................................. 2.00% 2.50%
----------- -----------
----------- -----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (6):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
TEN
ONE THREE FIVE YEARS
YEAR YEARS YEARS (7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (4)........................................................................... $67 $108 $151 $270
Class B Shares:
Assuming a complete redemption at end of period (5)........................................ $77 $111 $157 [ ]
Assuming no redemption..................................................................... $26 $ 79 $135 [ ]
<FN>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997
restated to reflect AIM's undertaking to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 2.00% and 2.50% of the average daily net
assets of the Fund's Class A and Class B shares, respectively. Without
reimbursements and waivers, "Other Expenses" and "Total Fund Operating
Expenses" would have been 0.65% and 2.13%, respectively, for Class A shares
and 0.65% and 2.63%, respectively, for Class B shares of the Fund. "Other
expenses" include custody, transfer agency, legal, audit and other
operating expenses. See "Management" herein and the Statement of Additional
Information for more information.
The Board of Trustees of the Trust believes that the aggregate per share
expenses of the Fund, and the Portfolio will be approximately equal to the
expenses the Fund would incur if its assets were invested directly in the
type of securities being held by the Portfolio.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
(6) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S
DIRECT AND INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The
table and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds. The
5% annual return is not a prediction of and does not represent the Fund's
or the Portfolio's projected or actual performance.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
</TABLE>
Prospectus Page 5
<PAGE>
AIM GLOBAL RESOURCES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM GLOBAL RESOURCES FUND
(FORMERLY GT GLOBAL NATURAL RESOURCES FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM GLOBAL RESOURCES FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital growth. It seeks its
objective by investing all of its investable assets in the Portfolio, which, in
turn, invests primarily in equity securities of companies throughout the world
that own, explore or develop natural resources and other basic commodities or
supply goods and services to such companies. The Portfolio's investment
objective is identical to that of the Fund. There can be no assurance that the
Fund or Portfolio will achieve its investment objective.
At least 65% of the Portfolio's total assets will normally be invested in common
stock and preferred stock, and warrants to acquire such securities, issued by
natural resource companies. A "natural resource" company is an entity in which
(i) at least 50% of either the revenues or earnings was derived from natural
resource activities, or (ii) at least 50% of the assets was devoted to such
activities, based upon the company's most recent fiscal year. The remainder of
the Portfolio's assets may be invested in debt securities issued by natural
resource companies and/or equity and debt securities of companies outside of the
natural resource industries, which, in the opinion of the Sub-adviser, stand to
benefit from developments in the natural resource industries.
GLOBAL RESOURCE INDUSTRIES INVESTMENT. Examples of natural resource companies
include those which own, explore or develop: energy sources (such as oil, gas
and coal); ferrous and non-ferrous metals (such as iron, aluminum, copper,
nickel, zinc and lead), strategic metals (such as uranium and titanium) and
precious metals (such as gold, silver and platinum); chemicals; forest products
(such as timber, coated and uncoated tree sheet, pulp and newsprint); other
basic commodities (such as foodstuffs); refined products (such as chemicals and
steel) and service companies that sell to these producers and refiners; and
other products and services, which, in the Sub-adviser's opinion are significant
to the ownership and development of natural resources and other basic
commodities.
The Sub-adviser believes that the liberalization of formerly socialist economies
will bring about dramatic changes in both the supply and demand for natural
resources. In addition, rapid industrialization in developing countries of Asia
and Latin America is generating new demands for industrial materials that are
affecting world commodities markets. The Sub-adviser believes these changes are
likely to create investment opportunities that benefit from new sources of
supply and/or from changes in commodities prices.
The Sub-adviser also believes that investments in natural resource industries
offer an opportunity to protect wealth against the capital-eroding effects of
inflation. During periods of accelerating inflation or currency uncertainty,
worldwide investment demand for natural resources, particularly precious metals,
tends to increase, and during periods of disinflation or currency stability, it
tends to decrease. The Sub-adviser believes that rising commodity prices and
increasing worldwide industrial production may favorably affect share prices of
natural resource companies, and investments in such companies can offer
excellent opportunities to offset the effects of inflation.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. The Portfolio expects that, from
time to time, a significant portion of its assets may be invested in the
securities of domestic issuers. The industry represented in the Portfolio,
however, is a global industry with significant, growing markets outside of the
United States. A sizeable proportion of the companies which comprise the natural
resources industries are headquartered outside of the United States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Portfolio. The Sub-adviser uses its financial
expertise in markets located throughout the world and the substantial global
resources of AMVESCAP PLC in attempting to identify those countries and
companies then providing the greatest potential for long-term capital
appreciation. In this fashion, the Sub-adviser seeks to enable shareholders to
capitalize on the substantial investment opportunities and the potential for
long-term growth of capital presented by the global natural resources industries
represented in the Portfolio.
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AIM GLOBAL RESOURCES FUND
The Sub-adviser allocates the Portfolio's assets among securities of countries
and in currency denominations where opportunities for meeting the Portfolio's
investment objective are expected to be the most attractive. The Portfolio may
invest substantially in securities denominated in one or more currencies. Under
normal conditions, the Portfolio invests in the securities of issuers located in
at least three countries, including the United States; investments in securities
of issuers in any one country, other than the United States, will represent no
more than 50% of the Portfolio's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
In assessing companies for the Resources Portfolio, the Sub-adviser will also
evaluate, among other factors, their capabilities for expanded exploration and
production, superior exploration programs and production techniques and
facilities, current inventories, expected production and demand levels and the
potential to accumulate new resources.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Portfolio may invest up to
100% of its total assets in cash (U.S. dollars, foreign currencies or
multinational currency units such as Euros) and/or high quality debt securities
or money market instruments of U.S. or foreign issuers. In addition, for
temporary defensive purposes, most or all of the Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Portfolio adopts a temporary defensive posture, it will not be invested so as to
achieve directly its investment objective. In addition, pending investment of
proceeds from new sales of Fund shares or to meet its ordinary daily cash needs,
the Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest in foreign or domestic high quality money market
instruments. For a full description of money market instruments, see "Money
Market Instruments" in the "Investment Objectives and Policies" section of the
Statement of Additional Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Portfolio in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Portfolio to participate in privatizations may be limited by local
law, or the terms on which the Portfolio may be permitted to participate may be
less advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Portfolio may invest up to 10% of
its total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Portfolio
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time, the Portfolio would
continue to pay its own management fees and other expenses. AIM and the
Sub-adviser will waive their advisory fees to the extent that the Portfolio
invests in an Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemptions of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of its shares than would be the case if the Portfolio did not
borrow.
Prospectus Page 8
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AIM GLOBAL RESOURCES FUND
A reverse repurchase agreement is a borrowing transaction in which the Portfolio
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Portfolio's sale of securities together with
its commitment (for which the Portfolio may receive a fee) to purchase similar,
but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolios to retain ownership of the securities loaned and, at the same
time, enhances the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other collateral as permitted by the Portfolio's investment program and
regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actually receiving or delivering the securities, as the
case may be. No income accrues on securities that have been purchased pursuant
to a forward commitment or on a when-issued basis prior to delivery to the
Portfolio. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to its portfolio positions. The Portfolio also may purchase and sell put
and call options on currencies, futures contracts on currencies and options on
such futures contracts to hedge against movements in exchange rates.
In addition, the Portfolio may purchase and sell put and call options on equity
and debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Portfolio or that the Sub-adviser intends to include in
the Portfolio's holdings. The Portfolio also may purchase and sell put and call
options on stock indexes to hedge against overall fluctuations in the securities
markets generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write
Prospectus Page 9
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AIM GLOBAL RESOURCES FUND
call options on such futures contracts to protect against a general stock market
decline or a decline in a specific market sector that could affect adversely the
Portfolio's holdings. The Portfolio also may purchase stock index futures
contracts and purchase call options or write put options on such contracts to
hedge against a general stock market or market sector advance and thereby
attempt to lessen the cost of future securities acquisitions. The Portfolio may
use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of that Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by the Trust's
Board of Trustees without shareholder approval. The Fund's policies regarding
concentration and lending, and the percentage of the Fund's assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval.
The approval of the Fund and of other investors in the Portfolio, if any, is not
required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objective.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's or Portfolio's investment policies or
restrictions.
The Portfolio is authorized to engage in Short Sales, although it currently has
no intention of doing so, and may purchase American Depository Receipts,
American Depository Shares, Global Depository Receipts and European Depository
Receipts. See "Short Sales" and "Depository Receipts," respectively, in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board of
Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or the shareholders of
the Fund could require the Fund to redeem its interest in the Portfolio. Any
such redemption could result in a distribution in kind of portfolio securities
(as opposed to a cash distribution) by the Portfolio. Should such a distribution
occur, the Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Fund and could
adversely affect its liquidity. Upon redemption, the Board would consider what
action might be taken, including the investment of all the investable assets of
the Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention by the Fund of its own
investment adviser to manage its assets in accordance with its investment
objective, policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may
Prospectus Page 10
<PAGE>
AIM GLOBAL RESOURCES FUND
experience different returns than investors in another investment company that
invests exclusively in the Portfolio. As of the date of this Prospectus, the
Fund is the only institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors, if
any, in the Portfolio. For example, as with all open-end investment companies,
if a large investor were to redeem its interest in the Portfolio, (1) the
Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset values will fluctuate reflecting
fluctuations in the market value of the Portfolio's securities. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure, and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Portfolio will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. In addition,
the value of debt securities held by the Portfolio generally will fluctuate with
changes in the perceived creditworthiness of the issuers of such securities and
interest rates.
Because the Portfolio focuses its investments on the natural resources
industries, an investment in it may be more volatile than that of other
investment companies that do not concentrate their investments in such a manner.
Moreover, the value of the shares of the Fund will be especially susceptible to
factors affecting the natural resources industries in which it focuses.
Accordingly, the Fund should not be considered a complete investment program.
NATURAL RESOURCES INDUSTRIES. Natural resource industries may be subject to
greater political, environmental and other governmental regulation than many
other industries. The nature of such regulation continues to evolve in both the
United States and foreign countries, and changes in governmental policies and
the need for regulatory approvals may have a material effect on the products and
services offered by companies in the natural resource industries. For example,
the exploration, development and distribution of coal, oil and gas in the United
States are subject to significant federal and state regulation, which may affect
rates of return on such investments and the kinds of services that may be
offered. Governmental regulation may also hamper the development of new
technologies.
In addition, many natural resource companies historically have been subject to
significant costs associated with compliance with environmental and other safety
regulations. Further, competition is intense for many natural resource
companies. As a result, many of these companies may be adversely affected in the
future and the value of the securities issued by such companies may be subject
to increased share price volatility. Such companies may also be subject to
irregular fluctuations in earnings due to changes in the availability of money,
the level of interest rates, and other factors.
The value of securities of natural resource companies will fluctuate in response
to market conditions for the particular natural resources with which the issuers
are involved. The price of natural resources will fluctuate due to changes in
worldwide levels of inventory, and changes, perceived or actual, in production
and consumption. With respect to precious metals, such price fluctuations may be
substantial over short periods of time. In addition, the value of natural
resources may fluctuate directly with respect to various stages of the
inflationary cycle and perceived inflationary trends and are subject to numerous
factors, including national and international politics.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
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AIM GLOBAL RESOURCES FUND
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Portfolio's interest and dividends from foreign issuers may be
subject to non-U.S. withholding taxes, thereby reducing the Portfolio's net
investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political or social instability, or diplomatic
developments which could affect the Portfolio's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Portfolio may invest in issuers domiciled in "emerging markets." Investing
in emerging market countries involves risks in addition to those risks involved
in foreign investing. Many emerging market countries have experienced high rates
of inflation for many years. In addition, emerging markets generally are
dependent heavily upon international trade and, accordingly, have been and
continue to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. The securities markets of
emerging market countries are substantially smaller, less developed, less liquid
and more volatile than the securities markets of the developed countries. In
addition, issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than issuers in developed
countries.
The Portfolio will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Portfolio and gains and losses realized by the Portfolio.
LOWER QUALITY DEBT SECURITIES. The Portfolio may invest up to 20%, of its total
assets in below investment grade debt securities, that is, rated below BBB by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa
by Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Portfolio will not invest in debt securities
that are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
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AIM GLOBAL RESOURCES FUND
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Portfolio may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
In addition, the Portfolio may have difficulty disposing of lower quality
securities because they may have a thin trading market. There may be no
established retail secondary market for many of these securities, and the
Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market also may have an adverse impact on market prices of such instruments and
may make it more difficult for the Portfolio to obtain accurate market
quotations for purposes of valuing its investments. The Portfolio may also
acquire lower quality debt securities during an initial underwriting or which
are sold without registration under applicable securities laws. Such securities
involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Portfolio may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Portfolio may also incur additional expenses to the
extent it is required to seek recovery upon a default in the payment of
principal or interest on portfolio holdings, and the Portfolio may have limited
legal recourse in the event of a default.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Portfolio to
achieve capital appreciation substantially exceeding the appreciation the
Portfolio would realize if they did not make such investments. However, in order
to attempt to limit investment risk, the Portfolio will invest no more than 5%
of its total assets in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Portfolio is
authorized to enter into options, futures and forward currency transactions, the
Portfolio might not enter into any such transactions. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the
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AIM GLOBAL RESOURCES FUND
Portfolio to sell a security at a disadvantageous time, due to the need for the
Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
INVESTING IN SMALLER COMPANIES. While the Portfolio's holdings normally will
include securities of established suppliers of traditional products and
services, the Portfolio may invest in smaller companies which can benefit from
the development of new products and services. These smaller companies may
present greater opportunities for capital appreciation, but may also involve
greater risks than large, established issuers. Such smaller companies may have
limited product lines, markets or financial resources, and their securities may
trade less frequently and in more limited volume than the securities of larger,
more established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
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MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees and the Board of Trustees of the Portfolio have
overall responsibility for the operation of the Fund and the Portfolio,
respectively. The Boards have approved all significant agreements between the
Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administrative services agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-adviser,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and the transfer agency agreement. The day-to-day
operations of the Fund and the Portfolio are delegated to the officers of the
Trust and the Portfolio, subject always to the investment objective and policies
of the Fund and the Portfolio and to the general supervision of the Boards. See
"Trustees and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the investment managers to the Fund and the Portfolio include,
but are not limited to, determining the composition of the investment holdings
of the Portfolio and placing orders to buy, sell or hold particular securities.
In addition, AIM and the Sub-adviser provide the following administration
services to the Portfolio and the Fund: furnishing corporate officers and
clerical staff; providing office space, services and equipment; and supervising
all matters relating to the Portfolio's and the Fund's operation.
For administration services, the Fund pays AIM administration fees computed
daily and payable monthly at the annualized rate of 0.25% of the Fund's average
daily net assets. AIM has appointed the Sub-adviser as the Fund's
sub-administrator. In addition, the Fund bears its pro rata portion of the
investment management and administration fees paid by its corresponding
Portfolio to AIM and the Sub-adviser. The Portfolio pays AIM a fee, based on the
Portfolio's average daily net assets at the annualized rate of .725% on the
first $500 million, .70% on the next $500 million, .675% on the next $500
million and .65% on all amounts thereafter. Out of its aggregate fees payable by
the Fund and the Portfolio, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund and the Portfolio. The investment management and administration fees paid
by the Fund and the Portfolio are higher than those paid by most mutual funds.
The Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM Distributors
or other agents. AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 2.00% and 2.50% of the average daily net assets of the Fund's Class A
and Class B shares, respectively.
The Sub-adviser also serves as the Fund's and the Portfolio's pricing and
accounting agent. For these services the Sub-adviser receives a fee consisting
of 0.03% of the first $5 billion of assets, and 0.02% of the assets in excess of
$5 billion, of the AIM Funds that are sub-advised by the Sub-adviser (other than
AIM Eastern Europe Fund).
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AIM GLOBAL RESOURCES FUND
Each of these funds, including the Fund and the Portfolio, pays an amount based
upon its relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administrative services agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Portfolio pursuant to
an investment sub-advisory and sub-administrative agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices, including investment offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong,
London, Singapore, Sydney, Tokyo and Toronto. In managing the Portfolio, the
Sub-adviser employs a team approach, taking advantage of its investment
resources around the world.
The investment professional primarily responsible for the portfolio management
of the Portfolio is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio Manager since Head of the Theme Funds for the Sub-adviser since 1997. Portfolio
San Francisco Portfolio inception in Manager for the Sub-adviser since 1994. Analyst for the Sub-adviser
1994 from 1992 to 1994.
</TABLE>
------------------------
In placing orders for the Portfolio's securities transactions, the Sub-adviser
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Sub-adviser may consider a broker/dealer's sale of
shares of the AIM Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Funds will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. Certain Trustees and
officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund directly and through institutions with whom AIM
Distributors has entered into selected dealer agreements. Under the Distribution
Agreement for the Class B shares, AIM
Prospectus Page 15
<PAGE>
AIM GLOBAL RESOURCES FUND
Distributors sells Class B shares of the Fund 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
the Fund's average daily net assets attributable to Class B shares attributable
to the sales efforts of AIM Distributors. In the event the Class B shares
Distribution Agreement is terminated, AIM Distributors would continue to receive
payments of asset based sales charges 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 shares master distribution
plan (as defined in the plan) would terminate all payments to AIM Distributors.
Termination of the Class B shares distribution plan or Distribution Agreement
does not affect the obligation of Class B shareholders to pay contingent
deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Company has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.50% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional
Prospectus Page 16
<PAGE>
AIM GLOBAL RESOURCES FUND
information and reports for other than existing shareholders, overhead,
preparation and distribution of advertising material and sales literature,
expense 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 the cost of
administering the Plans. These amounts payable by the Fund under the Plans need
not be directly related to the expenses actually incurred by AIM Distributors on
behalf of the Fund. Thus, even if AIM Distributors' actual expenses exceed the
fee payable to AIM Distributors thereunder at any given time, the Trust will not
be obligated to pay more than that fee, and if AIM Distributors' expenses are
less than the fee it receives, AIM Distributors will retain the full amount of
the fee. Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the National Association of Securities Dealers,
Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
liabilities of AIM Investment Funds, Inc., a Maryland corporation. The Fund
constitutes one of the thirteen separate and distinct series or portfolios of
the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other shares do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a
Prospectus Page 17
<PAGE>
AIM GLOBAL RESOURCES FUND
meeting of shareholders solely for the purpose of removing one or more Trustees
when requested in writing to do so by shareholders holding 10% of the Trust's
outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund when issued are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Global Investment Portfolio, a Delaware business trust. Under Delaware law, the
Fund and other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However, the
Agreement and Declaration of Trust of Global Investment Portfolio disclaims
shareholder liability for acts or obligations of the Portfolio and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Portfolio or a trustee. The Agreement and
Declaration of Trust also provides for indemnification from the Portfolio
property for all losses and expenses of any shareholder held personally liable
for the Portfolio's obligations. Thus the risk of an investor incurring
financial loss on account of such liability is limited to circumstances in which
the Portfolio itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the Fund and
to the Portfolio.
Prospectus Page 18
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
A-1
<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
A-2
<PAGE>
AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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AIM INVESTOR'S GUIDE
- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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AIM INVESTOR'S GUIDE
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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AIM INVESTOR'S GUIDE
number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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AIM INVESTOR'S GUIDE
the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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AIM INVESTOR'S GUIDE
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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AIM INVESTOR'S GUIDE
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
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<PAGE>
AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
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<PAGE>
AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
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AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-27
<PAGE>
AIM GLOBAL RESOURCES FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL TELECOMMUNICATIONS FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Telecommunications Fund
(the "Fund"), which is one of several series investment portfolios comprising
AIM Investment Funds (the "Trust"), an open-end series, management investment
company. The Fund is a diversified portfolio which seeks long-term growth of
capital by investing primarily in equity securities of companies throughout the
world engaged in the development, manufacture or sale of telecommunications
services or equipment. There can be no assurance that the Fund will achieve its
investment objective.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 7
Risk Factors.............................................................................. 10
Management................................................................................ 13
Other Information......................................................................... 16
</TABLE>
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a diversified series of the Trust.
Investment Objective: The Fund seeks long-term growth of capital
Principal Investments: The Fund invests primarily in equity securities of companies throughout the world engaged in the
development, manufacture or sale of telecommunications services or equipment.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management
and/or administrative services to institutional, corporate and individual clients around the world.
AIM and the Sub-adviser are both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and
its subsidiaries are an independent investment management group that has a significant presence in
the institutional and retail segment of the investment management industry in North America and
Europe, and a growing presence in Asia. AIM was organized in 1976 and, together with its
subsidiaries, currently advises approximately 90 investment company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
</TABLE>
Prospectus Page 2
<PAGE>
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to deferred
sales charge of 5% on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund eight years following
the end of the calendar month in which a purchase was made. Class B shares are subject to higher
expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors: An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<S> <C> <C>
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund will achieve its investment objective. The Fund's net asset value
will fluctuate, reflecting fluctuations in the market value of its portfolio holdings. The Fund's
policy of concentrating its investments in companies in its particular industries may cause the
Fund's net asset value to fluctuate more than if it invested in a greater number of industries.
The Fund may invest in foreign securities. Investments in foreign securities involve risks relating
to political and economic developments abroad and the differences between the regulations to which
U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
The Fund may invest up to 5% of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
SHAREHOLDER TRANSACTION COSTS (2):
<S> <C> <C>
Maximum sales charge on purchases of shares
(as a % of offering price)..................... 4.75% None
Sales charges on reinvested distributions to
shareholders................................... None None
Maximum deferred sales charge (as a % of net
asset value at time of purchase or sale,
whichever is less)............................. None 5.00%
Redemption charges.............................. None None
Exchange fees................................... None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees... 0.94% 0.94%
12b-1 distribution and service fees............. 0.50% 1.00%
Other expenses (after reimbursements and
waivers)....................................... 0.40% 0.40%
------- -------
Total Fund Operating Expenses................... 1.84% 2.34%
------- -------
------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (6):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
TEN
ONE THREE FIVE YEARS
YEAR YEARS YEARS (7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (4)........................................................................... $65 $103 $143 $255
Class B Shares:
Assuming a complete redemption at end of period (5)........................................ $75 $106 $149 [ ]
Assuming no redemption..................................................................... $24 $ 74 $126 [ ]
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUNDS. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Funds' fiscal year ended October 31, 1997. "Other
Expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
(6) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the Hypothetical Example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM GLOBAL TELECOMMUNICATIONS FUND
(FORMERLY GT GLOBAL TELECOMMUNICATIONS FUND)
[TO BE ADDED]
------------------------
PERFORMANCE All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term growth of capital. It seeks its
objective by investing primarily in equity securities of companies throughout
the world engaged in the development, manufacture or sale of telecommunications
services or equipment. There can be no assurance that the Fund will achieve its
investment objective.
At least 65% of the Fund's total assets normally will be invested in common and
preferred stocks and warrants to acquire such securities issued by
telecommunications companies. A "telecommunications" company is an entity in
which (i) at least 50% of either its revenues or earnings was derived from
telecommunications activities, or (ii) at least 50% of its assets was devoted to
telecommunications activities, based on the company's most recent fiscal year.
The remainder of the assets of the Fund may be invested in debt securities
issued by telecommunications companies and/or equity and debt securities of
companies outside of the telecommunications industry which, in the opinion of
the Sub-adviser, stand to benefit from developments in the telecommunications
industries.
GLOBAL TELECOMMUNICATIONS INDUSTRIES INVESTMENT. Telecommunications companies
cover a variety of sectors, ranging from companies concentrating on established
technologies to those primarily engaged in emerging or developing technologies.
The characteristics of companies focusing on the same technology will vary among
countries depending upon the extent to which the technology is established in
the particular country. The Sub-adviser will allocate the Fund's investments
among these sectors depending upon its assessment of their relative long-term
growth potential.
Examples of telecommunications companies include those engaged in designing,
developing or providing the following products and services: communications
equipment and services (including equipment and services for both data and voice
transmission); electronic components and equipment; broadcasting (including
television and radio, satellite, microwave and cable television and
narrowcasting); computer equipment, mobile communications and cellular
radio/paging; electronic mail; local and wide area networking and linkage of
word and data processing systems; publishing and information systems; videotext
and teletext; and emerging technologies combining telephone, television and/or
computer systems.
The Sub-adviser believes that there are opportunities for continued growth in
demand for components, products, media and systems to collect, store, retrieve,
transmit, process, distribute, record, reproduce and use information. The
pervasive societal impact of communications and information technologies has
been accelerated by the lower costs and higher efficiencies that result from the
blending of computers with telecommunications systems. Accordingly, companies
engaged in the production of methods for using electronic and, potentially,
video technology to communicate information are expected to be important in the
Fund's portfolio. Older technologies, such as photography and print also may be
represented, however.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. The Fund expects that, from time
to time, a significant portion of its assets may be invested in the securities
of domestic issuers. The industry represented in the Fund, however, is a global
industry with significant, growing markets outside of the United States. A
sizeable proportion of the companies which comprise the telecommunications
industry are headquartered outside of the United States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Fund. The Sub-adviser uses its financial expertise in
markets located throughout the world and the substantial global resources of
AMVESCAP PLC in attempting to identify those countries and companies then
providing the greatest potential for long-term capital appreciation. In this
fashion, the Sub-adviser seeks to enable shareholders to capitalize on the
substantial investment opportunities and the potential for long-term growth of
capital presented by the global industry represented in the Fund.
Prospectus Page 7
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
The Sub-adviser allocates the Fund's assets among securities of countries and in
currency denominations where opportunities for meeting the Fund's investment
objective are expected to be the most attractive. The Fund may invest
substantially in securities denominated in one or more currencies. Under normal
conditions, the Fund invests in the securities of issuers located in at least
three countries, including the United States; investments in securities of
issuers in any one country, other than the United States, will represent no more
than 40% of the Fund's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Fund may invest up to 100%
of its total assets in cash (U.S. dollars, foreign currencies or multinational
currency units such as Euros) and/or high quality debt securities or money
market instruments of U.S. or foreign issuers. In addition, for temporary
defensive purposes, most or all of the Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Fund adopts a
temporary defensive posture, it will not be invested so as to achieve directly
its investment objective. In addition, pending investment of proceeds from new
sales of Fund shares or to meet its ordinary daily cash needs, the Fund may hold
cash (U.S. dollars, foreign currencies or multinational currency units) and may
invest in foreign or domestic high quality money market instruments. For a full
description of money market instruments, see "Money Market Instruments" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Fund to participate in privatizations may be limited by local law,
or the terms on which the Fund may be permitted to participate may be less
advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Fund may invest up to 10% of its
total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Fund would
bear its ratable share of that investment company's expenses, including its
advisory and administration fees. At the same time, the Fund would continue to
pay its own management fees and other expenses. AIM and the Sub-adviser will
waive their advisory fees to the extent that the Fund invests in an Affiliated
Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemptions of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
Prospectus Page 8
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. The Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. While a loan is outstanding, the borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to at least the value of the
borrowed securities, plus any accrued interest or such other collateral as
permitted by the Fund's investment program and regulatory agencies, and as
approved by the Board. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, the Fund will
segregate cash or liquid securities equal to the value of the when-issued or
forward commitment securities with its custodian and will mark to market daily
such assets. There is a risk that the securities may not be delivered and that
the Fund may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Fund may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on such futures
contracts to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-adviser intends to include in the
Fund's portfolio. The Fund also may purchase and sell put and call options on
stock indexes to hedge against overall fluctuations in the securities markets
generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
affect adversely the Fund's holdings. The Fund also may purchase stock index
futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The Fund
may use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
Prospectus Page 9
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by the Trust's
Board of Trustees without shareholder approval. The Fund's policies regarding
concentration and lending, and the percentage of the Fund's assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depositary Receipts," in the "Investment Objectives and
Policies" section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate reflecting fluctuations in
the market value of the Fund's positions. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure, and entitle holders to an interest in the assets of an issuer, if
any, remaining after all more senior claims have been satisfied. The value of
equity securities held by the Fund will fluctuate in response to general market
and economic developments, as well as developments affecting the particular
issuers of such securities. In addition, the value of debt securities held by
the Fund generally will fluctuate with changes in the perceived creditworthiness
of the issuers of such securities and interest rates.
Because the Fund focuses its investments on particular industries, an investment
in the Fund may be more volatile than that of other investment companies that do
not concentrate their investments in such a manner. Moreover, the value of the
shares of the Fund will be especially susceptible to factors affecting the
industries in which it focuses. Accordingly, the Fund should not be considered a
complete investment program.
TELECOMMUNICATIONS INDUSTRIES. Telecommunications industries may be subject to
greater governmental regulation than many other industries and changes in
governmental policy and the need for regulatory approvals may have a material
effect on the products and services offered by companies in the
telecommunications industries. Telephone operating companies in the United
States, for example, are subject to both federal and state regulation affecting
permitted rates of return and the kinds of services that may be offered. Certain
types of companies in the telecommunications industries are engaged in fierce
competition for market share that could result in increased share price
volatility.
Prospectus Page 10
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Fund's interest and dividends from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing the Fund's net investment
income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic
developments which could affect the Fund's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Fund may invest in issuers domiciled in "emerging markets." Investing in
emerging market countries involves risks in addition to those risks involved in
foreign investing. Many emerging market countries have experienced high rates of
inflation for many years. In addition, emerging markets generally are dependent
heavily upon international trade and, accordingly, have been and continue to be
affected adversely by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. The securities markets of emerging
market countries are substantially smaller, less developed, less liquid and more
volatile than the securities markets of the developed countries. In addition,
issuers in emerging markets typically are subject to a greater degree of change
in earnings and business prospects than issuers in developed countries.
The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund.
LOWER QUALITY DEBT SECURITIES. The Fund may invest up to 5% of its total assets
in below investment grade debt securities, that is, rated below BBB by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa by
Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Fund will not invest in debt securities that
are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
Prospectus Page 11
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Fund. If an issuer exercises these provisions in a declining
interest rate market, the Fund may have to replace the security with a lower
yielding security, resulting in a decreased return for investors. In addition,
the Fund may have difficulty disposing of lower quality securities because they
may have a thin trading market. There may be no established retail secondary
market for many of these securities, and the Fund anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market also may have an adverse impact
on market prices of such instruments and may make it more difficult for the Fund
to obtain accurate market quotations for purposes of valuing the Fund's
portfolio investments. The Fund may also acquire lower quality debt securities
during an initial underwriting or which are sold without registration under
applicable securities laws. Such securities involve special considerations and
risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Fund may also incur additional expenses to the extent it
is required to seek recovery upon a default in the payment of principal or
interest on portfolio holdings, and the Fund may have limited legal recourse in
the event of a default.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Fund to achieve
capital appreciation substantially exceeding the appreciation the Fund would
realize if it did not make such investments. However, in order to attempt to
limit investment risk, the Fund will invest no more than 5% of its total assets
in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; (4) lack of assurance
that a liquid secondary market will exist for any particular option, futures
contract or option thereon at any particular time; (5) the possible loss of
principal under certain conditions; and (6) the possible
Prospectus Page 12
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
inability of the Fund to purchase or sell a portfolio security at a time when it
would otherwise be favorable for it to do so, or the possible need for the Fund
to sell a security at a disadvantageous time, due to the need for the Fund to
maintain "cover" or to set aside securities in connection with hedging
transactions.
INVESTING IN SMALLER COMPANIES. While the Fund's portfolio normally will include
securities of established suppliers of traditional products and services, the
Fund may invest in smaller companies which can benefit from the development of
new products and services. These smaller companies may present greater
opportunities for capital appreciation, but may also involve greater risks than
large, established issuers. Such smaller companies may have limited product
lines, markets or financial resources, and their securities may trade less
frequently and in more limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such smaller
companies may fluctuate to a greater degree than the prices of the securities of
other issuers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust and persons or companies furnishing services to the Fund on
the other, including the investment management and administration agreement with
AIM, the investment sub-advisory and sub-administration agreement between AIM
and the Sub-adviser, the agreements with AIM Distributors regarding distribution
of the Fund's shares, the custody agreement and the transfer agency agreement.
The day-to-day operations of the Fund are delegated to the officers of the
Trust, subject always to the investment objective and policies of the Fund and
to the general supervision of the Trust's Board of Trustees. See "Trustees and
Executive Officers" in the Statement of Additional Information for information
on the Trust's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers include, but are not limited to,
determining the composition of the investment portfolio of the Fund and placing
orders to buy, sell or hold particular securities. In addition, AIM and the
Sub-adviser provide the following administration services to the Fund:
furnishing corporate officers and clerical staff; providing office space,
services and equipment; and supervising all matters relating to the Fund's
operation.
For investment management and administration services provided to the Fund, the
Fund pays AIM a fee computed daily and paid monthly based on the Fund's average
daily net assets at the annualized rate of .975% on the first $500 million, .95%
on the next $500 million, .925% on the next $500 million and .90% on amounts
thereafter. Out of the aggregate fees payable by the Fund, AIM pays the
Sub-adviser sub-advisory and sub-administration fees equal to 40% of the
aggregate fees AIM receives from the Fund. The investment management and
administration fees paid by the Fund are higher than those paid by most mutual
funds.
The Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM Distributors
or other agents. AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 2.00% and 2.50% of the average daily net assets of the Fund's Class A
and Class B shares, respectively. The Sub-adviser also serves as the Fund's
pricing and accounting agent. For these services the Sub-adviser receives a fee
consisting of 0.03% of the first $5 billion of assets, and 0.02% of the assets
in excess of $5 billion, of the AIM Funds that are sub-advised by the
Sub-adviser (other than AIM Eastern Europe Fund). Each of these funds, including
the Fund, pays an amount based upon its relative net assets.
Prospectus Page 13
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration services agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Michael Mahoney Portfolio Manager since Portfolio Manager for the Sub-adviser since 1993. Investment Analyst
San Francisco 1993 for the Sub-adviser from 1991 to 1993.
</TABLE>
------------------------
In placing orders for the Fund's securities transactions, the Sub-adviser seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-adviser may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions may be executed through affiliates of
AIM or the Sub-adviser. High portfolio turnover (over 100%) involves
correspondingly greater brokerage commissions and other transaction costs that
the Funds will bear directly and could result in the realization of net capital
gains which would be taxable when distributed to shareholders. See "Dividends,
Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. Certain Trustees and
officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund 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 of the
Fund 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.
Prospectus Page 14
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
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 the Fund's average
daily net assets attributable to Class B shares attributable to the sales
efforts of AIM Distributors. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based sales charges 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 shares master distribution plan (as
defined in the plan) would terminate all payments to AIM Distributors.
Termination of the Class B shares distribution plan or Distribution Agreement
does not affect the obligation of Class B shareholders to pay contingent
deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Company has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.50% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense of organizing and conducting sales
seminars, supplemental payments to dealers and other
Prospectus Page 15
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
institutions such as asset-based sales charges or as payments of service fees
under shareholder service arrangements, and the cost of administering the Plans.
These amounts payable by the Fund under the Plans need not be directly related
to the expenses actually incurred by AIM Distributors on behalf of the Fund.
Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Trust will not be obligated to
pay more than that fee, and if AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee. Payments
pursuant to the Plans are subject to any applicable limitations imposed by rules
of the National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998 . On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may continue to establish other
funds, each corresponding to a distinct investment portfolio and a distinct
series of the Trust's shares of beneficial interest. Shares of each fund are
entitled to one vote per share (with proportional voting for fractional shares)
and are freely transferable. Shareholders have no preemptive rights. Other than
the automatic conversion of Class B shares to Class A shares, there are no
conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Prospectus Page 16
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
Pursuant to the Trust's Agreement and Declaration of Trust, the Company may
issue an unlimited number of shares of the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal in earnings, assets
and voting privileges, except that each class normally has exclusive voting
rights with respect to its distribution plan and bears the expenses, if any,
related to the distribution of its shares. Shares of the Fund, when issued, are
fully paid and nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 17
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
A-1
<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
A-2
<PAGE>
AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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<PAGE>
AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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AIM INVESTOR'S GUIDE
- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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AIM INVESTOR'S GUIDE
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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AIM INVESTOR'S GUIDE
number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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AIM INVESTOR'S GUIDE
the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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AIM INVESTOR'S GUIDE
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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AIM INVESTOR'S GUIDE
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
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<PAGE>
AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
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<PAGE>
AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
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AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-27
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM LATIN AMERICAN GROWTH FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Latin American Growth Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a nondiversified portfolio which seeks capital appreciation
by investing primarily in equity and debt securities of a broad range of Latin
American issuers.
The Fund is designed for long term investors and not as a trading vehicle. The
Fund does not represent a complete investment program, nor is it suitable for
all investors. The Fund may invest significantly in lower quality and unrated
foreign government bonds whose credit quality is generally considered the
equivalent of U.S. corporate debt securities commonly known as "junk bonds."
Investments of this type are subject to a greater risk of loss of principal and
interest. An investment in the Fund should be considered speculative and subject
to special risk factors, related primarily to the Fund's investments in Latin
America. Purchasers should carefully assess the risks associated with an
investment in the Fund.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information dated
September 8, 1998 has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 7
Risk Factors.............................................................................. 11
Management................................................................................ 14
Other Information......................................................................... 17
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of the Trust.
Investment Objective: The Fund seeks capital appreciation.
Principal Investment: The Fund normally invests at least 65% of its total assets in equity and debt securities issued by
Latin American companies and governments.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
</TABLE>
Prospectus Page 2
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Shares are offered at net asset value without an initial sales charge and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calendar month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, " The AIM Family
of Funds"). Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
</TABLE>
Prospectus Page 3
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund will achieve its investment objective. The Fund's net asset
values will fluctuate, reflecting fluctuations in the market value of the portfolio holdings.
The Fund will invest primarily in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
There is no limitation on the percentage of the Fund's total assets that may be invested in below
investment grade debt securities. Investments of this type are subject to a greater risk of loss of
principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction cost associated
with investing in the Class A and Class B shares of the Fund are reflected in
the following tables (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares (as a % of offering price)............................. 4.75% None
Sales charges on reinvested distributions to shareholders.......................................... None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)............................................................................................. None 5.00%
Redemption charges................................................................................. None None
Exchange fees...................................................................................... None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees...................................................... 0.98% 0.98%
12b-1 distribution and service fees................................................................ 0.50% 1.00%
Other expenses (after reimbursements and waivers).................................................. 0.52% 0.52%
----------- -----------
Total Fund Operating Expenses...................................................................... 2.00% 2.50%
----------- -----------
----------- -----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (6):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
TEN
ONE THREE FIVE YEARS
YEAR YEARS YEARS (7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (4).............................................................. $67 $108 $151 $276
Class B Shares
Assuming a complete redemption at end of period (5)......................... $77 $111 $157 [ ]
Assuming no redemption...................................................... $26 $ 79 $135 [ ]
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the NASD rules regarding investment
companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect the current expense limits. "Other expenses" include custody,
transfer agency, legal, audit and other operating expenses. AIM has
undertaken to limit the Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the annual rate of 2.00% and
2.50% of the average daily net assets of the Fund's Class A and Class B
shares, respectively. Without reimbursements and waivers, "Other Expenses"
and "Total Fund Operating Expenses" would have been 0.58% and 2.06%,
respectively, for Class A shares and 0.58% and 2.56% for Class B Shares of
the Fund. See "Management" herein and the Statement of Additional
Information for more information.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
(6) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the Hypothetical Example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information.
AIM LATIN AMERICAN GROWTH FUND
(FORMERLY GT GLOBAL LATIN AMERICA GROWTH FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is capital appreciation. The Fund normally
invests at least 65% of its total assets in the securities of a broad range of
Latin American issuers. The Fund may invest in common stock, preferred stock,
rights, warrants and securities convertible into common stock, and other
substantially similar forms of equity securities with comparable risk
characteristics, as well as bonds, notes, debentures or other forms of
indebtedness that may be developed in the future. Normally, the Fund will invest
a majority of its assets in equity securities. The Fund may also invest up to
35% of its total assets in a combination of equity and debt securities of U.S.
issuers. There can be no assurance that the Fund will meet its investment
objective.
For purposes of this Prospectus, unless otherwise indicated, the Fund defines
Latin America to include the following countries: Argentina, the Bahamas,
Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican
Republic, Ecuador, El Salvador, French Guiana, Guatemala, Guyana, Haiti,
Honduras, Jamaica, Mexico, the Netherlands Antilles, Nicaragua, Panama,
Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela. Under
current market conditions, the Fund expects to invest primarily in securities
issued by companies and governments in Mexico, Chile, Brazil and Argentina. The
Fund may invest more than 25% of its total assets in any of these four countries
but does not expect to invest more than 60% of its total assets in any one
country.
The Fund defines securities of Latin American issuers to include: (a) securities
of companies organized under the laws of, or having a principal office located
in, a Latin American country; (b) securities of companies that derive 50% or
more of their total revenues from business in Latin America, provided that, in
the Sub-adviser's view, the value of such issuers' securities reflect Latin
American developments to a greater extent than developments elsewhere; (c)
securities issued or guaranteed by the government of a country in Latin America,
its agencies or instrumentalities, or municipalities, or the central bank of
such country; (d) U.S. dollar-denominated securities or securities denominated
in a Latin American currency issued by companies to finance operations in Latin
America; and (e) securities of Latin American issuers, as defined herein, in the
form of depositary shares. For purposes of the foregoing definition, the Fund's
purchases of securities issued by companies outside of Latin America to finance
their Latin American operations will be limited to securities the performance of
which is materially related to such company's Latin American activities.
In allocating investments among the various Latin American countries, the
Sub-adviser looks principally at the stage of industrialization, potential for
productivity gains through economic deregulation, the impact of financial
liberalization and monetary conditions and the political outlook in each
country. In allocating assets between equity and debt securities, the
Sub-adviser will consider, among other factors: the level and anticipated
direction of interest rates; expected rates of economic growth and corporate
profits growth; changes in Latin American government policy including regulation
governing industry, trade, financial markets, and foreign and domestic
investment; substance and likely development of government finances; and the
condition of the balance of payments and changes in the terms of trade. In
evaluating investments in securities of U.S. issuers, the Sub-adviser will
consider, among other factors, the issuer's Latin American business activities
and the impact that development in Latin America may have on the issuer's
operations and financial condition.
Certain sectors of the economies of certain Latin American countries are closed
to equity investments by foreigners. Further, due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities in certain Latin American countries, the Fund may
be able to invest in such countries solely or primarily through governmentally
approved investment vehicles or companies. In addition, the portion of the
Fund's assets invested directly in Chile may be less than the portion invested
in other Latin American countries because, at present, capital directly invested
in Chile normally cannot be repatriated for at least one
Prospectus Page 7
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
year. As a result, the Fund currently intends to limit most of its Chilean
investments to indirect investments through American Depositary Receipts
("ADRs") and established Chilean investment companies, the shares of which are
not subject to repatriation restrictions.
INVESTMENTS IN DEBT SECURITIES. Under normal circumstances, the Fund may invest
up to 50% of its total assets in debt securities. There is no limitation on the
percentage of its assets that may be invested in debt securities that are rated
below investment grade. Investment in below investment grade debt securities
involves a high degree of risk and can be speculative. These debt securities are
the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Most debt securities in which the Fund will invest are not rated; if rated, it
is expected that such ratings would be below investment grade. However, the Fund
will not invest in debt securities that are in default in payment as to
principal or interest. See "Risk Factors -- Risks Associated with Debt
Securities."
The Fund may invest in "Brady Bonds," which are debt restructurings that provide
for the exchange of cash and loans for newly issued bonds. Brady Bonds have been
issued by the countries of Albania, Argentina, Brazil, Bulgaria, Costa Rica,
Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Panama, Peru,
Philippines, Poland, Uruguay, Venezuela and Vietnam, and are expected to be
issued by other emerging market countries. As of the date of this Prospectus,
the Fund is not aware of the occurrence of any payment defaults on Brady Bonds.
Investors should recognize, however, that Brady Bonds do not have a long payment
history. In addition, Brady Bonds are often rated below investment grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time of issuance and is adjusted at
regular intervals thereafter.
Capital appreciation in debt securities may arise as a result of a favorable
change in relative foreign exchange rates, in relative interest rate levels and/
or in the creditworthiness of issuers. The receipt of income from debt
securities owned by the Fund is incidental to its objective of capital
appreciation.
TEMPORARY DEFENSIVE STRATEGIES. The Fund may invest up to 100% of its assets in
cash (U.S. dollars, foreign currencies, multinational units such as Euros)
and/or high quality debt securities or money market instruments to generate
income to defray its expenses, for temporary defensive purposes and pending
investment in accordance with its investment objective and policies. In
addition, the Fund may be primarily invested in U.S. securities for temporary
defensive purposes or pending investment of the proceeds of sales of new Fund
shares. The Fund may assume a temporary defensive position when, due to
political, market or other factors broadly affecting Latin American markets, the
Sub-adviser determines that opportunities for capital appreciation in those
markets would be significantly limited over an extended period or that investing
in those markets presents undue risk of loss. For a full description of money
market instruments, see "Temporary Defensive Strategies" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
ADDITIONAL INVESTMENT POLICIES
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Fund may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). Pursuant to the Investment Company Act of 1940 (the "1940
Act"), the Fund generally may invest up to 10% of its total assets in the
aggregate in shares of other investment companies and up to 5% of its total
assets in any one investment company, as long as each investment does not
represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities and
is subject to limitations under the 1940 Act and market availability. The Fund
does not intend to invest in such investment companies unless, in the judgment
of the Sub-adviser, the
Prospectus Page 8
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
potential benefits of such investment justify the payment of any applicable
premium or sales charge. As a shareholder in an investment company, the Fund
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time the Fund would continue
to pay its own management fees and other expenses. AIM and the Sub-adviser will
waive their advisory fees to the extent that the Fund invests in an Affiliated
Fund.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows a Fund to retain
ownership of the securities loaned and, at the same time, enhances the Fund's
total return. At all times a loan is outstanding, the Fund's borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S.
government securities or certain irrevocable letters of credit equal to the
value of the borrowed securities plus any accrued interest or such other
collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. The risks in lending portfolio securities, as
with other extensions of secured credit, consist of possible delays in receiving
additional collateral or in recovery of the loaned securities and possible loss
of rights in the collateral should the borrower fail financially.
PRIVATIZATIONS. The governments in some Latin American countries have been
engaged in programs of selling part or all of their stakes in government owned
or controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain Latin American countries, the ability of foreign
entities such as the Fund to participate in privatizations may be limited by
local law, or the terms on which the Fund may be permitted to participate may be
less advantageous than those afforded local investors. There can be no assurance
that Latin American governments and governments in emerging markets will
continue to sell companies currently owned or controlled by them or that
privatization programs will be successful.
BORROWING. It is a fundamental policy of the Fund that it may borrow an amount
up to 33 1/3% of its total assets in order to meet redemption requests.
Borrowing may cause greater fluctuation in the value of the Fund's shares than
would be the case if the Fund did not borrow, but also may enable the Fund to
retain favorable securities positions rather than liquidating such positions to
meet redemptions. It is a nonfundamental policy of the Fund, that the Fund will
not purchase securities during times when outstanding borrowings represent 5% or
more of each Fund's total assets.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities and forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery to the Fund. If the Fund
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Fund enters into a transaction on a
when-issued or forward commitment basis, the Fund will segregate cash or liquid
securities equal to the value of the when-issued or forward commitment
securities with its custodian bank and will mark to market daily such assets.
There is a risk that the securities may not be delivered and that the Fund may
incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment risk normally associated with the
portfolio. These instruments are often referred to as "derivatives," which may
be defined as financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security, currency or an
index of securities). The Fund may enter into such instruments up to the full
value of its portfolio assets. See "Risk Factors -- Options, Futures and Foreign
Currency Transactions" herein and "Options, Futures and Currency
Prospectus Page 9
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on such futures
contracts to hedge against movements in exchange rates.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most Latin American markets, to
securities denominated in such currencies or to securities of issuers domiciled
or principally engaged in business in such emerging markets. To the extent that
such a market does not exist, the Sub-adviser may not be able to effectively
hedge its investment in such markets.
The Fund may purchase and sell put and call options on securities to hedge
against the risk of fluctuations in the prices of securities held by the Fund or
that the Sub-adviser intends to include in the Fund's portfolio. The Fund also
may purchase and sell put and call options on indices to hedge against overall
fluctuations in the securities markets generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
adversely affect the Fund's portfolio. The Fund also may purchase stock index
futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The Fund
may use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolios against changes in the general level of interest
rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations as
fundamental policies which also may not be changed without shareholder approval.
A complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information may be changed by the Trust's Board of Trustees without shareholder
approval. If a percentage restriction on investment or utilization of assets in
an investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively, in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
Prospectus Page 10
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objective. Investing in the Fund entails a substantial degree of risk and an
investment in the Fund should be considered speculative. Investors are strongly
advised to consider carefully the special risks involved in Latin America, which
are in addition to the usual risks of investing in developed markets around the
world.
The Fund's net asset value will fluctuate, reflecting fluctuations in the market
value of its portfolio positions and its net currency exposure. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Fund will fluctuate
in response to general market and economic developments, as well as developments
affecting the particular issuers of such securities.
The Fund is classified under the 1940 Act as a "non-diversified" fund. As a
result, the Fund will be able to invest in a fewer number of issuers than if it
were classified under the 1940 Act as a "diversified" fund. To the extent that
the Fund invests in a smaller number of issuers, the value of its shares may
fluctuate more widely and it may be subject to greater investment and credit
risk with respect to its portfolio.
Investing in securities of Latin American issuers involves risks relating to
potential political and economic instability of certain Latin American countries
and the risks of expropriation, nationalization, confiscation of assets and
property or the imposition of restrictions on foreign investment and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation, the Fund could lose its entire investment
in any such country.
The securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the United States. Disclosure and regulatory standards are in many respects
less stringent than U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited.
The limited size of many Latin American securities markets and limited trading
volume in issuers compared to volume of trading in U.S. securities could cause
prices to be erratic for reasons apart from factors that affect the quality of
the securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets.
Further, there is a risk that an emergency situation may arise in one or more
Latin American markets as a result of which prices for portfolio securities in
such markets may not be readily available. Section 22(e) of the 1940 Act permits
a registered investment company, such as the Fund, to suspend redemption of its
shares for any period during which an emergency exists, as determined by the
SEC. Accordingly, when the Fund believes that circumstances dictate, it will
promptly apply to the SEC for a determination that such an emergency exists
within the meaning of Section 22(e) of the 1940 Act. During the period
commencing from the Fund's identification of such conditions until the date of
any SEC action, the Fund's portfolio securities in the affected markets will be
valued at fair value determined in good faith by or under the direction of the
Trust's Board of Trustees.
The economies of individual Latin American countries may differ favorably or
unfavorably from the U.S. economy in such respects as the rate of growth of
gross domestic product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. Most Latin American countries
have experienced substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates
have had and may continue to have very negative effects on the economies and
securities markets of certain Latin American countries. Furthermore, certain
Latin American countries may impose withholding taxes
Prospectus Page 11
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
on dividends payable to the Fund at a higher rate than those imposed by other
foreign countries. This may reduce the Fund's investment income available for
distribution to shareholders.
Companies in Latin America are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. There is substantially less publicly available
information about Latin American companies and the governments of Latin American
countries than there is about U.S. companies and the U.S. Government.
Certain Latin American countries are among the largest debtors to commercial
banks and foreign governments. At times certain Latin American countries have
declared moratoria on the payment of principal and/or interest on external debt.
The Fund may invest in debt securities, including Brady Bonds, issued as part of
debt restructurings and such debt is to be considered speculative. There is a
history of defaults with respect to commercial bank loans by public and private
entities issuing Brady Bonds.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Fund generally will vary inversely with market interest rates. If interest
rates in a market fall, the Fund's debt securities issued by governments or
companies in that market ordinarily will increase in value. If market interest
rates increase, however, the debt securities owned by the Fund in that market
will likely decrease in value.
The Fund may invest up to 50% of its total assets in debt securities of any
rating. Such investments involve a high degree of risk.
Debt rated Baa by Moody's Investors Service, Inc. ("Moody's") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), and
debt rated Ba, B, Caa, Ca or C by Moody's is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated C by Moody's or S&P is the lowest rated debt that is not
in default as to principal or interest and such issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing. Lower quality debt securities are also generally considered to be
subject to greater risk than securities with higher ratings with regard to a
deterioration of general economic conditions. These foreign debt securities are
the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. Similarly, certain Latin American governments that issue lower
quality debt securities are among the largest debtors to commercial banks,
foreign governments and supranational organizations such as the World Bank, and
may not be able or willing to make principal and/ or interest repayments as they
come due. The risk of loss due to default by the issuer is significantly greater
for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from the Fund. In
addition, the Fund may have difficulty disposing of lower quality securities
because they may have a
Prospectus Page 12
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
thin trading market. There may be no established retail secondary market for
many of these securities, and the Fund anticipates that such securities could be
sold only to a limited number of dealers or institutional investors. The lack of
a liquid secondary market also may have an adverse impact on market prices of
such instruments and may make it more difficult for the Fund to obtain accurate
market quotations for purposes of valuing the Fund's portfolio. The Fund may
also acquire lower quality debt securities during an initial underwriting or
which are sold without registration under applicable securities laws. Such
securities involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession.
The Fund may also incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and the Fund may have limited legal recourse in the event of a
default. Debt securities issued by governments in Latin American markets can
differ from debt obligations issued by private entities in that remedies from
defaults generally must be pursued in the courts of the defaulting government,
and legal recourse is therefore somewhat diminished. Political conditions, in
terms of a government's willingness to meet the terms of its debt obligations,
also are of considerable significance. There can be no assurance that the
holders of commercial bank debt may not contest payments to the holders of debt
securities issued by governments in Latin American markets in the event of
default by the governments under commercial bank loan agreements.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets in
securities for which no readily available market exists, so-called "Illiquid
Securities." The Fund may invest in joint ventures, cooperatives, partnerships
and state enterprises and other similar vehicles which are illiquid
(collectively, "Special Situations"). The Sub-adviser believes that carefully
selected investments in Special Situations could enable the Fund to achieve
capital appreciation substantially exceeding the appreciation the Fund would
realize if it did not make such investments. However, in order to limit
investment risk, the Fund will invest no more than 5% of its total assets in
Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
CURRENCY RISK. Because the Fund may invest substantially in securities
denominated in currencies other than the U.S. dollar, and since the Fund may
hold foreign currencies, the Fund will be affected favorably or unfavorably by
exchange control regulations or changes in the exchange rates between such
currencies and the U.S. dollar. Changes in currency exchange rates will
influence the value of the Fund's shares, and also may affect the value of
dividends and interest earned by the Fund and gains and losses realized by the
Fund. Currencies generally are evaluated on the basis of fundamental economic
criteria (e.g., relative inflation and interest rate levels and trends, growth
rate forecasts, balance of payments status and economic policies) as well as
technical and political data. Exchange rates are determined by the forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in dollars.
Many of the currencies of Latin American countries have experienced steady
devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Any devaluations in the currencies
in which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries also may have fixed currencies whose values against the U.S.
dollar are not independently determined. In addition, there is a risk that
certain countries may restrict the free conversion of their currencies into
other currencies. Further, certain currencies may not be internationally traded.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency
Prospectus Page 13
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
transactions involve certain risks, which include: (1) dependence on the
Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of forward contracts, options,
futures contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which the Fund invests; (4) lack of assurance that a liquid secondary market
will exist for any particular option, futures contract or option thereon at any
particular time; (5) the possible loss of principal under certain conditions;
and (6) the possible inability of a Fund to purchase or sell a portfolio
security at a time when it would otherwise be favorable for it to do so, or the
possible need for the Fund to sell a security at a disadvantageous time, due to
the need for the Fund to maintain "cover" or to set aside securities in
connection with hedging transactions.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment management and administration
agreement with AIM, the investment sub-advisory and sub-administration agreement
between AIM and the Sub-adviser, the agreements with AIM Distributors regarding
distribution of the Fund's shares, the custody agreement and the transfer agency
agreement. The day to day operations of the Fund are delegated to the officers
of the Trust, subject always to the objective and policies of the Fund and to
the general supervision of the Trust's Board of Trustees. See "Trustees and
Executive Officers" in the Statement of Additional Information for information
on the Trust's Board of Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the Fund's portfolio and
placing orders to buy, sell or hold particular securities; furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
the Fund pays AIM investment management and administration fees, computed daily
and paid monthly, based on its average daily net assets, at the annualized rate
of .975% on the first $500 million, .95% on the next $500 million, .925% on the
next $500 million, and .90% on amounts thereafter. Out of the aggregate fees
payable by the Fund, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-adviser, AIM Distributors or other agents. AIM has
undertaken to limit the Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the annual rate of 2.00% and
2.50% of the average daily net assets of the Fund's Class A and Class B shares,
respectively.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-Adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The
Prospectus Page 14
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
Sub-adviser, 50 California Street, 27th Floor, San Francisco, California 94111,
and 1166 Avenue of the Americas, New York, New York 10036, serves as the
sub-adviser to the Fund pursuant to an investment sub-advisory and
sub-administration agreement dated as of May 29, 1998. Prior to May 29, 1998,
the Sub-adviser was known as Chancellor LGT Asset Management, Inc. On May 29,
1998, Liechtenstein Global Trust AG ("LGT"), the former indirect parent
organization of the Sub-adviser, consummated a purchase agreement with AMVESCAP
PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management Division,
which included the Sub-adviser and certain other affiliates. As a result of this
transaction, the Sub-adviser is now an indirect wholly-owned subsidiary of
AMVESCAP PLC. Prior to the sale, the Sub-adviser and its worldwide asset
management affiliates provided investment management and/or administrative
services to institutional, corporate and individual clients around the world
since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- --------------------------- ---------------------- ------------------------------------------------------------------
<S> <C> <C>
Francesco Bertoni Portfolio Manager Portfolio Manager for the Sub-adviser since June 1998. Investment
London since 1998 Director of INVESCO Asset Management Ltd. (London) ("INVESCO
London"), an affiliate of the Sub-adviser, since 1994. Portfolio
Manager for INVESCO London from 1990 to 1994.
David Manuel Portfolio Manager Portfolio Manager for the Sub-adviser and INVESCO GT Asset
London since 1997 Management PLC (London), an affiliate of the Sub-adviser, since
November 1997. Investment Analyst and Portfolio Manager for Abbey
Life Investment Services Ltd. (Bournemouth) from 1987 to 1997,
and Head of Latin American Equities from 1994 to 1997.
</TABLE>
------------------------
In placing securities orders for the Fund's portfolio transactions, the
Sub-adviser seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-adviser may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions may be executed
through affiliates of AIM or the Sub-adviser. High portfolio turnover (over
100%) involves correspondingly greater brokerage commissions and other
transaction costs that the Fund will bear directly and could result in the
realization of net capital gains which would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998, on behalf of Class A shares of the Fund and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. Certain Trustees and
officers of the Trust are affiliated with AIM Distributors.
Prospectus Page 15
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund 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 of the
Fund 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 the Fund's average daily net assets
attributable to Class B shares attibutable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges 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 shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares master distribution plan (as defined in the plan) would terminate all
payments to AIM Distributors. Termination of the Class B shares distribution
plan or Distribution Agreement does not affect the obligation of Class B
shareholders to pay contingent deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.50% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund.
Prospectus Page 16
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
Any amounts not paid as a service fee would constitute an asset-based sales
charge. Amounts paid in accordance with the Class B Plan with respect to the
Fund may be used to finance any activity primarily intended to result in the
sale of Class B shares of the Fund.
BOTH PLANS. Activities that may be financed under the Class A Plan and the Class
B Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, expense 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 the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland Corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other
Prospectus Page 17
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
series do not have cumulative voting rights, which means that the holders of a
majority of the shares voting for the election of Trustees can elect all the
Trustees. A Trustee may be removed at any meeting of the shareholders of the
Trust by a vote of the shareholders owning at least two-thirds of the
outstanding shares. Any Trustee may call a special meeting of shareholders for
any purpose. Furthermore, Trustees shall promptly call a meeting of shareholders
solely for the purpose of removing one or more Trustees when requested in
writing to do so by shareholders holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 18
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
A-1
<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
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AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
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AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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AIM INVESTOR'S GUIDE
Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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AIM INVESTOR'S GUIDE
- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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AIM INVESTOR'S GUIDE
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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AIM INVESTOR'S GUIDE
number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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AIM INVESTOR'S GUIDE
the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
A-14
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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<PAGE>
AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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<PAGE>
AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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<PAGE>
AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
A-18
<PAGE>
AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
A-19
<PAGE>
AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
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AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
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AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
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AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
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<PAGE>
AIM LATIN AMERICAN GROWTH FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM STRATEGIC INCOME FUND
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Strategic Income Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end series, management investment
company. The Fund is a non-diversified portfolio which primarily seeks high
current income and secondarily seeks capital appreciation. The Fund allocates
its assets among debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets.
The Fund is designed for long-term investors and not as a trading vehicle, does
not represent a complete investment program and is not suitable for all
investors. An investment in the Fund involves risk factors that should be
reviewed carefully by potential investors. The Fund is authorized to borrow
money for investment purposes, which would increase the volatility of its
performance and involves additional risks. See "Investment Objectives and
Policies" and "Risk Factors."
THE STRATEGIC INCOME FUND INVESTS UP TO 50% OF ITS TOTAL ASSETS IN LOWER QUALITY
AND UNRATED FOREIGN GOVERNMENT BONDS WHOSE CREDIT QUALITY IS GENERALLY
CONSIDERED THE EQUIVALENT OF U.S. CORPORATE DEBT SECURITIES COMMONLY KNOWN AS
"JUNK BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF
PRINCIPAL AND INTEREST. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THE FUND. SEE "INVESTMENT OBJECTIVES AND POLICIES" AND
"RISK FACTORS."
This Prospectus sets forth concisely information about the Fund that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information, dated September 8,
1998, has been filed with the Securities and Exchange Commission ("SEC") and is
incorporated herein by reference. The Statement of Additional Information is
available without charge upon written request to the Trust at 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173 or by calling 1-800-347-4246. The SEC
maintains a Web site at (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding
the Fund. Additional information about
the Fund may also be obtained from (http://www.aimfunds.com).
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM STRATEGIC INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objectives and Policies........................................................ 7
Risk Factors.............................................................................. 14
Management................................................................................ 19
Other Information......................................................................... 23
Appendix A -- Description of Debt Ratings................................................. 24
</TABLE>
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of the Trust.
Investment Objectives: The Fund primarily seeks high current income and secondarily seeks capital appreciation.
Principal Investments: The Fund allocates its assets among debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets, and selects particular securities in each
sector based on their relative investment merit.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment man-
agement group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an
offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to a separate
prospectus, the Fund also offers Advisor Class shares, which represent interests in the Fund. The
Advisor Class has different distribution arrangements.
Class A Shares: Shares are offered at net asset value plus any applicable initial sales charge.
</TABLE>
Prospectus Page 2
<PAGE>
AIM STRATEGIC INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Shares are offered at net asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six years from the date
such shares were purchased. Class B shares automatically convert to Class A shares of the Fund eight
years following the end of the calendar month in which a purchase was made. Class B shares are
subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and additional investments must be
at least $50. The minimum initial investment is modified for investments through tax-qualified
retirement plans and accounts initially established with an Automatic Investment Plan. The dis-
tributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
Suitability for Investors An investor in Class A or Class B shares of the Fund should consider the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the shares are expected
to be held, and other circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution fees and any applicable contingent
deferred sales charges on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares. To assist investors
in making this determination, the table under the caption "Table of Fees and Expenses" sets forth
examples of the charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase of more than $250,000
for Class B shares.
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Class A and Class B shares of the Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Class A shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, generally without charge. A contingent deferred sales charge of 1% may apply to
certain redemptions where a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
</TABLE>
Prospectus Page 3
<PAGE>
AIM STRATEGIC INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B shareholders of the Fund may redeem all or a portion of their shares at net asset value on
any business day, less a contingent deferred sales charge for redemptions made within six years from
the date such shares were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on a monthly
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
Risk Factors: There is no assurance that the Fund will achieve its investment objectives. The Fund's net asset
value will fluctuate, reflecting fluctuations in the market value of its portfolio holdings. The
value of debt securities held by the Fund generally fluctuates inversely with interest rate
movements.
The Fund will invest in foreign securities. Investments in foreign securities involve risks relating
to political and economic developments abroad and the differences between the regulations to which
U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies. The Fund may invest in debt securities of issuers in emerging markets. Such
investments entail greater risks than investing in securities of issuers in developed markets.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
The Fund may invest up to 50% of its total assets in debt securities rated below investment grade or,
if not rated, determined by the Sub-adviser to be of comparable quality. Investments of this type are
subject to greater risk of loss of principal and interest.
See "Investment Objectives and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM STRATEGIC INCOME FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares (as a % of offering price)............................... 4.75% None
Sales charges on reinvested distributions to shareholders............................................ None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)............................................................................................... None 5.00%
Redemption charges................................................................................... None None
Exchange fees........................................................................................ None None
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees........................................................ 0.73% 0.73%
12b-1 distribution and service fees.................................................................. 0.35% 1.00%
Other expenses....................................................................................... 0.36% 0.36%
------- -------
Total Fund Operating Expenses...................................................................... 1.44% 2.09%
------- -------
------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (6):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
TEN
ONE THREE FIVE YEARS
YEAR YEARS YEARS (7)
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (4).................................................................. $62 $91 $123 $213
Class B Shares
Assuming a complete redemption at end of period (5)............................... $73 $99 $136 [ ]
Assuming no redemption............................................................ $21 $66 $113 [ ]
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1997. "Other
expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
(6) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
The table and the assumption in the Hypothetical Example of a 5% annual
return are required by regulation of the SEC applicable to all mutual funds;
the 5% annual return is not a prediction of and does not represent the Fund.
(7) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
Prospectus Page 5
<PAGE>
AIM STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. For the period
March 29, 1988 (commencement of operations) to October 22, 1992, the Strategic
Income Fund was named G.T. Global Bond Fund and operated under different
investment objectives, policies and limitations. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM STRATEGIC INCOME FUND
(FORMERLY GT GLOBAL STRATEGIC INCOME FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for Class
A shares reflects the deduction of the Fund's maximum front-end sales charge at
the time of purchase. Standardized total return for Class B shares reflects the
deduction of the maximum applicable contingent deferred sales charge on a
redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield reflects investment
income net of expenses over the relevant period attributable to a Fund share,
expressed as an annualized percentage of the maximum offering price per share
for Class A shares and net asset value per share for Class B shares.
Yield is a function of the type and quality of the Fund's investments, the
maturity of the securities held in the Fund's portfolio and the operating
expense ratio of the Fund. A shareholder's investment in the Fund is not insured
or guaranteed.
Prospectus Page 6
<PAGE>
AIM STRATEGIC INCOME FUND
These factors should be carefully considered by the investor before making an
investment in the Fund.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and /or assume certain expenses of any fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
The Fund primarily seeks high current income and secondarily seeks capital
appreciation. There can be no assurance that the fund will achieve its
investment objective.
The Fund invests in debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets. The Fund selects debt
securities from those issued by governments, their agencies and
instrumentalities; central banks; and commercial banks and other corporate
entities. Debt securities in which the Fund may invest include bonds, notes,
debentures, and other similar instruments including mortgage-backed and
asset-backed securities of foreign issuers as well as domestic issuers. The Fund
normally invests at least 50% of its net assets in U.S. and foreign debt and
other fixed income securities that, at the time of purchase, are rated at least
investment grade by Moody's or S&P or, if not rated, determined by the
Sub-adviser to be of comparable quality. No more than 50% of the Fund's total
assets may be invested in securities rated below investment grade. Such
securities involve a high degree of risk and are predominantly speculative. They
are the equivalent of high yield, high risk bonds, commonly known as "junk
bonds." The Fund may also invest in securities that are in default as to payment
of principal and/or interest.
The Fund's investments in emerging market securities may consist substantially
of Brady Bonds (see "General Policies -- Brady Bonds," below) and other
sovereign debt securities issued by emerging market governments that are traded
in the markets of developed countries or groups of developed countries. The
Sub-adviser may invest in debt securities of emerging market issuers that it
determines to be suitable investments for the Fund without regard to ratings.
Currently, the substantial majority of emerging market debt securities are
considered to have a credit quality below investment grade. The Fund also may
invest in below-investment grade debt securities of corporate issuers in the
United States and in developed foreign countries, subject to the overall 50%
limitation.
GENERAL POLICIES
ASSET ALLOCATION. The Fund invests in debt obligations allocated among diverse
markets and denominated in various currencies, including U.S. dollars, or in
multinational currency units such as Euros. The Fund is designed for investors
who wish to accept the risks entailed in such investments, which are different
from those associated with a portfolio consisting entirely of securities of U.S.
issuers denominated in U.S. dollars. The Fund may purchase securities that are
issued by the government or a company or financial institution of one country
but denominated in the currency of another country (or a multinational currency
unit).
The Sub-adviser allocates the assets of the Fund in securities of issuers in
countries and in currency denominations where the combination of fixed income
market returns, the price appreciation potential of fixed income securities and
currency exchange rate movements will present opportunities primarily for high
current income and secondarily for capital appreciation. In so doing, the Sub-
adviser intends to take full advantage of the different yield, risk and return
characteristics that investment in the fixed income markets of different
countries can provide for U.S. investors. Fundamental economic strength, credit
quality and currency and interest rate trends are the principal determinants of
the emphasis given to various country, geographic and industry sectors within
the Fund. Securities held by the Fund may be invested in without limitation as
to maturity.
Prospectus Page 7
<PAGE>
AIM STRATEGIC INCOME FUND
The Sub-adviser selects securities of particular issuers on the basis of its
views as to the best values then currently available in the marketplace. Such
values are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the local and world
economies, movements in the general level and term of interest rates, currency
values, political developments and variations in the supply of funds available
for investment in the world bond market relative to the demands placed upon it.
The Sub-adviser generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation, interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. The Sub-adviser may seek to protect the Fund
against such negative currency movements through the use of sophisticated
investment techniques. See "Options, Futures and Forward Currency Transactions"
and "Swaps, Caps, Floors and Collars."
According to the Sub-adviser, as of the date of this Prospectus, more than 50%
of the value of all outstanding government debt obligations throughout the world
is represented by obligations denominated in currencies other than the U.S.
dollar. Moreover, from time to time, the debt securities of issuers located
outside the United States have substantially outperformed the debt obligations
of U.S. issuers. Accordingly, the Sub-adviser believes that the Fund's policy of
investing in debt securities throughout the world may enable the achievement of
results superior to those produced by mutual funds with similar objectives to
those of the Fund that invest solely in debt securities of U.S. issuers.
The Fund is designed for investors who wish to accept the risks entailed in such
investments, which are different from those associated with a portfolio
consisting entirely of securities of U.S. issuers denominated in U.S. dollars.
TEMPORARY DEFENSIVE STRATEGIES. The Sub-adviser may employ a temporary defensive
investment strategy if it determines such a strategy to be warranted due to
market, economic or political conditions. Pursuant to such a defensive strategy,
the Fund temporarily may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and/or invest up to 100% of its assets in high
quality debt securities or money market instruments of U.S. or foreign issuers.
In addition, for temporary defensive purposes, most or all of the Fund's
investments may be made in the United States and denominated in U.S. dollars. To
the extent the Fund employs a temporary defensive strategy, it will not be
invested so as to achieve directly its investment objectives. In addition,
pending investment of proceeds from new sales of Fund shares or to meet ordinary
daily cash needs, the Fund may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and may invest in high quality foreign or domestic
money market instruments. For a full description of money market instruments,
see "Selection of Debt Investments" in the "Investment Objectives and Policies"
section of the Statement of Additional Information.
EMERGING MARKET SECURITIES. The Fund considers "emerging markets" to consist of
all countries determined by the Sub-adviser to have developing or emerging
economies and markets. These countries generally include every country in the
world except the United States, Canada, Japan, Australia, New Zealand and most
countries located in Western Europe. The Fund will consider investment in the
following emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
The Fund will not be invested in all such markets at all times. Moreover,
investing in some of those markets currently may not be desirable or feasible,
due to the lack of adequate custody arrangements, overly burdensome repatriation
requirements and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus and the Statement of Additional Information, an
issuer in an emerging
Prospectus Page 8
<PAGE>
AIM STRATEGIC INCOME FUND
market is an entity: (i) for which the principal securities trading market is an
emerging market, as defined above; (ii) that (alone or on a consolidated basis)
derives 50% or more of its total revenue from either goods produced, sales made
or services performed in emerging markets; or (iii) organized under the laws of,
or with a principal office in, an emerging market.
BRADY BONDS. The Fund may invest in "Brady Bonds," which are debt restructurings
that provide for the exchange of cash and loans for newly issued bonds. Brady
Bonds have been issued by the countries of Albania, Argentina, Brazil, Bulgaria,
Costa Rica, Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria,
Panama, Peru, Philippines, Poland, Uruguay, Venezuela and Vietnam and are
expected to be issued by other emerging market countries. As of the date of this
Prospectus, the Fund is not aware of the occurrence of any payment defaults on
Brady Bonds. Investors should recognize, however, that Brady Bonds do not have a
long payment history. In addition, Brady Bonds are often rated below investment
grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time of issuance and is adjusted at
regular intervals thereafter.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The Fund may invest in
mortgage-backed and asset-backed securities of U.S. and foreign issuers,
including privately issued mortgage-backed and asset-backed securities.
Mortgage-backed securities represent direct or indirect interests in pools of
underlying mortgage loans that are secured by real property. Investors typically
receive payments out of the interest on and principal of the underlying
mortgages. Asset-backed securities are similar to mortgage-backed securities,
except that the underlying assets are other financial assets or financial
receivables, such as motor vehicle installment sales contracts, home equity
loans, leases of various types of real and personal property, and receivables
from credit cards. Any mortgage-backed and asset-backed securities purchased by
the Fund will be subject to the same rating requirements that apply to its other
investments.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may invest in fixed and floating
rate loans ("Loans") arranged through private negotiations between a foreign
entity and one or more financial institutions ("Lenders"). The majority of the
Fund's investments in Loans in emerging markets is expected to be in the form of
participations in Loans ("Participations") and assignments of portions of Loans
from third parties ("Assignments"). Participations typically will result in the
Fund having a contractual relationship only with the Lender, not with the
borrower government. The Fund will have the right to receive payments of
principal, interest and any fees to which it is entitled only from the Lender
selling the Participation and only upon receipt by the Lender of the payments
from the borrower. In connection with purchasing Participations, the Fund
generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the loan ("Loan Agreement"), nor any
rights of set-off against the borrower, and the Fund may not directly benefit
from any collateral supporting the Loan in which it has purchased the
Participation. As a result, the Fund will assume the credit risk of both the
borrower and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund
may be treated as a general creditor of the Lender and may not benefit from any
set-off between the Lender and the borrower. The Fund will acquire
Participations only if the Lender interpositioned between the Fund and the
borrower is determined by the Sub-adviser to be creditworthy. When the Fund
purchases Assignments from Lenders, the Fund will acquire direct rights against
the borrower on the Loan. However, since Assignments are arranged through
private negotiations between potential assignees and assignors, the rights and
obligations acquired by the Fund as the purchaser of an Assignment may differ
from, and be more limited than, those held by the assigning Lender.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and
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AIM STRATEGIC INCOME FUND
payment for the securities take place at a later date. When-issued securities
and forward commitments may be sold prior to the settlement date, but the Fund
will purchase or sell when-issued securities and forward commitments only with
the intention of actually receiving or delivering the securities, as the case
may be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery of the
securities. If the Fund disposes of the right to acquire a when-issued security
prior to its acquisition or disposes of its right to deliver or receive against
a forward commitment, it may incur a gain or loss. At the time the Fund enters
into a transaction on a when-issued or forward commitment basis, the Fund will
segregate cash or liquid securities equal to the value of the when-issued or
forward commitment securities with its custodian and will mark to market daily
such assets. There is a risk that the securities may not be delivered and that
the Fund may incur a loss.
The Fund may also sell securities on a "when, as and if issued" basis for
hedging purposes. Under such a transaction, the Fund is required to deliver at a
future date a security it does not presently hold, but which it has a right to
receive if the security is issued. Issuance of the security may not occur, in
which case the Fund would have no obligation to the other party, and would not
receive payment for the sale. Selling securities on a "when, as and if issued"
basis may reduce risk of loss to the extent that such a sale wholly or partially
offsets unfavorable price movements on the investments being hedged. However,
such sales also limit the amount the Fund can receive if the "when, as and if
issued" security is in fact issued.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund is
authorized to borrow money from banks in an amount up to 33 1/3% of its total
assets (including the amount borrowed), less all liabilities and indebtedness
other than the borrowings and may use the proceeds of such borrowings for
investment purposes. The Fund will borrow for investment purposes only when the
Sub-adviser believes that such borrowings will benefit the Fund after taking
into account considerations such as the costs of the borrowing and the likely
investment returns on the securities purchased with the borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Fund creates the opportunity for increased net
income and appreciation but, at the same time, involves special risk
considerations. For example, leveraging might exaggerate changes in the net
asset value of Fund shares and in the yield realized by the Fund. Although the
principal amount of such borrowings will be fixed, the Fund's assets may change
in value during the time the borrowing is outstanding. By leveraging the Fund,
changes in net asset values, higher or lower, may be greater in degree than if
leverage was not employed. To the extent the income derived from the assets
obtained with borrowed funds exceeds the interest and other expenses that the
Fund will have to pay, the Fund's net income will be greater than if borrowing
was not used. Conversely, if the income from the assets obtained with borrowed
funds is not sufficient to cover the cost of borrowing, the net income of the
Fund will be less than if borrowing were not used, and therefore the amount
available for distribution to shareholders as dividends will be reduced. The
Fund expects that some of its borrowings may be made on a secured basis.
In addition to the foregoing borrowings, the Fund may borrow money for temporary
or emergency purposes or payments in an amount not exceeding 5% of the value of
its total assets (not including the amount borrowed) provided that the total
amount borrowed by the Fund for any purpose does not exceed 33 1/3% of its total
assets.
The Fund may also enter into reverse repurchase agreements with a bank or
recognized securities dealer, although the Fund currently has no intention of
doing so with respect to more than 5% of its total assets. Under a reverse
repurchase agreement, the Fund would sell securities and agree to repurchase
them at a particular price at a future date. At the time the Fund enters into a
reverse repurchase agreement, it will establish and maintain a segregated
account with an approved custodian containing cash or liquid securities having a
value not less than the repurchase price, including accrued interest. Reverse
repurchase agreements involve the risk that the market value of the securities
retained in lieu of sale by the Fund may decline below the price of the
securities the Fund has sold but is obligated to repurchase. In the event the
buyer of securities under a reverse repurchase agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or receiver may receive an
extension of time to determine whether to enforce the Fund's obligation to
repurchase the securities, and the Fund's use of the proceeds of the reverse
repurchase agreement may effectively be restricted pending such decision.
The Fund also may enter into "dollar rolls," in which the Fund sells fixed
income securities for delivery
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AIM STRATEGIC INCOME FUND
in the current month and simultaneously contracts to repurchase substantially
similar (same type, coupon and maturity) securities on a specified future date.
During the roll period, the Fund would forego principal and interest paid on
such securities. The Fund would be compensated by the difference between the
current sales price and the forward price for the future purchase, as well as by
the interest earned on the cash proceeds of the initial sale. See "Investment
Objectives and Policies" in the Statement of Additional Information.
Reverse repurchase agreements and dollar rolls will be treated as borrowings and
will be deducted from the Fund's assets for purposes of calculating compliance
with the Fund's borrowing limitation. See "Investment Limitations" in the
Statement of Additional Information.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. At all times a loan is outstanding, the Fund requires the
borrower to maintain with the Fund's custodian, collateral consisting of cash,
U.S. government securities, or certain irrevocable letters of credit equal to at
least the value of the borrowed securities, plus any accrued interest or such
other collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. The risks in lending portfolio securities, as
with other extensions of secured credit, consist of possible delays in receiving
additional collateral or in recovery of the loaned securities and possible loss
of rights in the collateral should the borrower fail financially.
ZERO COUPON SECURITIES. The Fund may invest in certain zero coupon securities
that are "stripped" U.S. Treasury notes and bonds. It also may invest in zero
coupon and other deep discount securities issued by foreign governments and
domestic and foreign corporations, including certain Brady Bonds and other
foreign debt and in payment-in-kind securities. Zero coupon securities pay no
interest to holders prior to maturity, and payment-in-kind securities pay
interest in the form of additional securities. However, a portion of the
original issue discount on zero coupon securities and the "interest" on
payment-in-kind securities will be included in the Fund's income. Accordingly,
for the Fund to continue to qualify for tax treatment as a regulated investment
company and to avoid a certain excise tax (see "Taxes" in the Statement of
Additional Information), it may be required to distribute an amount that is
greater than the total amount of cash it actually receives. These distributions
must be made from the Fund's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund will not be able to purchase additional
income-producing securities with cash used to make such distributions, and its
current income ultimately may be reduced as a result. Zero coupon and
payment-in-kind securities usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS. The Fund may utilize combinations of futures on
bonds and forward currency contracts to create investment positions that have
substantially the same characteristics as bonds of the same type as those on
which the futures contracts are written. Investment positions of this type are
generally referred to as "synthetic securities."
For example, in order to establish a synthetic security position for the Fund
that is comparable to owning a Japanese government bond, the Sub-adviser might
purchase futures contracts on Japanese government bonds in the desired principal
amount and purchase forward currency contracts for Japanese Yen in an amount
equal to the then current purchase price for such bonds in the Japanese cash
market, with each contract having approximately the same delivery date.
The Sub-adviser might roll over the futures and forward currency contract
positions before taking delivery in order to continue the Fund's investment
position, or the Sub-adviser might close out those positions, thus effectively
selling the synthetic security. Further, the amount of each contract might be
adjusted in response to market conditions and the forward currency contract
might be changed in amount or eliminated in order to hedge against currency
fluctuations.
The Sub-adviser would create synthetic security positions for the Fund when it
believes that it can obtain a better yield or achieve cost savings in comparison
to purchasing actual bonds or when comparable bonds are not readily available in
the market. Synthetic security positions are subject to the risk that changes in
the value of purchased futures contracts may differ from changes in the
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AIM STRATEGIC INCOME FUND
value of the bonds that might otherwise have been purchased in the cash market.
Also, while the Sub-adviser believes that the cost of creating synthetic
security positions generally will be materially lower than the cost of acquiring
comparable bonds in the cash market, the Fund will incur transaction costs in
connection with each purchase of a futures or forward currency contract. The use
of futures contracts and forward currency contracts to create synthetic security
positions also is subject to substantially the same risks as those that exist
when these instruments are used in connection with hedging strategies. See
"Options, Futures and Forward Currency Transactions" below and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies, and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the Fund's investment. The Fund also may enter into interest
rate, currency and index swaps and purchase or sell related caps, floors and
collars and other similar instruments. See "Swaps, Caps, Floors and Collars"
below. These instruments are often referred to as "derivatives," which may be
defined as financial instruments whose performance is derived, at least in part,
from the performance of another asset (such as a security, currency or an index
of securities). The Fund may enter into such instruments up to the full value of
its portfolio assets. See "Risk Factors -- Options, Futures and Currency
Transactions" herein and "Options, Futures and Currency Strategies" in the
Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. The Fund also may purchase and sell put and call
options on currencies, futures contracts on currencies and options on such
futures contracts to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on securities
to hedge against the risk of fluctuations in the prices of securities held by
the Fund or that the Sub-adviser intends to include in the Fund's portfolio. The
Fund also may purchase and sell put and call options on indices to hedge against
overall fluctuations in the securities markets generally or in a specific market
sector.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or market sector decline that could adversely affect the Fund's
portfolio. The Fund also may purchase index futures contracts and purchase call
options or write put options on such contracts to hedge against a general market
or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. The Fund may use interest rate futures contracts and
options thereon to hedge its portfolio against changes in the general level of
interest rates.
SWAPS, CAPS, FLOORS AND COLLARS. The Fund may enter into interest rate, currency
and index swaps, and purchase or sell related caps, floors and collars and other
derivative instruments. The Fund expects to enter into these transactions
primarily to preserve a return or spread on a particular investment or portion
of its portfolio, to protect against currency fluctuations, as a technique for
managing the portfolio's duration (I.E., the price sensitivity to changes in
interest rates) or to protect against any increase in the price of securities
the Fund anticipates purchasing at a later date. The Fund intends to use these
transactions as hedges, and will not sell interest rate caps or floors if it
does not own securities or other instruments providing an income stream roughly
equivalent to what the Fund may be obligated to pay.
Interest rate swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest (for example, an exchange of
floating rate payments for fixed rate payments) with respect to a notional
amount of principal. A currency swap is an agreement to exchange cash flows on a
notional amount based on changes in the values of the reference indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a
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AIM STRATEGIC INCOME FUND
combination of a cap and a floor that preserves a certain return within a
predetermined range of interest rates or values.
INDEXED COMMERCIAL PAPER. The Fund may invest without limitation in commercial
paper which is indexed to certain specific foreign currency exchange rates. The
terms of such commercial paper provide that its principal amount is adjusted
upwards or downwards (but not below zero) at maturity to reflect changes in the
exchange rate between two currencies while the obligation is outstanding. The
Fund will purchase such commercial paper with the currency in which it is
denominated and, at maturity, will receive interest and principal payments
thereon in that currency, but the amount of principal payable by the issuer at
maturity will change in proportion to the change (if any) in the exchange rate
between the two specified currencies between the date the instrument is issued
and the date the instrument matures. While such commercial paper entails the
risk of loss of principal, the potential for realizing gains as a result of
changes in foreign currency exchange rates enables the Fund to hedge against a
decline in the U.S. dollar value of investments denominated in foreign
currencies while seeking to provide an attractive money market rate of return.
The Fund will not purchase such commercial paper for speculation.
OTHER INDEXED SECURITIES. The Fund may invest in certain other indexed
securities, which are securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals or other
commodities, or other financial indicators. Indexed securities typically, but
not always, are debt securities or deposits whose value at maturity or coupon
rate is determined by reference to a specific instrument or statistic. The
performance of indexed securities depends to a great extent on the performance
of the security, currency, or other instrument to which they are indexed, and
may also be influenced by interest rate changes in the United States and abroad.
At the same time, indexed securities are subject to the credit risks associated
with the issuer of the security, and their values may decline substantially if
the issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments. New forms of indexed securities
continue to be developed. The Fund may invest in such securities to the extent
consistent with its investment objectives.
OTHER INFORMATION. The Fund's investment objectives may not be changed without
the approval of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. The
Fund's other investment policies described herein and in the Statement of
Additional Information may be changed by the Trust's Board of Trustees without
shareholder approval.
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. See "Investment Objectives and Policies -- Short
Sales" in the Statement of Additional Information.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
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AIM STRATEGIC INCOME FUND
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objectives. The Fund's net asset value will fluctuate, reflecting fluctuations
in the market value of its portfolio positions and its net currency exposure.
The value of fixed income securities held by the Fund generally fluctuates
inversely with interest rate movements. Longer term bonds held by the Fund are
subject to greater interest rate risk.
NON-DIVERSIFIED CLASSIFICATION. The Fund is classified under the Investment
Company Act of 1940 (the "1940 Act") as a "non-diversified" fund. As a result,
the Fund will be able to invest in a fewer number of issuers than if it were
classified under the 1940 Act as a "diversified" fund. To the extent that the
Fund invests in a smaller number of issuers, the value of the Fund's shares may
fluctuate more widely and the Fund may be subject to greater investment and
credit risk with respect to its portfolios.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally are not registered with the SEC, nor
are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. In addition, certain costs
attributable to foreign investing, such as custody charges, are higher than
those attributable to domestic investing. Securities of some foreign companies
are less liquid and their prices may be more volatile than securities of
comparable domestic companies. The Fund's interest and dividends from foreign
issuers may be subject to non-U.S. withholding taxes, thereby reducing their net
investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic
developments which could affect the investments of the Fund in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
CURRENCY RISK. Since the Fund normally invests substantially in securities
denominated in currencies other than the U.S. dollar, and because they may hold
foreign currencies, they will be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rates between such currencies and
the U.S. dollar. Changes in currency exchange rates will influence the value of
the Fund's shares, and also may affect the value of dividends and interest
earned by the Fund and gains and losses realized by the Fund. Currencies
generally are evaluated on the basis of fundamental economic criteria (e.g.,
relative inflation and interest rate levels and trends, growth rate forecasts,
balance of payments status and economic policies) as well as technical and
political data. The exchange rates between the U.S. dollar and other currencies
are determined by supply and demand in the currency exchange markets, the
international balance of payments, governmental intervention, speculation and
other economic and political conditions. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, a decline in the exchange rate of the
currency would adversely affect the value of the security expressed in U.S.
dollars.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed foreign markets around the world.
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AIM STRATEGIC INCOME FUND
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Fund could lose its entire investment in that market.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause the Fund to forego attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Fund believes that appropriate circumstances warrant, it will promptly apply
to the SEC for a determination that an emergency exists within the meaning of
Section 22(e) of the 1940 Act. During the period commencing from the Fund's
identification of such conditions until the date of SEC action, the portfolio
securities of the Fund in the affected markets will be valued at fair value as
determined in good faith by or under the direction of the Trust's Board of
Trustees.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The yield characteristics of
mortgage-backed and asset-backed securities differ from those of traditional
bonds. Among the major differences are that interest and principal payments are
made more frequently (usually monthly) and that principal may be prepaid at any
time because the underlying mortgage loans or other assets generally may be
prepaid at any time. Generally, prepayments on fixed-rate mortgage loans will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. Mortgage-backed and asset-backed securities may also
decrease in value as a result of increasing market interest rates and, because
of prepayments, may benefit less than other bonds from declining interest rates.
Reinvestments of prepayments may occur at lower interest rates than the original
investment, thus adversely affecting the yield of the Fund. Actual prepayment
experience may cause the yield of a mortgage-backed security to differ from what
was assumed when the Fund purchased the security. The market for privately
issued mortgage-backed and asset-backed securities is smaller and less liquid
than the market for U.S. government mortgage-backed securities.
Foreign mortgage-backed securities markets are substantially smaller than U.S.
markets, but have been established in several countries, including Germany,
Denmark, Sweden, Canada and Australia,
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AIM STRATEGIC INCOME FUND
and may be developed elsewhere. Foreign mortgage-backed securities generally are
structured similar to domestic mortgage-backed securities, and they normally
present substantially similar investment risks as well as the other risks
normally associated with foreign securities.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may have difficulty disposing of
Assignments and Participations. The liquidity of such securities is limited and,
the Fund anticipates that such securities could be sold only to a limited number
of institutional investors. The lack of a liquid secondary market could have an
adverse impact on the value of such securities and on the Fund's ability to
dispose of particular Assignments or Participations when necessary to meet the
Fund's liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for the Fund to assign a value to those securities for purposes of
valuing the Fund's portfolio and calculating its net asset value.
SOVEREIGN DEBT. The Fund may invest in sovereign debt securities of emerging
market governments, including Brady Bonds. Investments in such securities
involve special risks. The issuer of the debt or the governmental authorities
that control the repayment of the debt may be unable or unwilling to repay
principal or interest when due in accordance with the terms of such debt.
Periods of economic uncertainty may result in the volatility of market prices of
sovereign debt obligations and in turn the Fund's net asset value, to a greater
extent than the volatility inherent in domestic fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's investments.
Emerging markets are faced with social and political issues and some of them
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs, and may have other adverse
social, political and economic consequences. Political changes or a
deterioration of a country's domestic economy or balance of trade may affect the
willingness of countries to service their sovereign debt. Although the
Sub-adviser intends to manage the Fund in a manner that will minimize the
exposure to such risks, there can be no assurance that adverse political changes
will not cause the Fund to suffer a loss of interest or principal on any of its
holdings.
In recent years, some of the emerging market countries in which the Fund expects
to invest have encountered difficulties in servicing their sovereign debt
obligations. Some of these countries have withheld payments of interest and/or
principal of sovereign debt. These difficulties have also led to agreements to
restructure external debt obligations -- in particular, commercial bank loans,
typically by rescheduling principal payments, reducing interest rates and
extending new credits to finance interest payments on existing debt. In the
future, holders of emerging market sovereign debt securities may be requested to
participate in similar rescheduling of such debt. Certain emerging market
countries are among the largest debtors to commercial banks and foreign
governments. Currently, Brazil, Mexico and Argentina are the largest debtors
among developing countries. At times certain emerging market countries have
declared moratoria on the payment of principal and interest on external debt;
such a moratorium is currently in effect in certain emerging market countries.
There is no bankruptcy proceeding by
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AIM STRATEGIC INCOME FUND
which a creditor may collect in whole or in part sovereign debt on which an
emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Fund may invest involve great risk. As noted above, sovereign debt
obligations issued by emerging market governments generally are deemed to be the
equivalent in terms of quality to securities rated below investment grade by
Moody's and S&P. Such securities are regarded as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations and involve major risk exposure to
adverse conditions. Some of such securities, with respect to which the issuer
currently may not be paying interest or may be in payment default, may be
comparable to securities rated D by S&P or C by Moody's. The Fund may have
difficulty disposing of and valuing certain sovereign debt obligations because
there may be a limited trading market for such securities. Because there is no
liquid secondary market for many of these securities, the Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors.
LOWER QUALITY DEBT SECURITIES. Under normal market conditions the Fund may
invest up to 50% of its total assets in debt securities rated below investment
grade. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest quality debt that is not in default as to
principal or interest and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than higher quality securities with regard to a deterioration of general
economic conditions. These securities are the equivalent of high yield, high
risk bonds, commonly known as "junk bonds." As noted above, the Fund may invest
in debt securities rated below C, which are in default as to principal and/or
interest.
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit quality in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Appendix A" for a discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Prospectus Page 17
<PAGE>
AIM STRATEGIC INCOME FUND
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Fund. If an issuer exercises these provisions in a declining
interest rate market, the Fund may have to replace the security with a lower
yielding security, resulting in a decreased return for investors. In addition,
the Fund may have difficulty disposing of lower quality securities because there
may be a thin trading market for such securities. There may be no established
retail secondary market for many of these securities, and the Fund anticipates
that such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing the securities in the portfolios of the Fund. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower quality securities, especially in a
thinly traded market. The Fund also may acquire lower quality debt securities
during an initial underwriting or may acquire lower quality debt securities
which are sold without registration under applicable securities laws. Such
securities involve special considerations and risks.
Factors having an adverse effect on the market value of lower rated securities
or their equivalents purchased by the Fund will adversely impact net asset value
of the Fund. See "Risk Factors" in the Statement of Additional Information. In
addition to the foregoing, such factors may include: (i) potential adverse
publicity; (ii) heightened sensitivity to general economic or political
conditions; and (iii) the likely adverse impact of a major economic recession.
The Fund also may incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and the Fund may have limited legal recourse in the event of a
default. Debt securities issued by governments in emerging markets can differ
from debt obligations issued by private entities in that remedies from defaults
generally must be pursued in the courts of the defaulting government, and legal
recourse is therefore somewhat diminished. Political conditions, in terms of a
government's willingness to meet the terms of its debt obligations, also are of
considerable significance. There can be no assurance that the holders of
commercial bank debt may not contest payments to the holders of debt securities
issued by governments in emerging markets in the event of default by the
governments under commercial bank loan agreements.
As of October 31, 1997, the Fund had 89.27% of its total net assets in debt
securities that received a rating from Moody's and 4.00% of its total net assets
in debt securities that were not so rated. In addition, the Fund had 6.73% of
its total net assets in cash and net receivables. The Fund had the following
percentages of its total net assets invested in rated securities: Aaa -- 41.23%,
Aa -- 12.68%, A -- 1.31%, Baa -- 3.75%, Ba -- 24.30%, B -- 6.00%, Caa -- 0.00%,
Ca -- 0.00%, C -- 0.00%. Included under the unrated category are securities held
by the Fund which, while unrated, have been determined by the Sub-adviser to be
of comparable quality to securities in the following rating categories: Ba --
1.03%; and B -- 2.97%. It should be noted that the allocation of the investments
of the Fund by rating on any given date will vary and should not be considered
representative of the future portfolio composition of the Fund.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. In addition, issuers in
emerging markets typically are subject to a greater degree of change in earnings
and business prospects than issuers in developed countries. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which the Fund invests; (4) lack of
assurance that a liquid secondary market will exist for any particular option,
futures contract or option thereon at any particular time; (5) the possible loss
of principal under certain conditions; and (6) the possible inability of the
Fund to purchase or sell a portfolio security at a time when it would otherwise
be favorable for it to do so, or the possible need for the Fund to sell a
security at a disadvantageous
Prospectus Page 18
<PAGE>
AIM STRATEGIC INCOME FUND
time, due to the need for the Fund or Portfolio to maintain "cover" or to set
aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets, in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust and persons or companies furnishing services to the Fund
including the investment management and administration agreement with AIM, the
investment sub-advisory and sub-administration agreement between AIM and the
Sub-adviser, the agreements with AIM Distributors regarding distribution of the
Fund's shares, the custody agreement and the transfer agency agreement. The
day-to-day operations of the Fund are delegated to the officers of the Trust,
subject always to the investment objectives and policies of the Fund and to the
general supervision of the Trust's Board of Trustees. See "Trustees and
Executive Officers" in the Statement of Additional Information for information
on the Trustees of the Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the investment portfolio of
the Fund and placing orders to buy, sell or hold particular securities. In
addition, AIM and the Sub-adviser provide the following administration services
to the Fund: furnishing corporate officers and clerical staff; providing office
space, services and equipment; and supervising all matters relating to the
Fund's operation.
The Fund pays AIM investment management and administration fees computed daily
and payable monthly, based on the average daily net assets, for such services at
the annualized rate of .725% on the first $500 million, .70% on the next $1
billion, .675% on the next $1 billion, and .65% on amounts thereafter. Out of
the aggregate fees payable by the Fund, AIM pays the Sub-adviser sub-advisory
and sub-administration fees equal to 40% of the aggregate fees AIM receives from
the Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-adviser, AIM Distributors or any other agents. AIM has
undertaken to limit the expenses of the Class A and Class B shares of the Fund
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 1.85% and 2.50% of the average daily net assets of
the Fund's Class A and Class B shares.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser, 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the Americas, New
York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29,
Prospectus Page 19
<PAGE>
AIM STRATEGIC INCOME FUND
1998, Liechtenstein Global Trust AG ("LGT"), the former indirect parent
organization of the Sub-adviser, consummated a purchase agreement with AMVESCAP
PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management Division,
which included the Sub-adviser and certain other affiliates. As a result of this
transaction, the Sub-adviser is now an indirect wholly owned subsidiary of
AMVESCAP PLC. Prior to the sale, the Sub-adviser and its worldwide asset
management affiliates provided investment management and/or administrative
services to institutional, corporate and individual clients around the world
since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices, including investment offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong,
London, Singapore, Sydney, Tokyo and Toronto. In managing the Fund, the
Sub-adviser employs a team approach, taking advantage of its investment
resources around the world.
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau Portfolio Manager since Chief Investment Officer for Global Fixed Income for the Sub-adviser
New York 1996 since October 1996. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from July
1995 to October 1996. Employed by Chancellor Capital Management,
Inc. ("Chancellor Capital"), a predecessor of the Sub-Adviser, from
1995 to October 1996. Senior Vice President and Senior Portfolio
Manager for Fiduciary Trust Company International from 1993 to
1995. Vice President at Bankers Trust Company from 1991 to 1993.
David B. Hughes Portfolio Manager since Head of Global Fixed Income, North America, for the Sub- Adviser
New York 1998 since January 1998. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-Adviser from July
1995 to December 1997. Employed by Chancellor Capital from July
1995 to October 1996. Assistant Vice President of Fiduciary Trust
Company International from 1994 to 1995. Assistant Treasurer at the
Bankers Trust Company from 1991 to 1994.
Craig Munro Portfolio Manager since Portfolio Manager for the Sub-Adviser since August 1997. Vice
New York 1998 President and Senior Analyst in the Emerging Markets Group of the
Global Fixed Income Division of Merrill Lynch Asset Management from
1993 to August 1997.
</TABLE>
------------------------
In placing orders for the Fund's securities transactions, the Sub-adviser seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-adviser may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions for the Fund may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
Prospectus Page 20
<PAGE>
AIM STRATEGIC INCOME FUND
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. Certain Trustees and
officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute shares of the Fund 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 of the
Fund 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 the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges 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 shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay contingent deferred sales charges.
DISTRIBUTION PLANS. CLASS A PLAN. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
CLASS B PLAN. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B
Prospectus Page 21
<PAGE>
AIM STRATEGIC INCOME FUND
Plan, the Fund pays distribution expenses at an annual rate of 1.00% of the
average daily net assets attributable to the Fund's Class B shares. Of such
amount the Fund pays a service fee of 0.25% of the average daily net assets
attributable to the Fund's Class B shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own Class B shares of the Fund. Any amounts not paid
as a service fee would constitute an asset-based sales charge. Amounts paid in
accordance with the Class B Plan with respect to the Fund may be used to finance
any activity primarily intended to result in the sale of Class B shares of the
Fund.
BOTH PLANS. Activities that may be financed under the
Class A Plan and the Class B Plan (collectively, the "Plans") include, but are
not limited to: printing of prospectuses and statements of additional
information and reports for other than existing shareholders, overhead,
preparation and distribution of advertising material and sales literature,
expense 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 the cost of
administering the Plans. These amounts payable by the Fund under the Plans need
not be directly related to the expenses actually incurred by AIM Distributors on
behalf of the Fund. Thus, even if AIM Distributors' actual expenses exceed the
fee payable to AIM Distributors thereunder at any given time, the Trust will not
be obligated to pay more than that fee, and if AIM Distributors' expenses are
less than the fee it receives, AIM Distributors will retain the full amount of
the fee. Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the National Association of Securities Dealers,
Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time agree
to waive voluntarily all or any portion of its 12b-1 fee, while retaining its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into service
agreements and which sell shares of the Fund on an agency basis, may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
The Fund will obtain a representation from such financial institutions that they
will either be licensed as dealers as required under applicable state law, or
that they will not engage in activities which would constitute acting as a
"dealer" as defined under applicable state law. Financial intermediaries and any
other person entitled to receive compensation for selling Fund shares may
receive different compensation for selling shares of one class over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
Prospectus Page 22
<PAGE>
AIM STRATEGIC INCOME FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust.
From time to time, the Trust may establish other funds, each corresponding to a
distinct investment portfolio and a distinct series of the Trust's shares.
Shares of each fund are entitled to one vote per share (with proportional voting
for fractional shares) and are freely transferable. Shareholders have no
preemptive rights. Other than the automatic conversion of Class B shares to
Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that Class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may also
issue an unlimited number of shares of the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal in earnings, assets
and voting privileges except that each class normally has exclusive voting
rights with respect to its distribution plan and bears the expenses, if any,
related to the distribution of its shares. Shares of the Fund, when issued, are
fully paid and nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 23
<PAGE>
AIM STRATEGIC INCOME FUND
APPENDIX A
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
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 edged." 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 risk appear somewhat
larger than the 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
some time 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.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are 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 which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Prospectus Page 24
<PAGE>
AIM STRATEGIC INCOME FUND
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
Prospectus Page 25
<PAGE>
AIM STRATEGIC INCOME FUND
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
Prospectus Page 26
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM AMERICA VALUE FUND AIM INCOME FUND
AIM ASIAN GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND AIM JAPAN GROWTH FUND
AIM CHARTER FUND AIM LATIN AMERICAN GROWTH FUND
AIM CONSTELLATION FUND AIM LIMITED MATURITY TREASURY FUND
AIM DEVELOPING MARKETS FUND AIM MID CAP GROWTH FUND
AIM DOLLAR FUND(*) AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM SMALL CAP OPPORTUNITIES FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH & INCOME FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL HEALTH CARE FUND AIM VALUE FUND
AIM GLOBAL HIGH INCOME FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM
Family of Funds ("AIM Funds"), an investor must submit a fully completed new
Account Application form directly to A I M Fund Services, Inc. ("AFS" or the
"Transfer Agent") or through any dealer authorized by A I M Distributors, Inc.
("AIM Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
is $500, except for accounts initially established through an Automatic
Investment Plan, which requires a special authorization form (see "Special
Plans") and for certain retirement accounts. The minimum initial investment for
accounts established with an Automatic Investment Plan is $50. The minimum
initial investment for an Individual Retirement Arrangement ("IRA") or Roth IRA
is $250. There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such
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<PAGE>
AIM INVESTOR'S GUIDE
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well
as Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased
directly through AIM Distributors or through any dealer who has entered into an
agreement with AIM Distributors. The minimum investment for subsequent purchases
is $50. The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION-SM-: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for
details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN GROWTH FUND, AIM
BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER
FUND, AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH 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 GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP GROWTH FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT
A-2
<PAGE>
AIM INVESTOR'S GUIDE
CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without
a sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over another class in the same Multiple Class Fund. Factors an investor
should consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL HIGH INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP EQUITY
FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM AMERICA VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
GROWTH FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP EQUITY FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN SINGLE TRANSACTION 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
A-3
<PAGE>
AIM INVESTOR'S GUIDE
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS 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 HIGH INCOME FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES
FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD 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
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
---------------------------- -------------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE OF THE OF THE
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT IN 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; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus
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<PAGE>
AIM INVESTOR'S GUIDE
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 of more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. See "Contingent Deferred Sales Charge Program
for Large Purchases." AIM Distributors may make payments to dealers and
institutions who are dealers of record for purchases of $1 million or more of
Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM LIMITED MATURITY TREASURY FUND, and in an amount up to
0.25% of such purchases of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed
A-5
<PAGE>
AIM INVESTOR'S GUIDE
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds currently offer two or more classes of shares through separate
distribution systems (the "Multiple Distribution System"). Although each class
of shares of a particular Multiple Class Fund represents an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by each class of shares and other relevant factors, such as
whether his or her investment goals are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange Privilege --
Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made within
the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase of
such Class B shares was made. If a shareholder exchanges Class B shares of
AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an initial
sales charge and are not subject to a contingent deferred sales charge;
however, they are subject to the other fees and expenses described in the
prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon
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Eastern Time or NYSE Close on any business day of the Fund will be confirmed at
the price next determined. Net asset value is normally determined at 12:00 noon
Eastern Time and NYSE Close on each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- - an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the benefit
of any such person, such as an IRA, 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);
- - a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting an
application on behalf of each new participant with the contribution
transmittal;
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- - a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or SIMPLE
IRA accounts should be linked;
- - any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
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 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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gain 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 with 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
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irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through
AIM Distributors without payment of an initial sales charge: (a) A I M
Management Group Inc. ("AIM Management") and its affiliated companies; (b) any
current or retired officer, director, trustee or employee, or any member of the
immediate family (including spouse, children, parents and parents of spouse) of
any such person, of AIM Management or its affiliates or of certain mutual funds
which are advised or managed by AIM; or any trust established exclusively for
the benefit of such persons; (c) any employee benefit plan established for
employees of AIM Management or its affiliates; (d) any current or retired
officer, director, trustee or employee, or any member of
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AIM INVESTOR'S GUIDE
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; (i) any employee or any member of the immediate family (including
spouse, children, parents and parents of spouse) of any employee, of Triformis
Inc.; (j) shareholders of the AIM/GT Funds as of April 30, 1987 who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
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 AIM/GT Funds since that time.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined under the
caption "Exchange Privilege") sold at net asset value to an employee benefit
plan in accordance with this paragraph as follows: 1% of the first $2 million of
such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50%
of the next $17 million of such purchases, plus 0.25% of amounts in excess of
$20 million of such purchases and up to 0.10% of the net asset value of any
Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at net asset value to
an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone
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number of the dealer who sold to the unit holder the units to be redeemed or
repurchased; and (ii) states that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the
proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a
shareholder who owns shares which are not subject to a contingent deferred sales
charge, can arrange for monthly, quarterly or annual amounts (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested to shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in
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the amount specified by the shareholder (minimum $50 per investment, per
account) and on a day or date(s) specified by the shareholder. The proceeds are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the withdrawal. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans; SARSEP
plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement accounts").
Information concerning these plans, including the custodian's fees and the forms
necessary to adopt such plans, can be obtained by calling or writing the AIM
Funds or AIM Distributors. Shares of the AIM Funds are also available for
investment through existing 401(k) plans (for both individuals and employers)
adopted under the Code. The plan custodian currently imposes an annual $10
maintenance fee with respect to each retirement account for which it serves as
the custodian. This fee is generally charged in December. Each AIM Fund and/or
the custodian reserve the right to change this maintenance fee and to initiate
an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of AIM Funds. The Program automatically rebalances
holdings of AIM Funds to the established allocation on a periodic basis. Under
the Program, a shareholder may predesignate, on a percentage basis, how the
total value of his or her holdings in a minimum of two, and a maximum of ten,
AIM Funds ("Personal Portfolio") is to be rebalanced on a quarterly, semiannual,
or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more AIM Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other AIM Funds in the
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AIM INVESTOR'S GUIDE
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the AIM
Fund(s) in a shareholder's Personal Portfolio have appreciated during a
rebalancing period, the Program will result in shares of AIM Fund(s) that have
appreciated most during the period being exchanged for shares of AIM Fund(s)
that have appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular AIM Fund would
be 2% or less. In predesignating percentages, shareholders must use whole
percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an AIM
Fund's shares. The AIM Funds and AIM Distributors reserve the right to modify,
suspend, or terminate the Program at any time on 60 days' prior written notice
to shareholders. A request to participate in the Program must be received in
good order at least five business days prior to the next rebalancing date. Once
a shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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AIM INVESTOR'S GUIDE
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM Funds --
Sales Charges and Dealer Concessions," shares of certain of the AIM Funds,
including the Class A shares of the Multiple Class Funds, listed below and
referred to herein as the "Load Funds," are sold at a public offering price that
includes a maximum sales charge of 5.50% or 4.75% of the public offering price
of such shares; Class A shares (or shares which normally involve the payment of
initial sales charges) of certain of the AIM Funds, listed below and referred to
herein as the "Lower Load Funds," are sold at a public offering price that
includes a maximum sales charge of 1.00% of the public offering price of such
shares; and Class A shares or shares of certain other funds, listed below and
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND -- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND -- CLASS A
AIM ADVISOR MULTIFLEX FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
AIM AGGRESSIVE GROWTH FUND -- CLASS A
AIM AMERICA VALUE FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND -- CLASS A
AIM EMERGING MARKETS FUND -- CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND -- CLASS A
AIM GLOBAL HEALTH CARE FUND -- CLASS A
AIM GLOBAL HIGH INCOME FUND -- CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND -- CLASS A
AIM GLOBAL RESOURCES FUND -- CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND -- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A
AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND -- CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND -- CLASS A
AIM INTERNATIONAL EQUITY FUND -- CLASS A
AIM INTERNATIONAL GROWTH FUND -- CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND -- CLASS A
AIM MID CAP GROWTH FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND -- CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP EQUITY FUND -- CLASS A
AIM SMALL CAP OPPORTUNITIES FUND -- CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND -- CLASS A
LOWER LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM LIMITED MATURITY TREASURY FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND -- CLASS A
NO LOAD FUNDS:
- --------------------------------------------------------------------------------
AIM MONEY MARKET FUND -- AIM CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM DOLLAR FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE, (iii) Class A shares
may be exchanged for Class A shares, (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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AIM INVESTOR'S GUIDE
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund or acquired upon
any Lower Load Fund. exchange of
shares of any
Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE
IS REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD --------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- --------------------------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Load Funds............. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds....... Net Asset Value if shares were acquired Net Asset Value Net Asset Value Not Applicable Not Applicable
upon exchange of any Load Fund.
Otherwise, difference in sales charge
will apply.
No Load Funds.......... Offering Price if No Load shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
directly purchased. Net Asset Value if if No Load
No Load shares were acquired upon shares were
exchange of shares of any Load Fund. acquired upon
Difference in sales charge will apply if exchange of
No Load shares were acquired upon shares of any
exchange of Lower Load Fund shares. Load Fund or
any Lower Load
Fund;
otherwise,
Offering Price.
Multiple Class Funds:
Class B.............. Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.............. Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the
funds offer more than one class of shares, the exchange must be between the same
class of shares (e.g., Class A, Class B and Class C shares of a Multiple Class
Fund cannot be exchanged for each other) except that AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple
Class Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten business days, and all other shares are held
in an account for at least one day, prior to the exchange; and (h) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
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AIM INVESTOR'S GUIDE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged
are redeemed at their net asset value as determined at NYSE Close on the day
that an exchange request in proper form (described below) is received. Exchange
requests received after NYSE Close will result in the redemption of shares at
their net asset value at NYSE Close on the next business day. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase, Exchange and
Redemption Orders (AIM MONEY MARKET FUND only)" for information regarding the
timing of exchange orders for AIM MONEY MARKET FUND. Normally, shares of an AIM
Fund to be acquired by exchange are purchased at their net asset value or
applicable offering price, as the case may be, determined on the date that such
request is received, but under unusual market conditions such purchases may be
delayed for up to five business days if it is determined that a fund would be
materially disadvantaged by an immediate transfer of the proceeds of the
exchange. If a shareholder is exchanging into a fund paying daily dividends
("Dividends, Distributions and Tax Matters -- Dividends and Distributions,"
below), and the release of the exchange proceeds is delayed for the foregoing
five-day period, such shareholder will not begin to accrue dividends until the
sixth business day after the exchange. Shares purchased by check may not be
exchanged until it is determined that the check has cleared, which may take up
to ten business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. If a shareholder does not wish to allow telephone
exchanges by any person in his account, he should decline that option on the
account application. AIM Distributors has made arrangements with certain dealers
and investment advisory firms to accept telephone instructions to exchange
shares between any of the AIM Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the funds, including the condition that any such dealer or
investment advisor enter into an agreement (which contains additional conditions
with respect to exchanges of shares) with AIM Distributors. To exchange shares
by telephone, a shareholder, dealer or investment advisor who has satisfied the
foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable
to reach AFS by telephone, he may also request exchanges by telegraph or use
overnight courier services to expedite exchanges by mail, which will be
effective on the business day received by the Transfer Agent as long as such
request is received prior to NYSE Close. The Transfer Agent and AIM Distributors
will not be liable for any loss, expense or cost arising out of any telephone
exchange request that they reasonably believe to be genuine, but may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
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AIM INVESTOR'S GUIDE
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MULTIPLE DISTRIBUTION SYSTEM. CLASS B SHARES. Class B shares purchased
under the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS % OF DOLLAR
YEARS SINCE PURCHASE MADE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C>
First..................................................................................... 5%
Second.................................................................................... 4%
Third..................................................................................... 3%
Fourth.................................................................................... 3%
Fifth..................................................................................... 2%
Sixth..................................................................................... 1%
Seventh and Following..................................................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
CLASS C SHARES. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
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AIM INVESTOR'S GUIDE
WAIVERS. Contingent deferred sales charges on Class B and Class C shares
will be waived on redemptions (1) following the death or post-purchase
disability, as defined in Section 72(m)(7) of the Code, of a shareholder or a
settlor of a living trust (provided AIM Distributors is notified of such death
or post-purchase disability at the time of the redemption request and is
provided with satisfactory evidence of such death or post-purchase disability),
(2) in connection with certain distributions from IRAs, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B or Class C
shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the prospectus of such Multiple Class Fund, (5) effected by AIM of its
investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or beneficiaries who
are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary notifies
AIM Distributors of such transfer no later than the time such transfer
occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement Plan
invested in Class B or Class C shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess deferral
amounts; and
(v) distributions upon the death or disability (as defined in the Code) of the
participant or beneficiary.
Shareholders who purchased Class B shares of the AIM/GT Funds or Class C
shares of AIM GLOBAL TRENDS FUND prior to June 1, 1998 are entitled to certain
additional waivers of the contingent deferred sales charge on those shares as
described in the Statement of Additional Information of each respective fund
under "How to Purchase and Redeem Shares."
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND [or Class A shares
of AIM DOLLAR FUND] which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code,
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<PAGE>
AIM INVESTOR'S GUIDE
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where shares are
being redeemed in connection with employee terminations or withdrawals, and (a)
the total amount invested in a Plan is at least $1,000,000, (b) the sponsor of a
Plan signs a letter of intent to invest at least $1,000,000 in one or more of
the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided, however,
that Plans created under Section 403(b) of the Code which are sponsored by
public educational institutions shall qualify under (a), (b) or (c) above on the
basis of the value of each Plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the Plan or on the number of
eligible employees; (2) redemptions of shares following the death or
post-purchase disability, as defined in Section 72(m)(7) of the Code, of a
shareholder or a settlor of a living trust; (3) redemptions of shares purchased
at net asset value by private foundations or endowment funds where the initial
amount invested was at least $1,000,000; (4) redemptions of shares purchased by
an investor in amounts of $1,000,000 or more where such investor's dealer of
record, due to the nature of the investor's account, notifies AIM Distributors
prior to the time of investment that the dealer waives the payments otherwise
payable to the dealer as described in the third paragraph under the caption
"Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds;"
and (5) pursuant to a Systematic Withdrawal Plan, provided that amounts
withdrawn under such plan do not exceed on an annual basis 12% of the value of
the shareholder's investment in Class A shares at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund
to establish as IRA, should include the following information along with a
written request for either partial or full liquidation of fund shares; (a) a
statement as to whether or not the shareholder has attained age 59 1/2, and (b)
a statement as to whether or not the shareholder elects to have federal income
tax withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in this account, he should decline that option on the account
application. The telephone redemption feature can be used only if: (a) the
redemption proceeds are to be mailed to the address of record or transferred
electronically or wired to the pre-authorized bank account; (b) there has been
no change of address of record on the account within the preceding 30 days; (c)
the shares to be redeemed are not in certificate form; (d) the person requesting
the redemption can provide proper identification information, and (e) the
proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors'
prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not
eligible for the telephone redemption option. AIM Distributors has made
arrangements with certain dealers and investment advisors to accept telephone
instructions for the redemption of shares. AIM Distributors reserves the right
to impose conditions on these dealers and investment advisors, including the
condition that they enter into agreements (which contain additional conditions
with respect to the redemption of shares) with AIM Distributors. The Transfer
Agent and AIM Distributors will not be liable for any loss, expense or cost
arising out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain
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AIM INVESTOR'S GUIDE
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 taxpayer identification number and current address, and mailings
of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order
is received prior to 11:30 a.m. Eastern Time, the redemption will be effective
on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing
the appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an
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AIM INVESTOR'S GUIDE
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner, (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring or electronic funds transfer instructions, and (8) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
These requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment may alter any capital gains payable. If
there has been a loss on the redemption and shares of the same fund are
repurchased, all of the loss may not be tax deductible, depending on the timing
and amount reinvested. Under the Code, if the redemption proceeds of fund shares
on which a sales charge was paid are reinvested in shares of the same fund, or
exchanged for shares of another AIM Fund, at a reduced sales charge within 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering the privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in
connection with the redemption of Class A shares and who subsequently reinvest a
portion or all of the value of the redeemed shares in Class A shares of any AIM
Fund within 90 days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is
determined as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close
with respect to AIM MONEY MARKET FUND) on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
defining net asset value per share, futures and options contracts generally will
be valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but
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AIM INVESTOR'S GUIDE
not yet received. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
supervision of the fund's officers and in accordance with methods which are
specifically authorized by its governing Board of Directors or Trustees.
Short-term obligations with maturities of 60 days or less, and the securities
held by the Money Market Funds, are valued at amortized cost as reflecting fair
value. AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOARD FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate
securities that have an unconditional demand or put feature exercisable within
seven days or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions
is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND............................. declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND.............. declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.................. declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND........................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND...................... declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND........................ declared and paid annually annually annually
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND............................. declared and paid annually annually annually
AIM BALANCED FUND................................. declared and paid quarterly annually annually
AIM BLUE CHIP FUND................................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND...................... declared and paid annually annually annually
AIM CHARTER FUND.................................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND..................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND................. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INCOME FUND............................ declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND......................... declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND.................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND............................... declared daily; paid monthly annually annually
AIM INCOME FUND................................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.................. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND..................... declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND................ declared daily; paid monthly annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM MONEY MARKET FUND............................. declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND........................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SELECT GROWTH FUND............................ declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.................. declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.......................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND.................... declared daily; paid monthly annually annually
AIM VALUE FUND.................................... declared and paid annually annually annually
AIM WEINGARTEN FUND............................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in
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AIM INVESTOR'S GUIDE
like shares of another Multiple Class Fund, to the extent permitted. For funds
that do not declare a dividend daily, such dividends and distributions will be
reinvested at the net asset value per share determined on the ex-dividend date.
For funds that declare a dividend daily, such dividends and distributions will
be reinvested at the net asset value per share determined on the payable date.
Shareholders may elect, by written notice to the Transfer Agent, to receive such
distributions, or the dividend portion thereof, in cash, or to invest such
dividends and distributions in shares of another fund in the AIM Funds; provided
that (i) dividends and distributions attributable to Class B shares may only be
reinvested in Class B shares, (ii) dividends and distributions attributable to
Class C shares may only be reinvested in Class C shares, (iii) dividends and
distributions attributable to Class A shares may not be reinvested in Class B or
Class C shares, and (iv) dividends and distributions attributable to the AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be reinvested in the Class
A shares of that Fund or in any Class B or Class C shares. Investors who have
not previously selected such a reinvestment option on the account application
form may contact the Transfer Agent at any time to obtain a form to authorize
such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds
are not subject to sales charges, and shares so purchased are automatically
credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS--GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares, except for "exempt-interest dividends" paid by AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt
Funds"), which are exempt from federal income tax. With respect to tax-exempt
shareholders, dividends and distributions from the AIM Funds are not subject to
federal income taxation to the extent permitted under the applicable tax
exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
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AIM INVESTOR'S GUIDE
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HIGH
INCOME FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD
FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be
required to include the "exempt-interest" portion of dividends paid by the
Tax-Exempt Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other
A-25
<PAGE>
AIM INVESTOR'S GUIDE
taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP GROWTH FUND,
AIM SMALL CAP EQUITY FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND --
SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so,
each of these funds may elect to pass through to its shareholders credits for
foreign taxes paid. If a 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, for any
fund, such losses exceed other income during a taxable year, the fund would not
be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
A-26
<PAGE>
AIM INVESTOR'S GUIDE
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If several members of a household own shares of the same fund,
only one annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-27
<PAGE>
AIM STRATEGIC INCOME FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM DEVELOPING MARKETS FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Developing Markets Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a non-diversified portfolio which primarily seeks long-term
capital appreciation. Its secondary investment objective is income, to the
extent consistent with seeking capital appreciation. The Fund normally invests
substantially all of its assets in issuers in the developing (or "emerging")
markets of Asia, Europe, Latin America and elsewhere. A majority of the Fund's
assets ordinarily is invested in emerging market equity securities. The Fund
also invests in emerging market debt securities, which are selected based on
their potential to provide a combination of capital appreciation and current
income.
The Fund is designed for long-term investors and not as a trading vehicle. The
Fund does not represent a complete investment program, nor is it suitable for
all investors. The Fund may invest significantly in equity and high yield, high
risk ("lower quality") debt securities that are predominantly speculative.
Investments of this type are subject to a greater risk of loss of principal and
interest. The Fund's investments in securities of issuers in developing markets
involves special considerations and risks that are not typically associated with
investments in securities of issuers in the United States or in other more
established markets. Investors should carefully assess the risks associated with
an investment in the Fund.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information dated
September 8, 1998 has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM DEVELOPING MARKETS FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objectives and Policies........................................................ 7
Risk Factors.............................................................................. 12
Management................................................................................ 17
Other Information......................................................................... 19
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of the Trust.
Investment Objectives: The Fund's primary investment objective is long-term capital appreciation; its secondary objective is
income, to the extent consistent with seeking capital appreciation.
Principal Investments: The Fund normally invests a majority of its assets in emerging market equity securities and also may
invest in emerging market debt securities.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment man-
agement group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
</TABLE>
Prospectus Page 2
<PAGE>
AIM DEVELOPING MARKETS FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at least
1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment discretion over such
account, and (ii) the account holder pays such person as compensation for its advice and other
services an annual fee of at least 0.50% on the assets in the account; (c) any account with assets of
a least $10,000 if (i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the assets in the account;
(d) accounts advised by the Sub-advisor or one of the companies formerly affiliated with the Asset
Management Division of Liechtenstein Global Trust AG, provided such accounts were invested in Advisor
Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and (e) any of the
companies affiliated with AMVESCAP PLC. Pursuant to a separate prospectus, the Fund also offers Class
A and Class B shares, which represent interests in the Fund. The Class A and Class B shares have
different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments must be
at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Advisor Class shares of the Fund may be exchanged for Advisor Class shares of certain
funds in the AIM Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at net asset value
on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund will achieve its investment objectives. The Fund's net asset
value per share will fluctuate, reflecting fluctuations in the market value of its portfolio
holdings.
</TABLE>
Prospectus Page 3
<PAGE>
AIM DEVELOPING MARKETS FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund invests in foreign securities. Investments in foreign securities involve risks relating to
political and economic developments abroad and the differences between the regulations to which U.S.
and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings, and gains and losses realized on sales of securities. Securities of
foreign companies may be less liquid and their prices more volatile than those of securities of
comparable U.S. companies. The Fund normally invests substantially all of its assets in issuers in
emerging markets. Such investments entail greater risks than investing in issuers in developed
markets.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
The value of debt securities held by the Fund generally fluctuates inversely with interest rate
movements. Certain investment grade debt securities may possess speculative qualities. The Fund may
invest in below investment grade debt securities. Investments of this type are subject to a greater
risk of loss of principal and interest.
See "Investment Objectives and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM DEVELOPING MARKETS FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following table (1):
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION COSTS:
<S> <C>
Maximum sales charge on purchases of shares (as a % of offering price)................................... None
Sales charges on reinvested distributions to shareholders................................................ None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)............................................................................................... None
Redemption charges....................................................................................... None
Exchange Fees............................................................................................ None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees............................................................ 0.98%
12b-1 distribution and service fees...................................................................... None
Other expenses (after estimated waivers)................................................................. 0.52%
-------
Total Fund Operating Expenses............................................................................ 1.50%
-------
-------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares...................................................................... $15 $ 48 $ 82 $180
</TABLE>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are estimated based on the fees and expenses the Fund is expected
to incur during its initial year as an open-end fund and AIM's undertaking
to limit the Fund's expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the annual rate of 1.50% of the
average daily net assets of the Fund's Advisor Class shares. Without
waivers, "Other expenses" and "Total Fund Operating Expenses" are estimated
to be 0.65% and 1.63%, respectively, for Advisor Class shares. "Other
expenses" include custody, transfer agent, legal and audit fees and other
operating expenses. See "Management" herein and in the Statement of
Additional Information for more information. Investors purchasing Advisor
Class shares through financial planners, trust companies, bank trust
departments or registered investment advisers, or under a "wrap fee"
program, will be subject to additional fees charged by such entities or by
the sponsors of such programs. Where any account advised by one of the
companies affiliated with AMVESCAP PLC invests in Advisor Class shares of
the Fund, such account shall not be subject to duplicative advisory fees.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the example of a 5% annual return are required by regulations of the SEC
applicable to all mutual funds. The 5% annual return is not a prediction of
and does not represent the Fund's projected or actual performance.
Prospectus Page 5
<PAGE>
AIM DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one share of G.T. Global Developing Markets Fund, Inc. (the
"Predecessor Fund") for the periods shown. This information is supplemented by
the financial statements and accompanying notes appearing in the Statement of
Additional Information. The Predecessor Fund was a closed-end investment company
whose single class of shares traded on the New York Stock Exchange ("NYSE"). On
October 31, 1997, the Fund, which had no previous operating history, acquired
the assets and assumed the liabilities of the Predecessor Fund. On that date,
all shareholders of the Predecessor Fund received Class A shares of the Fund.
The fees and expenses of the Fund will differ from those of the Predecessor
Fund. The Fund's fiscal year end will be October 31, rather than December 31,
which was the Predecessor Fund's fiscal year end.
AIM DEVELOPING MARKETS FUND
(FORMERLY GT GLOBAL DEVELOPING MARKETS FUND)
(SUCCESSOR TO G.T. GLOBAL DEVELOPING MARKETS FUND, INC.)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM DEVELOPING MARKETS FUND
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's primary investment objective is long-term capital appreciation; its
secondary objective is income, to the extent consistent with seeking capital
appreciation. The Fund normally invests substantially all of its assets in
issuers in the developing (or "emerging") markets of Asia, Europe, Latin America
and elsewhere. A majority of the Fund's assets normally are invested in emerging
market equity securities. The Fund may invest in the following types of equity
securities: common stock, preferred stock, securities convertible into common
stock, American Depository Receipts, Global Depository Receipts, rights and
warrants to acquire such securities and substantially similar forms of equity
with comparable risk characteristics. The Fund may also invest in emerging
market debt securities that will be selected based on their potential to provide
a combination of capital appreciation and current income. There can be no
assurance the Fund will achieve its investment objective.
For purposes of the Fund's operations, emerging markets consist of all countries
determined by the Sub-adviser to have developing or emerging economies and
markets. These countries generally include every country in the world except the
United States, Canada, Japan, Australia, New Zealand and most countries located
in Western Europe. See "Investment Objectives and Policies" in the Statement of
Additional Information for a complete list of all the countries that the Fund
does not currently consider to be emerging markets.
For purposes of the Fund's policy of normally investing substantially all of its
assets in issuers in emerging markets, the Fund will consider investment in the
following emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
Although the Fund considers each of the above-listed countries eligible for
investment, it will not be invested in all such markets at all times. Moreover,
investing in some of those markets currently may not be desirable or feasible,
due to the lack of adequate custody arrangements for the Fund's assets, overly
burdensome repatriation and similar restrictions, the lack of organized and
liquid securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus, an issuer in an emerging market is an entity (1) for
which the principal securities trading market is an emerging market, as defined
above, (2) that (alone or on a consolidated basis) derives 50% or more of its
total revenues from business in emerging markets, provided that, in the
Sub-adviser's view, the value of such issuer's securities will tend to reflect
emerging market developments to a greater extent than developments elsewhere, or
(3) organized under the laws of, or with a principal office in, an emerging
market.
In selecting investments, the Sub-adviser seeks to identify those countries and
industries where economic and political factors, including currency movements,
are likely to produce above-average growth rates over the long term. The
Sub-adviser seeks those emerging markets that have strongly developing economies
and in which the markets are becoming more sophisticated. The Sub-adviser then
invests in those companies in such countries and industries that it believes are
best positioned and managed to take advantage of these economic and political
factors. The Sub-adviser believes that the issuers of securities in emerging
markets often have sales and earnings growth rates that exceed those in
developed countries and that such
Prospectus Page 7
<PAGE>
AIM DEVELOPING MARKETS FUND
growth rates may in turn be reflected in more rapid share price appreciation.
As opportunities to invest in securities in other emerging markets develop, the
Fund expects to expand and further broaden the group of emerging markets in
which it invests. In some cases, investments in debt securities could provide
the Fund with access to emerging markets in the early stages of their economic
development, when equity securities are not yet generally available or, in the
Sub-adviser's view, do not yet present an acceptable investment alternative.
While the Fund generally is not restricted in the portion of its assets that may
be invested in a single region, under normal conditions its assets will be
invested in issuers in at least four countries, and it will not invest more than
25% of its assets in issuers in one country. The Fund's holdings of any one
foreign currency together with securities denominated in or indexed to such
currency will not exceed 40% of its assets.
INVESTMENTS IN DEBT SECURITIES. The Fund may invest up to 50% of its total
assets in the following types of emerging market debt securities: (1) debt
securities issued or guaranteed by governments, their agencies,
instrumentalities or political subdivisions, or by government owned, controlled
or sponsored entities, including central banks (collectively, "Sovereign Debt"),
including Brady Bonds; (2) interests in issuers organized and operated for the
purpose of restructuring the investment characteristics of Sovereign Debt; (3)
debt securities issued by banks and other business entities; and (4) debt
securities denominated in or indexed to the currencies of emerging markets. Debt
securities held by the Fund may take the form of bonds, notes, bills,
debentures, bank debt obligations, short-term paper, loan participations,
assignments and interests issued by entities organized and operated for the
purpose of restructuring the investment characteristics of any of the foregoing.
There is no requirement with respect to the maturity or duration of debt
securities in which the Fund may invest.
There is no limitation on the percentage of the Fund's assets that may be
invested in debt securities that are rated below investment grade. Investment in
below investment grade debt securities involves a high degree of risk and can be
speculative. These debt securities are the equivalent of high yield, high risk
bonds, commonly known as "junk bonds." Debt securities in which the Fund will
invest may not be rated; if rated, it is expected that such ratings will be
below investment grade. See "Risk Factors -- Risks Associated with Debt
Securities" and "-- Risks Associated with Below Investment Grade Debt
Securities."
The Fund may invest in "Brady Bonds," which are debt restructurings that provide
for the exchange of cash and loans for newly issued bonds. Brady Bonds have been
issued by the countries of Albania, Argentina, Brazil, Bulgaria, Costa Rica,
Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Panama, Peru,
Philippines, Poland, Uruguay, Venezuela and Vietnam, and are expected to be
issued by other emerging market countries. As of the date of this Prospectus,
the Fund is not aware of the occurrence of any payment defaults on Brady Bonds.
Investors should recognize, however, that Brady Bonds do not have a long payment
history. In addition, Brady Bonds are often rated below investment grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time of issuance and is adjusted at
regular intervals thereafter.
Capital appreciation in debt securities may arise as a result of a favorable
change in relative foreign exchange rates, relative interest rate levels and/or
the creditworthiness of issuers.
ADDITIONAL INVESTMENT POLICIES
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy
for the Fund if it determines such a strategy to be warranted due to market,
economic or political conditions. Under a defensive strategy, the Fund may hold
cash (U.S. dollars, foreign currencies or multinational currency units such as
Euros) and/ or invest any portion or all of its assets in high quality money
market instruments of U.S. or foreign issuers. In addition, for temporary
defensive purposes, most or all of the Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Fund adopts a
temporary defensive posture, it will not be invested so as to directly achieve
its investment objectives.
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AIM DEVELOPING MARKETS FUND
In addition, pending investment of proceeds from new sales of Fund shares or in
order to meet ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest in foreign or
domestic high quality money market instruments. For a description of money
market instruments, see "Temporary Defensive Strategies" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
BORROWING AND REVERSE REPURCHASE AGREEMENTS. In connection with meeting requests
for the redemption of Fund shares, the Fund may borrow from banks or may borrow
through reverse repurchase agreements. The Fund also may borrow up to 5% of its
total assets for temporary or emergency purposes other than to meet redemptions,
but total borrowings may not exceed 33 1/3% of its total assets. However, the
Fund will not purchase securities while borrowings in excess of 5% of its total
assets are outstanding. Any borrowing by the Fund may cause greater fluctuation
in the value of its shares than would be the case if it did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed-upon price that includes an interest component.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. The Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. While a loan is outstanding, the borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to at least 100% of the value of the
borrowed securities plus any accrued interest or such other collateral as
permitted by the Fund's investment program and regulatory agencies, and as
approved by the Board. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral if the borrower fails financially.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. To attempt to increase
return, the Fund may write call options on securities. This strategy will be
employed only when, in the opinion of the Sub-adviser, the size of the premium
the Fund receives for writing the option is adequate to compensate it against
the risk that appreciation in the underlying security may not be fully realized
if the option is exercised. The Fund also is authorized to write put options to
attempt to enhance return, although it does not currently intend to do so.
The Fund may also use forward currency contracts, futures contracts, options on
securities, options on currencies, options on indices and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with its investments. These instruments are
often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities). The
Fund may enter into such instruments up to the full value of its portfolio
assets. See "Options, Futures and Currency Strategies" in the Statement of
Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on such futures
contracts to hedge its portfolio against movements in exchange rates.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets, to securities
denominated in such currencies or to securities of issuers domiciled or
principally engaged in business in such emerging markets. To the extent that
such a market does not exist, the Sub-adviser may not be able to effectively
hedge its investment in such markets.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-adviser intends to include in the
Fund's portfolio. The Fund also may purchase and sell put and call options on
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AIM DEVELOPING MARKETS FUND
stock indices to hedge against overall fluctuations in the securities markets or
in a specific market sector.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or a specific market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general market or market sector advance and thereby attempt to lessen the cost
of future securities acquisitions. Similarly, the Fund may use interest rate
futures contracts and options thereon to hedge the debt portion of its portfolio
against changes in the general level of interest rates.
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Fund may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). Pursuant to the Investment Company Act of 1940, as amended
(the "1940 Act"), the Fund generally may invest up to 10% of its total assets in
the aggregate in shares of other investment companies and up to 5% of its total
assets in any one investment company, as long as each investment does not
represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of their portfolio securities and multiple layering of
fees and expenses and is subject to limitations under the 1940 Act and market
availability. The Fund does not intend to invest in other investment companies
unless, in the judgment of the Sub-adviser, the potential benefits of such
investment justify the payment of any applicable premium or sales charge. As a
shareholder in another investment company, the Fund would bear its ratable share
of that company's expenses, including its advisory and administration fees. At
the same time the Fund would continue to pay its own management fees and other
expenses. AIM and the Sub-adviser will waive their advisory fees to the extent
that the Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments in some emerging markets have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain emerging markets, the ability of foreign entities such
as the Fund to participate in privatizations may be limited by local law or the
terms on which the Fund may be permitted to participate may be less advantageous
than those afforded local investors. There can be no assurance that governments
in emerging markets will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities and forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery to the Fund. If the Fund
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Fund enters into a transaction on a
when-issued or forward commitment basis, the Fund will segregate cash or liquid
securities equal to the value of the when-issued or forward commitment
securities with its custodian bank and will mark to market daily such assets.
There is a risk that the securities may not be delivered and that the Fund may
incur a loss.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may invest in fixed and floating
rate loans ("Loans") arranged through private negotiations between a foreign
entity and one or more financial institutions ("Lenders"). The majority of the
Fund's investments in Loans in emerging markets is expected to be in the form of
participations in Loans ("Participations") and assignments of portions of Loans
from third parties ("Assignments"). Participations typically will result in the
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AIM DEVELOPING MARKETS FUND
Fund having a contractual relationship only with the Lender, not with the
borrower. The Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, the Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the loan, nor any rights of set-off against the borrower,
and the Fund may not directly benefit from any collateral supporting the Loan in
which it has purchased the Participation. As a result, the Fund will assume the
credit risk of both the borrower and the Lender that is selling the
Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund
may be treated as a general creditor of the Lender and may not benefit from any
set-off between the Lender and the borrower. The Fund will acquire
Participations only if the Lender interpositioned between the Fund and the
borrower is determined by the Sub-adviser to be creditworthy. When the Fund
purchases Assignments from Lenders, the Fund will acquire direct rights against
the borrower on the Loan. However, because Assignments are arranged through
private negotiations between potential assignees and assignors, the rights and
obligations acquired by the Fund as the purchaser of an Assignment may differ
from, and be more limited than, those held by the assigning Lender.
ZERO COUPON SECURITIES. The Fund may invest in certain zero coupon securities
that are "stripped" U.S. Treasury notes and bonds. The Fund also may invest in
zero coupon and other deep discount securities issued by foreign governments and
domestic and foreign corporations, including certain Brady Bonds and other
foreign debt, and in payment-in-kind securities. Zero coupon securities pay no
interest to holders prior to maturity, and payment-in-kind securities pay
"interest" in the form of additional securities. However, a portion of the
original issue discount on zero coupon securities and the interest on
payment-in-kind securities will be included in the Fund's income. Accordingly,
for the Fund to continue to qualify for tax treatment as a regulated investment
company and to avoid a certain excise tax (see "Taxes" in the Statement of
Additional Information), it may be required to distribute an amount that is
greater than the total amount of cash it actually receives. These distributions
may be made from the Fund's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund will not be able to purchase additional
income-producing securities with cash used to make such distributions, and its
current income ultimately may be reduced as a result. Zero coupon and
payment-in-kind securities usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
INDEXED COMMERCIAL PAPER. The Fund may invest without limitation in commercial
paper that is indexed to certain specific foreign currency exchange rates. The
terms of such commercial paper provide that its principal amount is adjusted
upwards or downwards (but not below zero) at maturity to reflect changes in the
exchange rate between two currencies while the obligation is outstanding. The
Fund will purchase such commercial paper with the currency in which it is
denominated and, at maturity, will receive interest and principal payments
thereon in that currency, but the amount of principal payable by the issuer at
maturity will change in proportion to the change (if any) in the exchange rate
between the two specified currencies between the date the instrument is issued
and the date the instrument matures. While such commercial paper entails the
risk of loss of principal, the potential for realizing gains as a result of
changes in foreign currency exchange rates enables the Fund to hedge against a
decline in the U.S. dollar value of investments denominated in foreign
currencies while seeking to provide an attractive money market rate of return.
The Fund will not purchase such commercial paper for speculation.
OTHER INDEXED SECURITIES. The Fund may invest in certain other indexed
securities, which are securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals or other commodities
or other financial indicators. Indexed securities typically, but not always, are
debt securities or deposits whose value at maturity or coupon rate is determined
by reference to a specific instrument or statistic. The performance of indexed
securities depends to a great extent on the performance of the security,
currency or other instrument to which they are indexed and also may be
influenced by interest rate changes in the United States and abroad. At the same
time, indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
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AIM DEVELOPING MARKETS FUND
issuer's creditworthiness deteriorates. Indexed securities may be more volatile
than the underlying instruments. New forms of indexed securities continue to be
developed. The Fund may invest in such securities to the extent consistent with
its investment objectives.
OTHER INFORMATION. The Fund's investment objectives may not be changed without
the approval of a majority of its outstanding voting securities. A "majority of
its outstanding voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares. In addition, the
Fund has adopted certain investment limitations that also may not be changed
without shareholder approval. A complete description of these limitations is
included in the Statement of Additional Information. Unless specifically noted,
the Fund's investment policies described in this Prospectus and in the Statement
of Additional Information may be changed by the Trust's Board of Trustees
without shareholder approval. The Fund's policies regarding lending, and the
percentage of Fund assets that may be committed to borrowing, are fundamental
policies and may not be changed without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively, in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objectives. Investing in the Fund entails a substantial degree of risk, and an
investment in the Fund should be considered speculative. Investors are strongly
advised to consider carefully the special risks involved in investing in
emerging markets, which are in addition to the usual risks of investing in
developed markets around the world.
The Fund's net asset value will fluctuate, reflecting fluctuations in the market
value of its portfolio positions and its net currency exposure. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Fund will fluctuate
in response to general market and economic developments, as well as developments
affecting the particular issuers of such securities.
In addition, the value of debt securities held by the Fund generally will
fluctuate with the perceived creditworthiness of the issuers of such securities
and interest rates.
NON-DIVERSIFIED CLASSIFICATION. The Fund is classified under the 1940 Act as a
"non-diversified" fund. As a result, the Fund will be able to invest in a
smaller number of issuers than if it was classified under the 1940 Act as a
"diversified" fund. To the extent that the Fund invests in a smaller number of
issuers, the net asset value of its shares may fluctuate more widely and it may
be subject to greater investment and credit risk with respect to its portfolio.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of, the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to
Prospectus Page 12
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AIM DEVELOPING MARKETS FUND
domestic companies. In addition, certain costs attributable to foreign
investing, such as custody charges, are higher than those attributable to
domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Fund's net investment income from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing that income.
Investing in some foreign countries involves risks relating to potential
political and economic instability within such countries and the risks of
expropriation, nationalization, confiscation of assets and property or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation, the Fund could lose its entire investment in that market.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, currency depreciation,
resource self-sufficiency and balance of payments positions. Investments in
foreign government securities involve special risks, including the risk that the
government issuers may be unable or unwilling to repay principal or interest
when due.
The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will affect the net asset value
of the Fund's shares and also may affect the value of dividends and interest
earned by the Fund and gains and losses realized by it.
INVESTING IN EMERGING MARKETS. Emerging markets generally are dependent heavily
upon international trade and, accordingly, have been and may continue to be
affected adversely by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. Inflation and rapid fluctuations in
inflation rates have had and may continue to have negative effects on the
economies and securities markets of certain countries with emerging markets.
Disclosure and regulatory standards in many respects are less stringent than in
the United States and other major markets. There also may be a lower level of
monitoring and regulation of emerging markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause it to miss attractive investment opportunities. Inability
to dispose of a portfolio security caused by settlement problems could result
either in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
developed countries. The risk also exists that an emergency situation may arise
in one or more emerging markets as a result of which trading of securities may
cease or may be substantially curtailed and prices for the Fund's portfolio
securities in such markets may not be readily available. Section 22(e) of the
1940 Act permits a registered investment company, such as the Fund, to suspend
redemption of its shares for any period during which an emergency exists, as
determined by the SEC. Accordingly, when the Fund believes that circumstances
dictate, it will promptly apply to the SEC for a determination that such an
emergency exists. During the period commencing with the Fund's identification of
such conditions until the date of any SEC action, the Fund's portfolio
securities in the affected markets will be valued at fair value determined in
good faith by or under the direction of the Trust's Board of Trustees.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Fund generally will vary inversely with market interest rates. If interest
rates in a market fall, the Fund's debt securities issued by governments or
companies in that market ordinarily will increase in value. If market interest
rates increase, however, the debt securities owned by the Fund in that market
will likely decrease in value.
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AIM DEVELOPING MARKETS FUND
RISKS ASSOCIATED WITH BELOW INVESTMENT GRADE DEBT SECURITIES. The Fund may
invest up to 50% of its total assets in debt securities rated below investment
grade. Such investments involve a high degree of risk.
Debt rated Baa by Moody's Investors Service, Inc. ("Moody's") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), and
debt rated Ba, B, Caa, Ca or C by Moody's is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated C by Moody's or S&P is the lowest rated debt that is not
in default as to principal or interest, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Lower quality debt securities are also generally considered to be subject to
greater risk than securities with higher ratings with regard to a deterioration
of general economic conditions. These foreign debt securities are the equivalent
of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting it, such as its inability to meet specific
projected business forecasts or the unavailability of additional financing.
Similarly, certain emerging market governments that issue lower quality debt
securities are among the largest debtors to commercial banks, foreign
governments and supranational organizations such as the World Bank and may not
be able or willing to make principal and/or interest repayments as they come
due. The risk of loss due to default by the issuer is significantly greater for
the holders of lower quality securities because such securities are generally
unsecured and may be subordinated to the claims of other creditors of the
issuer.
Lower quality debt securities frequently have call or buy-back features that
would permit an issuer to call or repurchase the security from the Fund. In
addition, the Fund may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and the Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing its portfolio. The Fund may also acquire lower quality debt securities
during an initial underwriting or that are sold without registration under
applicable securities laws. Such securities involve special considerations and
risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include (1) potential adverse publicity, (2) heightened sensitivity to general
economic or political conditions and (3) the likely adverse impact of a major
economic recession.
The Fund may also incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and the Fund may have limited legal recourse in the event of a
default. Debt securities issued by governments in emerging markets can differ
from debt obligations issued by private entities in that remedies from defaults
generally must be pursued in the courts of the defaulting government, and legal
recourse is therefore somewhat
Prospectus Page 14
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AIM DEVELOPING MARKETS FUND
diminished. Political conditions, in terms of a government's willingness to meet
the terms of its debt obligations, also are of considerable significance. There
can be no assurance that the holders of commercial bank debt may not contest
payments to the holders of debt securities issued by governments in emerging
markets in the event of default by the governments under commercial bank loan
agreements.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
CURRENCY RISK. Because the Fund may invest substantially in securities
denominated in currencies other than the U.S. dollar, and since the Fund may
hold foreign currencies, it will be affected favorably or unfavorably by
exchange control regulations or changes in the exchange rates between such
currencies and the U.S. dollar. Changes in currency exchange rates will affect
the net asset value of the Fund's shares and also may affect the value of
dividends and interest earned by the Fund and gains and losses realized by it.
Currencies generally are evaluated on the basis of fundamental economic criteria
(e.g., relative inflation and interest rate levels and trends, growth rate
forecasts, balance of payments status and economic policies) as well as
technical and political data. Exchange rates are determined by the forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in dollars.
Many of the currencies of emerging market countries have experienced steady
devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Any devaluations in the currencies
in which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries also may have fixed currencies whose values against the U.S.
dollar are not independently determined. In addition, there is a risk that
certain countries may restrict the free conversion of their currencies into
other currencies. Further, certain currencies may not be internationally traded.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Fund is authorized to
enter into options, futures and forward currency transactions. These
transactions involve certain risks, which include: (1) dependence on the
Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of forward contracts, options,
futures contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which the Fund invests; (4) lack of assurance that a liquid secondary market
will exist for any particular option, futures contract or option thereon at any
particular time; (5) the possible loss of principal under certain conditions;
and (6) the possible inability of the Fund to purchase or sell a portfolio
security at a time when it would otherwise be favorable for it to do so, or the
possible need for the Fund to sell a security at a disadvantageous time, due to
the need for the Fund to maintain "cover" or to set aside securities in
connection with hedging transactions.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may have difficulty disposing of
Assignments and Participations. The liquidity of such securities is limited, and
the Fund anticipates that such securities could be sold only to a limited number
of institutional investors. The lack of a liquid secondary market could have an
adverse impact on the value of such securities and on the Fund's ability to
dispose of particular Assignments or Participations when necessary to meet its
liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for the Fund to assign a value to those securities for purposes of
valuing its portfolio and calculating its net asset value.
Prospectus Page 15
<PAGE>
AIM DEVELOPING MARKETS FUND
SOVEREIGN DEBT. The Fund may invest in sovereign debt securities of emerging
market governments, including Brady Bonds. Investments in such securities
involve special risks. The issuer of the debt or the governmental authorities
that control the repayment of the debt may be unable or unwilling to repay
principal or interest when due in accordance with the terms of such debt.
Periods of economic uncertainty may result in the volatility of market prices of
sovereign debt obligations and in turn the Fund's net asset value, to a greater
extent than the volatility inherent in domestic fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's investments.
Emerging markets are faced with social and political issues, and some of them
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs and may have other adverse
social, political and economic consequences. Political changes or a
deterioration of a country's domestic economy or balance of trade may affect its
willingness to service its sovereign debt. Although the Sub-adviser intends to
manage the Fund in a manner that will minimize the exposure to such risks, there
can be no assurance that adverse political changes will not cause the Fund to
suffer a loss of interest or principal on any of its holdings.
In recent years, some of the emerging market countries in which the Fund expects
to invest have encountered difficulties in servicing their sovereign debt
obligations. Some of these countries have withheld payments of interest and/or
principal of sovereign debt. These difficulties have also led to agreements to
restructure external debt obligations -- in particular, commercial bank loans --
typically by rescheduling principal payments, reducing interest rates and
extending new credits to finance interest payments on existing debt. In the
future, holders of emerging market sovereign debt securities may be requested to
participate in similar rescheduling of such debt. Certain emerging market
countries are among the largest debtors to commercial banks and foreign
governments. Currently, Brazil, Mexico and Argentina are the largest debtors
among developing countries. At times certain emerging market countries have
declared moratoria on the payment of principal and interest on external debt;
such a moratorium is currently in effect in certain emerging market countries.
There is no bankruptcy proceeding by which a creditor may collect in whole or in
part sovereign debt on which an emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.
As noted above, sovereign debt obligations issued by emerging market governments
generally are deemed to be the equivalent in terms of quality to securities
rated below investment grade by Moody's and S&P. Such securities are regarded as
Prospectus Page 16
<PAGE>
AIM DEVELOPING MARKETS FUND
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations and involve
major risk exposure to adverse conditions. Some of such securities, with respect
to which the issuer currently may not be paying interest or may be in payment
default, may be comparable to securities rated D by S&P or C by Moody's. The
Fund may have difficulty disposing of and valuing certain sovereign debt
obligations because there may be a limited trading market for such securities.
Because there is no liquid secondary market for many of these securities, the
Fund anticipates that such securities could be sold only to a limited number of
dealers or institutional investors.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment management and administration
agreement with AIM, the investment sub-advisory and sub-administration agreement
between AIM and the Sub-adviser, the agreements with AIM Distributors regarding
distribution of the Fund's shares, the custody agreement and the transfer agency
agreement. The day-to-day operations of the Fund are delegated to the officers
of the Trust, subject always to the investment objectives and policies of the
Fund and to the general supervision of the Trust's Board of Trustees. See "Board
of Trustees and Executive Officers" in the Statement of Additional Information
for information on the Trust's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include
determining the composition of the Fund's portfolio and placing orders to buy,
sell or hold particular securities; furnishing corporate officers and clerical
staff; providing office space, services and equipment; and supervising all
matters relating to the Fund's operation. For these services, the Fund pays AIM
investment management and administration fees, computed daily and paid monthly,
based on its average daily net assets, at the annualized rate of .975% on the
first $500 million, .95% on the next $500 million, .925% on the next $500
million and .90% on amounts thereafter. Out of the aggregate fees payable by the
Fund, AIM pays the Sub-adviser sub-advisory and sub-administration fees equal to
40% of the aggregate fees AIM receives from the Fund. The investment management
and administration fees paid by the Fund are higher than those paid by most
mutual funds. The Fund pays all expenses not assumed by AIM, the Sub-adviser,
AIM Distributors or other agents. AIM has undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 1.50% of the average daily net assets of the
Fund's Advisor Class shares.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser, 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the Americas, New
York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with
Prospectus Page 17
<PAGE>
AIM DEVELOPING MARKETS FUND
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included the Sub-adviser and certain other affiliates. As a
result of this transaction, the Sub-adviser is now an indirect wholly owned
subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and its worldwide
asset management affiliates provided investment management and/or administrative
services to institutional, corporate and individual clients around the world
since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES BUSINESS EXPERIENCE
NAME/OFFICE FOR THE FUND PAST FIVE YEARS
- -------------------------- -------------------------- ---------------------------------------------------------------
<S> <C> <C>
Francesco Bertoni Portfolio Manager since Portfolio Manager for the Sub-adviser since June 1998.
London 1998 Investment Director of INVESCO Asset Management Ltd. (London)
("INVESCO London"), an affiliate of the Sub-adviser, since
1994. Portfolio Manager for INVESCO London from 1990 to 1994.
Cheng-Hock Lau Portfolio Manager since Chief Investment Officer for Global Fixed Income for the
New York 1997 Sub-adviser since October 1996. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from
July 1995 to October 1996. Employed by Chancellor Capital
Management, Inc. ("Chancellor Capital"), a predecessor of the
Sub-adviser, from 1995 to October 1996. Senior Vice President
and Senior Portfolio Manager for Fiduciary Trust Company
International from 1993 to 1995. Vice President at Bankers
Trust Company from 1991 to 1993.
</TABLE>
------------------------
In placing securities orders for the Fund's portfolio transactions, the
Sub-adviser seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-adviser may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions may be executed
through affiliates of AIM or the Sub-adviser. High portfolio turnover (over
100%) involves correspondingly greater brokerage commissions and other
transaction costs that the Fund will bear directly and could result in the
realization of net capital gains which would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
Advisor Class shares of the Fund. Certain Trustees and officers of the Trust are
affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
Prospectus Page 18
<PAGE>
AIM DEVELOPING MARKETS FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998 the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of thirteen separate and distinct series portfolios of
the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 19
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
A-1
<PAGE>
AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
A-2
<PAGE>
AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
A-3
<PAGE>
AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
A-10
<PAGE>
AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
A-11
<PAGE>
AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM DEVELOPING MARKETS FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM EMERGING MARKETS FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Emerging Markets Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a diversified portfolio which seeks long-term growth of
capital by investing primarily in equity securities of companies in emerging
markets.
The Fund is designed for long term investors and not as a trading vehicle. The
Fund does not represent a complete investment program, nor is it suitable for
all investors. The Fund may invest significantly in lower quality and unrated
foreign government bonds whose credit quality is generally considered the
equivalent of U.S. corporate debt securities commonly known as "junk bonds."
Investments of this type are subject to a greater risk of loss of principal and
interest. An investment in the Fund should be considered speculative and subject
to special risk factors, related primarily to the Fund's investments in emerging
markets. Purchasers should carefully assess the risks associated with an
investment in the Fund.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information dated
September 8, 1998 has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http:// www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM EMERGING MARKETS FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 5
Investment Objectives and Policies........................................................ 6
Risk Factors.............................................................................. 9
Management................................................................................ 12
Other Information......................................................................... 14
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a diversified series of the Trust.
Investment Objective: The Fund seeks long-term growth of capital.
Principal Investment: The Fund normally invests at least 65% of its total assets in equity securities of companies in
emerging markets.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment man-
agement group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at least
1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment discretion over such
account, and (ii) the account holder pays such person as compensation for its advice and other
services an annual fee of at least 0.50% on the assets in the account; (c) any account with assets of
a least $10,000 if (i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the assets in the account;
(d) accounts advised by the Sub-adviser or one of the companies formerly affiliated with the Asset
Management Division of Liechtenstein Global Trust AG, provided such accounts were invested in Advisor
Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and (e) any of the
companies affiliated with AMVESCAP PLC. Pursuant to a separate prospectus, the Fund also offers Class
A and Class B shares, which represent interests in the
</TABLE>
Prospectus Page 2
<PAGE>
AIM EMERGING MARKETS FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Fund. The Class A and Class B shares have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments must be
at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Advisor Class shares of the Fund may be exchanged for Advisor Class shares of certain
funds in The AIM Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at net asset value
on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund will achieve its investment objective. The Fund's net asset
values will fluctuate, reflecting fluctuations in the market value of its portfolio holdings.
The Fund will invest primarily in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
The Fund may invest up to 20% of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 3
<PAGE>
AIM EMERGING MARKETS FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following table (1):
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION COSTS:
<S> <C>
Maximum sales charge on purchases (as a % of offering price)................................................ None
Sales charges on reinvested distributions to shareholders................................................... None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is less).... None
Redemption charges.......................................................................................... None
Exchange fees............................................................................................... None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees............................................................... 0.98%
12b-1 distribution and service fees......................................................................... None
Other expenses (after reimbursements)....................................................................... 0.52%
-----------
Total Fund Operating Expenses............................................................................... 1.50%
-----------
-----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares........................................ $15 $ 48 $ 82 $180
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect the current expense limits. "Other expenses" include custody,
transfer agent, legal, audit and other operating expenses. AIM has
undertaken to limit the Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the annual rate of 1.50% of
the average daily net assets of the Fund's Advisor Class shares. Without
reimbursements, "Other Expenses" and "Total Fund Operating Expenses" would
have been 0.70% and 1.68%, respectively, for Advisor Class shares of the
Fund. See "Management" herein and the Statement of Additional Information
for more information. Investors purchasing Advisor Class shares through
financial planners, trust companies, bank trust departments or registered
investment advisers, or under a "wrap fee" program, will be subject to
additional fees charged by such entities or by the sponsors of such
programs. Where any account advised by one of the companies affiliated with
AMVESCAP PLC invests in Advisor Class shares of the Fund, such account shall
not be subject to duplicative advisory fees.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
The table and the assumption in the Hypothetical Example of a 5% annual
return are required by regulation of the SEC applicable to all mutual funds.
The 5% annual return is not a prediction of and does not represent the
Fund's projected or actual performance.
Prospectus Page 4
<PAGE>
AIM EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM EMERGING MARKETS FUND
(FORMERLY GT GLOBAL EMERGING MARKETS FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 5
<PAGE>
AIM EMERGING MARKETS FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term growth of capital. Under normal
circumstances, the Fund seeks its objective by investing at least 65% of its
total assets in equity securities of companies in emerging markets. The Fund may
invest in the following types of equity securities: common stock, preferred
stock, securities convertible into common stock, rights and warrants to acquire
such securities and substantially similar forms of equity with comparable risk
characteristics. There can be no assurance that the Fund will meet its
investment objective.
For purposes of the Fund's operations, "emerging markets" consist of all
countries determined by the Sub-adviser to have developing or emerging economies
and markets. These countries generally include every country in the world except
the United States, Canada, Japan, Australia, New Zealand and most countries
located in Western Europe. See "Investment Objective and Policies" in the
Statement of Additional Information for a complete list of all the countries
that the Fund does not consider to be emerging markets.
For purposes of the Fund's policy of normally investing at least 65% of its
total assets in equity securities of issuers in emerging markets, the Fund will
consider investment in the following emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
Although the Fund considers each of the above-listed countries eligible for
investment, it will not be invested in all such markets at all times. Moreover,
investing in some of those markets currently may not be desirable or feasible,
due to the lack of adequate custody arrangements for the Fund's assets, overly
burdensome repatriation and similar restrictions, the lack of organized and
liquid securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus, an issuer in an emerging market is an entity: (i)
for which the principal securities trading market is an emerging market, as
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenues from business in emerging markets, provided that, in the
Sub-adviser's view, the value of such issuer's securities will tend to reflect
emerging market developments to a greater extent than developments elsewhere; or
(iii) organized under the laws of, or with a principal office in, an emerging
market.
The Fund may also invest up to 35% of its total assets in (i) debt securities of
government or corporate issuers in emerging markets; (ii) equity and debt
securities of issuers in developed countries, including the United States; (iii)
securities of issuers in emerging markets not included in the list of emerging
markets above, if investing therein becomes feasible and desirable subsequent to
the date of this Prospectus; and (iv) cash and money market instruments.
The Fund invests in those emerging markets that the Sub-adviser believes have
strongly developing economies and in which the markets are becoming more
sophisticated. In selecting investments, the Sub-adviser seeks to identify those
countries and industries where economic and political factors, including
currency movements, are likely to produce above-average growth rates. The
Sub-adviser then invests in those companies in such countries and industries
that are best positioned and managed to take advantage of these economic and
political factors. The Fund ordinarily will be invested in the securities of
issuers in at least three different emerging markets. In evaluating investments
in securities of issuers in developed markets, the Sub-
Prospectus Page 6
<PAGE>
AIM EMERGING MARKETS FUND
adviser will consider, among other things, the business activities of the issuer
in emerging markets and the impact that developments in emerging markets are
likely to have on the issuer.
The Sub-adviser believes that the issuers of securities in emerging markets
often have sales and earnings growth rates that exceed those in developed
countries and that such growth rates may in turn be reflected in more rapid
share price appreciation. Accordingly, the Sub-adviser believes that the Fund's
policy of investing in equity securities of companies in emerging markets may
enable the Fund to achieve results superior to those produced by mutual funds
with similar objectives that invest solely in equity securities of issuers
domiciled in the United States and/or in other developed markets.
INVESTMENTS IN DEBT SECURITIES. The Fund may invest in debt securities of
governmental and corporate issuers in emerging markets. Emerging market debt
securities often are rated below investment grade or not rated by U.S. rating
agencies. The Fund may invest up to 20% of its total assets in debt securities
rated below investment grade. Investment in below investment grade debt
securities involves a high degree of risk and can be speculative. These debt
securities are the equivalent of high yield, high risk bonds, commonly known as
"junk bonds." See "Risk Factors -- Risks Associated with Debt Securities."
If the rating of a debt security held by the Fund drops below a minimum rating
considered acceptable by the Sub-adviser, the Fund will dispose of any such
security as soon as practicable and consistent with the best interests of the
Fund and its shareholders.
Growth of capital in debt securities may arise as a result of favorable changes
in relative foreign exchange rates, in relative interest rate levels and/ or in
the creditworthiness of issuers. The receipt of income from debt securities
owned by the Fund is
incidental to its objective of long-term growth of capital.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic, or
political conditions. Under a defensive strategy, the Fund temporarily may
invest up to 100% of its assets in cash (U.S. dollars, foreign currencies,
multinational currency units such as Euros) and/or high quality debt securities
or money market instruments of U.S. or foreign issuers. In addition, for
temporary defensive purposes, most or all of its investments may be made in the
United States and denominated in U.S. dollars. To the extent the Fund employs a
temporary defensive strategy, it will not be invested so as to achieve directly
its investment objective. In addition, pending investment of proceeds from new
sales of Fund shares or to meet ordinary daily cash needs, the Fund temporarily
may hold cash (U.S. dollars, foreign currencies or multinational currency units)
and may invest any portion of its assets in money market instruments. For a
description of money market instruments in which the Fund may invest, see
"Temporary Defensive Strategies" in the "Investment Objectives and Policies"
section of the Statement of Additional Information.
ADDITIONAL INVESTMENT POLICIES
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Fund may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). Pursuant to the Investment Company Act of 1940 (the "1940
Act"), the Fund generally may invest up to 10% of its total assets in the
aggregate in shares of other investment companies and up to 5% of its total
assets in any one investment company, as long as each investment does not
represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities and
is subject to limitations under the 1940 Act and market availability. The Fund
does not intend to invest in such investment companies unless, in the judgment
of the Sub-adviser, the potential benefits of such investment justify the
payment of any applicable premium or sales charge. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-adviser will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other
Prospectus Page 7
<PAGE>
AIM EMERGING MARKETS FUND
institutional investors. Securities lending allows a Fund to retain ownership of
the securities loaned and, at the same time, enhances the Fund's total return.
At all times a loan is outstanding, the Fund's borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to the value of the borrowed
securities plus any accrued interest or such other collateral as permitted by
the Fund's investment program and regulatory agencies, and as approved by the
Board. The Fund limits its loans of portfolio securities to an aggregate of 30%
of the value of its total assets, measured at the time any such loan is made.
The risks in lending portfolio securities, as with other extensions of secured
credit, consist of possible delays in receiving additional collateral or in
recovery of the loaned securities and possible loss of rights in the collateral
should the borrower fail financially.
PRIVATIZATIONS. The governments in some emerging markets have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain emerging markets, the ability of foreign entities such
as the Fund to participate in privatizations may be limited by local law, or the
terms on which the Fund may be permitted to participate may be less advantageous
than those afforded local investors. There can be no assurance that governments
in emerging markets will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
BORROWING. It is a fundamental policy of the Fund that it may borrow an amount
up to 33 1/3% of its total assets in order to meet redemption requests.
Borrowing may cause greater fluctuation in the value of the Fund's shares than
would be the case if the Fund did not borrow, but also may enable the Fund to
retain favorable securities positions rather than liquidating such positions to
meet redemptions. It is a nonfundamental policy of the Fund that the Fund will
not purchase securities during times when outstanding borrowings represent 5% or
more of the Fund's total assets.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities and forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery to the Fund. If the Fund
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Fund enters into a transaction on a
when-issued or forward commitment basis, the Fund will segregate cash or liquid
securities equal to the value of the when-issued or forward commitment
securities with its custodian bank and will mark to market daily such assets.
There is a risk that the securities may not be delivered and that the Fund may
incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment risk normally associated with the
portfolio. These instruments are often referred to as "derivatives," which may
be defined as financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security, currency or an
index of securities). The Fund may enter into such instruments up to the full
value of its portfolio assets. See "Risk Factors -- Options, Futures and Foreign
Currency Transactions" herein and "Options, Futures and Currency Strategies" in
the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and
Prospectus Page 8
<PAGE>
AIM EMERGING MARKETS FUND
options on such futures contracts to hedge against movements in exchange rates.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets, to securities
denominated in such currencies or to securities of issuers domiciled or
principally engaged in business in such emerging markets. To the extent that
such a market does not exist, the Sub-adviser may not be able to effectively
hedge its investment in such markets.
The Fund may purchase and sell put and call options on securities to hedge
against the risk of fluctuations in the prices of securities held by the Fund or
that the Sub-adviser intends to include in the Fund's portfolio. The Fund also
may purchase and sell put and call options on indices to hedge against overall
fluctuations in the securities markets generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
adversely affect the Fund's portfolio. The Fund also may purchase stock index
futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The Fund
may use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolios against changes in the general level of interest
rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations as
fundamental policies which also may not be changed without shareholder approval.
A complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information may be changed by the Trust's Board of Trustees without shareholder
approval. If a percentage restriction on investment or utilization of assets in
an investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively, in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objective. Investing in the Fund entails a substantial degree of risk and an
investment in the Fund should be considered speculative. Investors are strongly
advised to consider carefully the special risks involved in emerging markets,
which are in addition to the usual risks of investing in developed markets
around the world.
The Fund's net asset value will fluctuate, reflecting fluctuations in the market
value of its portfolio positions and its net currency exposure. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Fund will fluctuate
in response to general market and economic developments, as well as developments
affecting the particular issuers of such securities.
Investing in emerging markets involves risks relating to potential political and
economic instability
Prospectus Page 9
<PAGE>
AIM EMERGING MARKETS FUND
within such markets and the risks of expropriation, nationalization,
confiscation of assets and property or the imposition of restrictions on foreign
investment and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation, the Fund could lose its
entire investment in that market.
Economies in individual emerging markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments positions. Many emerging market countries
have experienced high rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain countries with
emerging markets.
Emerging markets generally are dependent heavily upon international trade and,
accordingly, have been and may continue to be affected adversely by trade
barriers, exchange controls, managed adjustments in relative currency values and
other protectionist measures imposed or negotiated by the countries with which
they trade.
Disclosure and regulatory standards in many respects are less stringent than in
the U.S. and other major markets. There also may be a lower level of monitoring
and regulation of emerging markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited. In
addition, the securities of non-U.S. issuers generally are not registered with
the SEC, nor are the issuers thereof usually subject to the SEC's reporting
requirements. Accordingly, there may be less publicly available information
about foreign securities and issuers than is available with respect to U.S.
securities and issuers. Foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. The Fund's net
investment income and/or capital gains from its foreign investment activities
may be subject to non-U.S. withholding taxes.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result either in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
developed countries. The risk also exists that an emergency situation may arise
in one or more emerging markets as a result of which trading of securities may
cease or may be substantially curtailed and prices for the Fund's portfolio
securities in such markets may not be readily available. Section 22(e) of the
1940 Act permits a registered investment company, such as the Fund, to suspend
redemption of its shares for any period during which an emergency exists, as
determined by the SEC. Accordingly, when the Fund believes that circumstances
dictate, it will promptly apply to the SEC for a determination that such an
emergency exists within the meaning of Section 22(e) of the 1940 Act. During the
period commencing from the Fund's identification of such conditions until the
date of any SEC action, the Fund's portfolio securities in the affected markets
will be valued at fair value determined in good faith by or under the direction
of the Trust's Board of Trustees.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Fund generally will vary inversely with market interest rates. If interest
rates in a market fall, the Fund's debt securities issued by governments or
companies in that market ordinarily will increase in value. If market interest
rates increase, however, the debt securities owned by the Fund in that market
will likely decrease in value.
The Fund may invest up to 20% of its total assets in debt securities rated below
investment grade. Such investments involve a high degree of risk.
Debt rated Baa by Moody's Investors Service, Inc. ("Moody's") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), and
debt rated Ba, B, Caa, Ca or C by Moody's is
Prospectus Page 10
<PAGE>
AIM EMERGING MARKETS FUND
regarded, on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of the
obligation. While such lower quality debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions. Debt rated C by Moody's or S&P is the
lowest rated debt that is not in default as to principal or interest and such
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing. Lower quality debt securities are also
generally considered to be subject to greater risk than securities with higher
ratings with regard to a deterioration of general economic conditions. These
foreign debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. Similarly, certain emerging market governments that issue lower
quality debt securities are among the largest debtors to commercial banks,
foreign governments and supranational organizations such as the World Bank, and
may not be able or willing to make principal and/or interest repayments as they
come due. The risk of loss due to default by the issuer is significantly greater
for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from the Fund. In
addition, the Fund may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and the Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing the Fund's portfolio. The Fund may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession.
The Fund may also incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and the Fund may have limited legal recourse in the event of a
default. Debt securities issued by governments in emerging markets can differ
from debt obligations issued by private entities in that remedies from defaults
generally must be pursued in the courts of the defaulting government, and legal
recourse is therefore somewhat diminished. Political conditions, in terms of a
government's willingness to meet the terms of its debt obligations, also are of
considerable significance. There can be no assurance that the holders of
commercial bank debt may not contest payments to the holders of debt securities
issued by governments in emerging markets in the event of default by the
governments under commercial bank loan agreements.
Prospectus Page 11
<PAGE>
AIM EMERGING MARKETS FUND
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "Illiquid
Securities."
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
CURRENCY RISK. Because the Fund may invest substantially in securities
denominated in currencies other than the U.S. dollar, and since the Fund may
hold foreign currencies, the Fund will be affected favorably or unfavorably by
exchange control regulations or changes in the exchange rates between such
currencies and the U.S. dollar. Changes in currency exchange rates will
influence the value of the Fund's shares, and also may affect the value of
dividends and interest earned by the Fund and gains and losses realized by the
Fund. Currencies generally are evaluated on the basis of fundamental economic
criteria (e.g., relative inflation and interest rate levels and trends, growth
rate forecasts, balance of payments status and economic policies) as well as
technical and political data. Exchange rates are determined by the forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in dollars.
Many of the currencies of emerging market countries have experienced steady
devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Any devaluations in the currencies
in which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries also may have fixed currencies whose values against the U.S.
dollar are not independently determined. In addition, there is a risk that
certain countries may restrict the free conversion of their currencies into
other currencies. Further, certain currencies may not be internationally traded.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of forward contracts, options,
futures contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which the Fund invests; (4) lack of assurance that a liquid secondary market
will exist for any particular option, futures contract or option thereon at any
particular time; (5) the possible loss of principal under certain conditions;
and (6) the possible inability of the Fund to purchase or sell a portfolio
security at a time when it would otherwise be favorable for it to do so, or the
possible need for the Fund to sell a security at a disadvantageous time, due to
the need for the Fund to maintain "cover" or to set aside securities in
connection with hedging transactions.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment management and administration
agreement with
Prospectus Page 12
<PAGE>
AIM EMERGING MARKETS FUND
AIM, the investment sub-advisory and sub-administration agreement between AIM
and the Sub-adviser, the agreements with AIM Distributors regarding distribution
of the Fund's shares, the custody agreement and the transfer agency agreement.
The day to day operations of the Fund are delegated to the officers of the
Trust, subject always to the objective and policies of the Fund and to the
general supervision of the Trust's Board of Trustees. See "Trustees and
Executive Officers" in the Statement of Additional Information for information
on the Trust's Board of Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment manager and administrator include, but are
not limited to, determining the composition of the Fund's portfolio and placing
orders to buy, sell or hold particular securities; furnishing corporate officers
and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
the Fund pays AIM investment management and administration fees, computed daily
and paid monthly, based on its average daily net assets, at the annualized rate
of .975% on the first $500 million, .95% on the next $500 million, .925% on the
next $500 million, and .90% on amounts thereafter. Out of the aggregate fees
payable by the Fund, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-adviser, AIM Distributors or other agents. AIM has
undertaken to limit each Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the annual rate of 1.50% the
average daily net assets of the Fund's Advisor Class shares.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser, 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the Americas, New
York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly-owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
Prospectus Page 13
<PAGE>
AIM EMERGING MARKETS FUND
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- --------------------------- ---------------------- ------------------------------------------------------------------
<S> <C> <C>
Francesco Bertoni Portfolio Manager Portfolio Manager for the Sub-adviser since June 1998. Investment
London since 1998 Director of INVESCO Asset Management Ltd. (London) ("INVESCO
London"), an affiliate of the Sub-adviser, since 1994. Portfolio
Manager for INVESCO London from 1990 to 1994.
Christine Rowley Portfolio Manager Portfolio Manager for the Sub-adviser, GT Asset Management PLC
London since 1997 (London) and INVESCO GT Asset Management Asia Ltd. (Hong Kong),
affiliates of the Sub-adviser, since 1992. Analyst with the Bank
of England from 1989 to 1990.
</TABLE>
------------------------
In placing securities orders for the Fund's portfolio transactions, the
Sub-adviser seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-adviser may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions may be executed
through affiliates of AIM or the Sub-adviser. High portfolio turnover (over
100%) involves correspondingly greater brokerage commissions and other
transaction costs that the Fund will bear directly and could result in the
realization of net capital gains which would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
the Advisor Class shares of the Fund. Certain Trustees and officers of the Trust
are affiliated with AIM Distributors.
The Distribution Agreement provide AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which
Prospectus Page 14
<PAGE>
AIM EMERGING MARKETS FUND
means that the holders of a majority of the shares voting for the election of
Trustees can elect all the Trustees. A Trustee may be removed at any meeting of
the shareholders of the Trust by a vote of the shareholders owning at least
two-thirds of the outstanding shares. Any Trustee may call a special meeting of
shareholders for any purpose. Furthermore, Trustees shall promptly call a
meeting of shareholders solely for the purpose of removing one or more Trustees
when requested in writing to do so by shareholders holding 10% of the Trust's
outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the fund with other shares of the Fund and is
entitled to such other shares of the Fund and is entitled to such dividends and
distributions out of the income earned and gain realized on the assets belonging
to the Fund as may be declared by the Board of Trustees. Each share of the Fund
is equal in earnings, assets and voting privileges except that each class
normally has exclusive voting rights with respect to its distribution plan and
bears the expenses, if any, related to the distribution of its shares. Shares of
the Fund, when issued, are fully paid and nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 15
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
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HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
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AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
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TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
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AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
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AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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<PAGE>
AIM INVESTOR'S GUIDE
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
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<PAGE>
AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
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AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM EMERGING MARKETS FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL CONSUMER PRODUCTS
AND SERVICES FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Consumer Products and
Services Fund (the "Fund"), which is one of several series investment portfolios
comprising AIM Investment Funds (the "Trust"), an open-end, series, management
investment company. The Fund is a diversified portfolio which seeks long-term
capital growth by investing all of its investable assets in the Global Consumer
Products and Services Portfolio ("Portfolio"), which, in turn, invests primarily
in equity securities of companies throughout the world that manufacture, market,
retail or distribute consumer products and services.
The Portfolio's investment objective is identical to that of the Fund. The
investment experience of the Fund will correspond directly with the investment
experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from
http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 5
Investment Objective and Policies......................................................... 6
Risk Factors.............................................................................. 10
Management................................................................................ 13
Other Information......................................................................... 14
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund and the Portfolio: The Fund is a diversified series of the Trust. The Portfolio is a diversified series of Global
Investment Portfolio.
Investment Objectives: The Fund seeks long-term capital growth.
Principal Investments: The Fund invests all of its investable assets in the Portfolio, which, in turn, invests primarily in
equity securities of companies throughout the world that manufacture, market, retail or distribute
consumer products and services.
Investment Managers: The Portfolio is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at least
1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment discretion over such
account, and (ii) the account holder pays such person as compensation for its advice and other
services an annual fee of at least 0.50% on the assets in the account; (c) any account with assets of
a least $10,000 if (i) such account is established under a "wrap fee"
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
program, and (ii) the account holder pays the sponsor of such program an annual fee of at least 0.50%
on the assets in the account; (d) accounts advised by the Sub-adviser or one of the companies
formerly affiliated with the Asset Management Division of Liechtenstein Global Trust AG, provided
such accounts were invested in Advisor Class shares of any of the funds in The AIM Family of Funds
that are sub-advised by the Sub-adviser ("AIM Funds") on May 29, 1998; and (e) any of the companies
composing or affiliated with AMVESCAP PLC. Pursuant to a separate prospectus, the Fund also offers
Class A and Class B shares, which represent interests in the Fund. The Class A and Class B shares
have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments must be
at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"), Advisor Class shares of the Fund may be exchanged for Advisor Class shares of certain
funds in The AIM Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at net asset value
on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund or the Portfolio will achieve its investment objective. The
Fund's net asset value will fluctuate, reflecting fluctuations in the market value of the Portfolio's
portfolio holdings. The Portfolio's policy of concentrating its investments in companies in the
consumer products and services industries may cause the Fund's net asset value to fluctuate more than
if it invested in a greater number of industries.
The Portfolio may invest in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Portfolio may engage in certain foreign currency, options and futures transactions to attempt to
hedge against the overall level of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and transaction costs.
The Portfolio may invest up to 20% of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following table (1):
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price).......................... None
Sales charges on reinvested distributions to shareholders....................................... None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever
is less)....................................................................................... None
Redemption charges.............................................................................. None
Exchange fees................................................................................... None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees................................................... 0.98%
12b-1 distribution and service fees............................................................. None
Other expenses (after reimbursements)........................................................... 0.51%
-------
Total Fund Operating Expenses................................................................... 1.49%
-------
-------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ---- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares............... $15 $47 $ 82 $179
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect AIM's undertaking to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 1.50% of the average daily net assets of the Fund's Advisor
Class shares. "Other expenses" include custody, transfer agency, legal,
audit and other operating expenses. See "Management" herein and the
Statement of Additional Information for more information. Investors
purchasing Advisor Class shares through financial planners, trust companies,
bank trust departments or registered investment advisers, or under a "wrap
fee" program, will be subject to additional fees charged by such entities or
by the sponsors of such programs. Where any account advised by one of the
companies composing or affiliated with AMVESCAP PLC invests in Advisor Class
shares of the Fund, such account shall not be subject to duplicative
advisory fees.
The Board of Trustees of the Trust believes that the aggregate per share
expenses of the Fund and its Portfolio will be approximately equal to the
expenses the Fund would incur if its assets were invested directly in the
type of securities being held by its Portfolio.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S
DIRECT AND INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The
table and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's or
the Portfolio's projected or actual performance.
Prospectus Page 5
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
(FORMERLY GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 5
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital growth. It seeks its
objective by investing all of its investable assets in the Portfolio, which, in
turn, invests primarily in equity securities of companies throughout the world
that manufacture, market, retail or distribute consumer products and services.
The Portfolio's investment objective is identical to that of the Fund. There can
be no assurance that the Fund or Portfolio will achieve its investment
objective.
At least 65% of the Portfolio's total assets normally will be invested in common
and preferred stocks and warrants to acquire such securities issued by consumer
products and services companies. A "consumer products or services" company is an
entity in which (i) at least 50% of either the revenues or earnings was derived
from activities relating to consumer products or services, or (ii) at least 50%
of the assets was devoted to such activities, based on the company's most recent
fiscal year. The remainder of the Portfolio's assets may be invested in debt
securities issued by consumer products or services companies and/or equity and
debt securities of companies outside the consumer products or services
industries, which, in the opinion of the Sub-adviser, stand to benefit from
developments in such industries.
GLOBAL CONSUMER PRODUCTS AND SERVICES INDUSTRIES INVESTMENT. Examples of
consumer products and services companies include those that manufacture, market,
retail, or distribute: durable goods (such as homes, household goods,
automobiles, boats, furniture and appliances, and computers); non-durable goods
(such as food and beverages and apparel); media, entertainment, broadcasting,
publishing and sports-related goods and services (such as television and radio
broadcast, motion pictures, wireless communications, gaming casinos, theme
parks, restaurants and lodging); and goods and services to companies in the
foregoing industries (such as advertisers, textile companies and distribution
and shipping companies).
The Portfolio expects that a significant portion of its assets may be invested
in the securities of U.S. issuers from time to time, particularly those that
market their products globally. However, consumer products and services
companies of a particular nation or region of the world are often operated and
owned in their local markets, close to their customers. These companies, the
Sub-adviser believes, may offer superior opportunities for capital growth as
compared to their larger, multinational counterparts. Certain global markets may
be more attractive than others from time to time; companies dependent on U.S.
markets, for example, may be outperformed by companies not dependent on U.S.
markets.
The Sub-adviser also believes that the demand for consumer products and services
worldwide will increase along with rising disposable incomes in both developed
and developing nations. Emerging economies, such as those in China, Southeast
Asia, Eastern Europe and Latin America, offer opportunities for the growth and
expansion of consumer markets. These regions currently comprise a growing source
of inexpensive consumer products for export and a growing source of demand for
consumer products and services as the disposable incomes of their populations
increase. In the Sub-adviser's view, these changes are likely to create
investment opportunities in companies, both local and multinational, that are
able to employ innovative manufacturing, marketing, retailing and distribution
methods to open new markets and/or expand existing markets.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. The Portfolio expects that, from
time to time, a significant portion of its assets may be invested in the
securities of domestic issuers. The industry represented in the Portfolio,
however, is a global industry with significant, growing markets outside of the
United States. A sizeable proportion of the companies which comprise the
consumer products and services industries are headquartered outside of the
United States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Portfolio. The Sub-adviser uses its financial
expertise in markets located throughout the world and the substantial global
resources of AMVESCAP PLC in attempting to identify those countries and
companies then providing the greatest potential for long-term
Prospectus Page 6
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
capital appreciation. In this fashion, the Sub-adviser seeks to enable
shareholders to capitalize on the substantial investment opportunities and the
potential for long-term growth of capital presented by the global consumer
products and services industries represented in the Portfolio.
The Sub-adviser allocates the Portfolio's assets among securities of countries
and in currency denominations where opportunities for meeting the Portfolio's
investment objective are expected to be the most attractive. The Portfolio may
invest substantially in securities denominated in one or more currencies. Under
normal conditions, the Portfolio invests in the securities of issuers located in
at least three countries, including the United States; investments in securities
of issuers in any one country, other than the United States, will represent no
more than 50% of the Portfolio's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Portfolio may invest up to
100% of its total assets in cash (U.S. dollars, foreign currencies or
multinational currency units such as Euros) and/or high quality debt securities
or money market instruments of U.S. or foreign issuers. In addition, for
temporary defensive purposes, most or all of the Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Portfolio adopts a temporary defensive posture, it will not be invested so as to
achieve directly its investment objective. In addition, pending investment of
proceeds from new sales of Fund shares or to meet its ordinary daily cash needs,
the Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest in foreign or domestic high quality money market
instruments. For a full description of money market instruments, see "Money
Market Instruments" in the "Investment Objectives and Policies" section of the
Statement of Additional Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Portfolio in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Portfolio to participate in privatizations may be limited by local
law, or the terms on which the Portfolio may be permitted to participate may be
less advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Portfolio may invest up to 10% of
its total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Portfolio
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time, the Portfolio would
continue to pay its own management fees and other expenses. AIM and the
Sub-adviser will waive their advisory fees to the extent that the Portfolio
invests in an Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemptions of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of its shares than would be the case if the Portfolio did not
borrow.
A reverse repurchase agreement is a borrowing transaction in which the Portfolio
transfers possession of a security to another party, such as a bank
Prospectus Page 7
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
or broker/dealer, in return for cash, and agrees to repurchase the security in
the future at an agreed upon price which includes an interest component. A
"roll" borrowing transaction involves the Portfolio's sale of securities
together with its commitment (for which the Portfolio may receive a fee) to
purchase similar, but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolios to retain ownership of the securities loaned and, at the same
time, enhances the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other collateral as permitted by the Portfolio's investment program and
regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actually receiving or delivering the securities, as the
case may be. No income accrues on securities that have been purchased pursuant
to a forward commitment or on a when-issued basis prior to delivery to the
Portfolio. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to its portfolio positions. The Portfolio also may purchase and sell put
and call options on currencies, futures contracts on currencies and options on
such futures contracts to hedge against movements in exchange rates.
In addition, the Portfolio may purchase and sell put and call options on equity
and debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Portfolio or that the Sub-adviser intends to include in
the Portfolio's holdings. The Portfolio also may purchase and sell put and call
options on stock indexes to hedge against overall fluctuations in the securities
markets generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
affect adversely the Portfolio's holdings. The Portfolio also may
Prospectus Page 8
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
purchase stock index futures contracts and purchase call options or write put
options on such contracts to hedge against a general stock market or market
sector advance and thereby attempt to lessen the cost of future securities
acquisitions. The Portfolio may use interest rate futures contracts and options
thereon to hedge the debt portion of its portfolio against changes in the
general level of interest rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of that Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by the Trust's
Board of Trustees without shareholder approval. The Fund's policies regarding
concentration and lending, and the percentage of the Fund's assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval. The investment policies of the Fund are identical to the
investment policies of the Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is not
required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in its corresponding
Portfolio's investment objective.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's or Portfolio's investment policies or
restrictions.
The Portfolio is authorized to engage in Short Sales, although it currently has
no intention of doing so, and may purchase American Depository Receipts,
American Depository Shares, Global Depository Receipts and European Depository
Receipts. See "Short Sales" and "Depository Receipts," respectively, in the
Investment Objectives and Policies section of the Statement of Additional
Information.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because a Fund will invest only in its corresponding Portfolio, the Fund's
shareholders will acquire only an indirect interest in the investments of that
Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board of
Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or the shareholders of
the Fund could require the Fund to redeem its interest in the Portfolio. Any
such redemption could result in a distribution in kind of portfolio securities
(as opposed to a cash distribution) by the Portfolio. Should such a distribution
occur, the Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Fund and could
adversely affect its liquidity. Upon redemption, the Board would consider what
action might be taken, including the investment of all the investable assets of
the Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention by the Fund of its own
investment adviser to manage its assets in accordance with its investment
objective, policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in a Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may experience different
returns than investors in another investment company that invests exclusively in
the
Prospectus Page 9
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Portfolio. As of the date of this Prospectus, the Fund is the only institutional
investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors, if
any, in the Portfolio. For example, as with all open-end investment companies,
if a large investor were to redeem its interest in the Portfolio, (1) the
Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset values will fluctuate reflecting
fluctuations in the market value of the Portfolio's securities. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure, and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Portfolio will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. In addition,
the value of debt securities held by the Portfolio generally will fluctuate with
changes in the perceived creditworthiness of the issuers of such securities and
interest rates.
Because the Portfolio focuses its investments on the consumer products and
services industries, an investment in it may be more volatile than that of other
investment companies that do not concentrate their investments in such a manner.
Moreover, the value of the shares of the Fund will be especially susceptible to
factors affecting the consumer products and services industries. Accordingly,
the Fund should not be considered a complete investment program.
CONSUMER PRODUCTS AND SERVICES INDUSTRIES. The performance of consumer products
and services companies, relates closely to the actual or perceived performance
of the overall economy, interest rates and consumer confidence. In addition,
changes in demographics and consumer tastes may also affect the demand for, and
success of, particular consumer products and services. Many consumer products
and services companies have unpredictable earnings, due in part to changes in
consumer tastes and intense competition. As a result, such companies may be
subject to increased share price volatility. The consumer products and services
industries may also be subject to greater government regulation, including trade
regulation, than many other industries. Changes in governmental policy and the
need for regulatory approvals may have a material effect on the products and
services offered by companies in the consumer products and services industries.
Such governmental regulations may also hamper the development of new business
opportunities.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Portfolio's interest and dividends from foreign issuers may be
subject to non-U.S. withholding taxes, thereby reducing the Portfolio's net
investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political or social instability, or diplomatic
developments which could
Prospectus Page 10
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
affect the Portfolio's investments in those countries. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, rate of
savings and capital reinvestment, resource self-sufficiency and balance of
payments positions.
The Portfolio may invest in issuers domiciled in "emerging markets." Investing
in emerging market countries involves risks in addition to those risks involved
in foreign investing. Many emerging market countries have experienced high rates
of inflation for many years. In addition, emerging markets generally are
dependent heavily upon international trade and, accordingly, have been and
continue to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. The securities markets of
emerging market countries are substantially smaller, less developed, less liquid
and more volatile than the securities markets of the developed countries. In
addition, issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than issuers in developed
countries.
The Portfolio will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Portfolio and gains and losses realized by the Portfolio.
LOWER QUALITY DEBT SECURITIES. The Portfolio may invest up to 20%, of its total
assets in below investment grade debt securities, that is, rated below BBB by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa
by Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Portfolio will not invest in debt securities
that are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be
Prospectus Page 11
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
subordinated to the claims of other creditors of the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Portfolio may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
In addition, the Portfolio may have difficulty disposing of lower quality
securities because they may have a thin trading market. There may be no
established retail secondary market for many of these securities, and the
Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market also may have an adverse impact on market prices of such instruments and
may make it more difficult for the Portfolio to obtain accurate market
quotations for purposes of valuing its investments. The Portfolio may also
acquire lower quality debt securities during an initial underwriting or which
are sold without registration under applicable securities laws. Such securities
involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Portfolio may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Portfolio may also incur additional expenses to the
extent it is required to seek recovery upon a default in the payment of
principal or interest on portfolio holdings, and the Portfolio may have limited
legal recourse in the event of a default.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Portfolio to
achieve capital appreciation substantially exceeding the appreciation the
Portfolio would realize if it did not make such investments. However, in order
to attempt to limit investment risk, the Portfolio will invest no more than 5%
of its total assets in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Portfolio is
authorized to enter into options, futures and forward currency transactions, the
Portfolio might not enter into any such transactions. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the Portfolio to sell a security at a disadvantageous time, due to the need for
the Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
INVESTING IN SMALLER COMPANIES. While the Portfolio's holdings normally will
include securities of established suppliers of traditional products and
services, the Portfolio may invest in smaller companies which can benefit from
the development of new products and services. These smaller companies may
present greater opportunities for capital appreciation, but may also involve
greater risks than large, established issuers. Such smaller companies may have
limited product lines, markets or financial resources, and their securities may
trade less frequently and in more limited volume than the securities of larger,
more established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
Prospectus Page 12
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees and the Board of Trustees of the Portfolio have
overall responsibility for the operation of the Fund and the Portfolio,
respectively. The Boards have approved all significant agreements between the
Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administration agreement with AIM, the investment sub-advisory
and sub-administration agreement between AIM and the Sub-adviser, the agreements
with AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the investment objective and policies of the Fund
and the Portfolio and to the general supervision of the Boards. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the investment managers and administrators to the Fund and the
Portfolio include, but are not limited to, determining the composition of the
investment holdings of the Portfolio and placing orders to buy, sell or hold
particular securities. In addition, AIM and the Sub-adviser provide the
following administration services to the Portfolio and the Fund: furnishing
corporate officers and clerical staff; providing office space, services and
equipment; and supervising all matters relating to the Portfolio's and the
Fund's operation.
For administration services, the Fund pays AIM administration fees computed
daily and payable monthly at the annualized rate of 0.25% of the Fund's average
daily net assets. AIM has appointed the Sub-adviser as the Fund's
sub-administrator. In addition, the Fund bears its pro rata portion of the
investment management and administration fees paid by its corresponding
Portfolio to AIM and the Sub-adviser. The Portfolio pays AIM a fee, based on the
Portfolio's average daily net assets at the annualized rate of .725% on the
first $500 million, .70% on the next $500 million, .675% on the next $500
million and .65% on all amounts thereafter. Out of its aggregate fees payable by
the Fund and the Portfolio, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund and the Portfolio. The investment management and administration fees paid
by the Fund and the Portfolio are higher than those paid by most mutual funds.
The Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM Distributors
or other agents. AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 1.50% of the average daily net assets of the Fund's Advisor Class
shares.
The Sub-adviser also serves as the Fund's and the Portfolio's pricing and
accounting agent. For these services the Sub-adviser receives a fee consisting
of 0.03% of the first $5 billion of assets, and 0.02% of the assets in excess of
$5 billion, of the AIM Funds that are sub-advised by the Sub-adviser (other than
AIM Eastern Europe Fund). Each of these funds, including the Fund and the
Portfolio, pays an amount based upon its relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Portfolio pursuant to
an investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP
Prospectus Page 13
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
PLC acquired LGT's Asset Management Division, which included the Sub-adviser and
certain other affiliates. As a result of this transaction, the Sub-adviser is
now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the
Sub-adviser and its worldwide asset management affiliates provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Portfolio, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Portfolio is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio Manager since Head of [the Theme Funds] for the Sub-adviser since 1997. Portfolio
San Francisco Portfolio inception in Manager for the Sub-adviser since 1994. Analyst for the Sub-adviser
1994 from 1992 to 1994.
</TABLE>
------------------------
In placing orders for the Portfolio's securities transactions, the Sub-adviser
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Sub-adviser may consider a broker/dealer's sale of
shares of the AIM Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
Advisor Class shares of the Fund. Certain Trustees and officers of the Trust are
affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may continue to establish other
funds, each corresponding to a distinct investment portfolio and a distinct
series of the Trust's shares of beneficial interest. Shares of each fund are
entitled to one vote per share (with proportional voting for fractional shares)
and are freely transferable. Shareholders have no preemptive rights. Other
Prospectus Page 14
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
than the automatic conversion of Class B shares to Class A shares, there are no
conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other shares do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Global Investment Portfolio, a Delaware business trust. Under Delaware law, the
Fund and other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However, the
Agreement and Declaration of Trust of Global Investment Portfolio disclaims
shareholder liability for acts or obligations of the Portfolio and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Portfolio or a trustee. The Agreement and
Declaration of Trust also provides for indemnification from the Portfolio
property for all losses and expenses of any shareholder held personally liable
for the Portfolio's obligations. Thus the risk of an investor incurring
financial loss on account of such liability is limited to circumstances in which
the Portfolio itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
The Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the Fund and
to the Portfolio.
Prospectus Page 15
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
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<PAGE>
AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
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<PAGE>
AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
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<PAGE>
AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
A-10
<PAGE>
AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
A-11
<PAGE>
AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL FINANCIAL SERVICES FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Financial Services Fund
(the "Fund"), which is one of several series investment portfolios comprising
AIM Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a diversified portfolio which seeks long-term capital
growth by investing all of its investable assets in the Global Financial
Services Portfolio ("Portfolio"), which, in turn, invests primarily in equity
securities of companies throughout the world that operate in the financial
services industries. The Portfolio's investment objective is identical to that
of the Fund. The investment experience of the Fund will correspond directly with
the investment experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and, is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objective and Policies.........................................................
Risk Factors..............................................................................
Management................................................................................ 7
Other Information......................................................................... 11
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C>
The Fund and the Portfolio: The Fund is a diversified series of the Trust. The Portfolio is a
diversified series of Global Investment Portfolio.
Investment Objective: The Fund seeks long-term capital growth.
Principal Investments: The Fund invests all of its investable assets in the Portfolio,
which, in turn, invests primarily in equity securities of
companies throughout the world that operate in the financial
services industries.
Investment Managers: The Portfolio is managed by A I M Advisors, Inc. ("AIM") and is
sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-
adviser"). AIM and the Sub-adviser and their worldwide asset
management affiliates provide investment management and/or
administrative services to institutional, corporate and
individual clients around the world. AIM and the Sub-adviser are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP
PLC and its subsidiaries are an independent investment management
group that has a significant presence in the institutional and
retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently
advises approximately 90 investment company portfolios.
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations which have at
least 1,000 employees; (b) any account with assets of at least
$10,000 if (i) a financial planner, trust company, bank trust
department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an
annual fee of at least 0.50% on the assets in the account; (c)
any account with assets of a least $10,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
0.50% on the assets in the account; (d) accounts advised by the
Sub-adviser or one of the companies formerly affiliated with the
Asset Management Division of Liechtenstein Global Trust AG,
provided such accounts were invested in Advisor Class shares of
any of the funds in The AIM Family of Funds that are sub-advised
by the Sub-adviser ("AIM Funds") on May 29, 1998; and (e) any of
the companies composing or affiliated with AMVESCAP PLC. Pursuant
to a separate prospectus, the Fund also offers Class A and Class
B shares, which represent interests in the Fund. The Class A and
Class B shares have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500
and additional investments must be at least $50. The distributor
of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How
to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Advisor
Class shares of the Fund may be exchanged for Advisor Class
shares of certain funds in The AIM Family of Funds in the manner
and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a
portion of their shares at net asset value on any business day.
See "How to Redeem Shares."
</TABLE>
<TABLE>
<S> <C>
Distributions: The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund makes
distributions of realized capital gains, if any, on an annual
basis. Dividends and distributions of the Fund may be reinvested
at net asset value without payment of a sales charge in the
Fund's shares or may be invested in shares of the other funds in
The AIM Family of Funds. See "Dividends, Distributions and Tax
Matters."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 3
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Risk Factors: There is no assurance that the Fund or the Portfolio will achieve
its investment objective. The Fund's net asset value will
fluctuate, reflecting fluctuations in the market value of the
Portfolio's portfolio holdings. The Portfolio's policy of
concentrating its investments in companies in the financial
services industries may cause the Fund's net asset value to
fluctuate more than if it invested in a greater number of
industries.
The Portfolio may invest in foreign securities. Investments in
foreign securities involve risks relating to political and
economic developments abroad and the differences between the
regulations to which U.S. and foreign issuers are subject.
Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency
exchange rates will affect the Fund's net asset value, earnings
and gains and losses realized on sales of securities. Securities
of foreign companies may be less liquid and their prices more
volatile than those of securities of comparable U.S. companies.
The Portfolio may engage in certain foreign currency, options and
futures transactions to attempt to hedge against the overall
level of investment and currency risk associated with its present
or planned investments. Such transactions involve certain risks
and transaction costs.
The Portfolio may invest up to 5% of its total assets in below
investment grade debt securities. Investments of this type are
subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</TABLE>
Prospectus Page 4
<PAGE>
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following table (1):
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION COSTS:
<S> <C>
Maximum sales charge on purchases of shares (as a % of offering price).......................... None
Sales charges on reinvested distributions to shareholders....................................... None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever
is less) None
Redemption charges.............................................................................. None
Exchange fees................................................................................... None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees................................................... 0.98%
12b-1 distribution and service fees............................................................. None
Other expenses (after reimbursements)........................................................... 0.52%
-------
Total Fund Operating Expenses................................................................... 1.50%
-------
-------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ---- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares............... $15 $48 $ 82 $180
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect AIM's undertaking to limit each Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 1.50% of the average daily net assets of the Fund's Advisor
Class shares. Without reimbursements, "Other Expenses" and "Total Fund
Operating Expenses" would have been 0.88% and 1.86%, respectively, for
Advisor Class shares of the Fund. "Other expenses" include custody, transfer
agency, legal, audit and other operating expenses. See "Management" herein
and the Statement of Additional Information for more information. Investors
purchasing Advisor Class shares through financial planners, trust companies,
bank trust departments or registered investment advisers, or under a "wrap
fee" program, will be subject to additional fees charged by such entities or
by the sponsors of such programs. Where any account advised by one of the
companies composing or affiliated with AMVESCAP PLC invests in Advisor Class
shares of the Fund, such account shall not be subject to duplicative
advisory fees.
The Board of Trustees of the Trust believes that the aggregate per share
expenses of the Fund and its Portfolio will be approximately equal to the
expenses the Fund would incur if its assets were invested directly in the
type of securities being held by the Portfolio.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S
DIRECT AND INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The
table and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's or
the Portfolio's projected or actual performance.
Prospectus Page 5
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM GLOBAL FINANCIAL SERVICES FUND
(FORMERLY GT GLOBAL FINANCIAL SERVICES FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quotes. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital growth. It seeks its
objective by investing all of its investable assets in the Portfolio, which, in
turn, invests primarily in equity securities of companies throughout the world
that operate in the financial services industries. The Portfolio's investment
objective is identical to that of the Fund. There can be no assurance that the
Fund or Portfolio will achieve its investment objective.
At least 65% of the Portfolio's total assets normally will be invested in common
and preferred stocks and warrants to acquire such securities issued by financial
services companies. A "financial services" company is an entity in which (i) at
least 50% of either the revenues or earnings was derived from financial services
activities, or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the Portfolio's
assets may be invested in debt securities issued by financial services companies
and/or equity and debt securities of companies outside of the financial services
industries, which, in the opinion of the Sub-adviser, stand to benefit from
developments in the financial services industries.
GLOBAL FINANCIAL SERVICES INDUSTRIES INVESTMENT. Examples of financial services
companies include commercial banks and savings institutions and loan
associations and their holding companies; consumer and industrial finance
companies; diversified financial services companies; investment banks; insurance
brokerages; securities brokerage and investment advisory companies; real estate-
related companies; leasing companies; and a variety of firms in all segments of
the insurance field such as multi-line, property and casualty and life insurance
and insurance holding companies.
The Sub-adviser believes an accelerating rate of global economic interdependence
will lead to significant growth in the demand for financial services. In
addition, in the Sub-adviser's view, as the industries evolve, opportunities
will emerge for those companies positioned for the future. Thus, the Sub-adviser
expects that banking and related financial institution consolidation in the
developed countries, increased demand for retail borrowing in developing
countries, a growing need for international trade-based financing, a rising
demand for sophisticated risk management, the proliferating number of liquid
securities markets around the world, and larger concentrations of investable
assets should lead to growth in financial service companies that are positioned
for the future.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. The Portfolio expects that, from
time to time, a significant portion of its assets may be invested in the
securities of domestic issuers. The industry represented in the Portfolio,
however, is a global industry with significant, growing markets outside of the
United States. A sizeable proportion of the companies which comprise the
financial services industries are headquartered outside of the United States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Portfolio. The Sub-adviser uses its financial
expertise in markets located throughout the world and the substantial global
resources of AMVESCAP PLC in attempting to identify those countries and
companies then providing the greatest potential for long-term capital
appreciation. In this fashion, the Sub-adviser seeks to enable shareholders to
capitalize on the substantial investment opportunities and the potential for
long-term growth of capital presented by the global financial services
industries represented in the Portfolio.
The Sub-adviser allocates the Portfolio's assets among securities of countries
and in currency denominations where opportunities for meeting the Portfolio's
investment objective are expected to be the most attractive. The Portfolio may
invest substantially in securities denominated in one or more currencies. Under
normal conditions, the Portfolio invests in the securities of issuers located in
at least three countries, including the United States; investments in securities
of issuers in any one country, other than the United States, will represent no
more than 40% of the Portfolio's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average
Prospectus Page 7
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
per share earnings growth; high return on invested capital; a healthy balance
sheet; sound financial and accounting policies and overall financial strength;
strong competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Portfolio may invest up to
100% of its total assets in cash (U.S. dollars, foreign currencies or
multinational currency units such as Euros) and/or high quality debt securities
or money market instruments of U.S. or foreign issuers. In addition, for
temporary defensive purposes, most or all of the Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Portfolio adopts a temporary defensive posture, it will not be invested so as to
achieve directly its investment objective. In addition, pending investment of
proceeds from new sales of Fund shares or to meet its ordinary daily cash needs,
the Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest in foreign or domestic high quality money market
instruments. For a full description of money market instruments, see "Money
Market Instruments" in the "Investment Objectives and Policies" section of the
Statement of Additional Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Portfolio in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Portfolio to participate in privatizations may be limited by local
law, or the terms on which the Portfolio may be permitted to participate may be
less advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Portfolio may invest up to 10% of
its total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Portfolio
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time, the Portfolio would
continue to pay its own management fees and other expenses. AIM and the
Sub-adviser will waive their advisory fees to the extent that the Portfolio
invests in an Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemptions of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of its shares than would be the case if the Portfolio did not
borrow.
A reverse repurchase agreement is a borrowing transaction in which the Portfolio
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Portfolio's sale of securities together with
its commitment (for which the Portfolio may receive a fee) to purchase similar,
but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolio to retain ownership of the securities loaned and, at the same
time, enhances the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other
Prospectus Page 8
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AIM GLOBAL FINANCIAL SERVICES FUND
collateral as permitted by the Portfolio's investment program and regulatory
agencies, and as approved by the Board. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in recovery of the securities and
possible loss of rights in the collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actually receiving or delivering the securities, as the
case may be. No income accrues on securities that have been purchased pursuant
to a forward commitment or on a when-issued basis prior to delivery to the
Portfolio. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to its portfolio positions. The Portfolio also may purchase and sell put
and call options on currencies, futures contracts on currencies and options on
such futures contracts to hedge against movements in exchange rates.
In addition, the Portfolio may purchase and sell put and call options on equity
and debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Portfolio or that the Sub-adviser intends to include in
the Portfolio's holdings. The Portfolio also may purchase and sell put and call
options on stock indexes to hedge against overall fluctuations in the securities
markets generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
affect adversely the Portfolio's holdings. The Portfolio also may purchase stock
index futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The
Portfolio may use interest rate futures contracts and options thereon to hedge
the debt portion of its portfolio against changes in the general level of
interest rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of
Prospectus Page 9
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information may be changed by the Trust's Board of Trustees without shareholder
approval. The Fund's policies regarding concentration and lending, and the
percentage of the Fund's assets that may be committed to borrowing, are
fundamental policies and may not be changed without shareholder approval. The
investment policies of the Fund are identical to the investment policies of the
Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is not
required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objective.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's or Portfolio's investment policies or
restrictions.
The Portfolio is authorized to engage in Short Sales, although it currently has
no intention of doing so, and may purchase American Depository Receipts,
American Depository Shares, Global Depository Receipts and European Depository
Receipts. See "Short Sales" and "Depository Receipts" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board of
Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or the shareholders of
the Fund could require the Fund to redeem its interest in the Portfolio. Any
such redemption could result in a distribution in kind of portfolio securities
(as opposed to a cash distribution) by the Portfolio. Should such a distribution
occur, the Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Fund and could
adversely affect its liquidity. Upon redemption, the Board would consider what
action might be taken, including the investment of all the investable assets of
the Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention by the Fund of its own
investment adviser to manage its assets in accordance with its investment
objective, policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may experience different
returns than investors in another investment company that invests exclusively in
the Portfolio. As of the date of this Prospectus, the Fund is the only
institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors, if
any, in the Portfolio. For example, as with all open-end investment companies,
if a large investor were to redeem its interest in the Portfolio, (1) the
Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
Prospectus Page 10
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset values will fluctuate reflecting
fluctuations in the market value of the Portfolio's securities positions. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure, and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Portfolio will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. In addition,
the value of debt securities held by the Portfolio generally will fluctuate with
changes in the perceived creditworthiness of the issuers of such securities and
interest rates.
Because the Portfolio focuses its investments on the financial services
industries, an investment in it may be more volatile than that of other
investment companies that do not concentrate their investments in such a manner.
Moreover, the value of the shares of the Fund will be especially susceptible to
factors affecting the financial services industries. Accordingly, the Fund
should not be considered a complete investment program.
FINANCIAL SERVICES INDUSTRIES. Financial services industries may be subject to
greater governmental regulation than many other industries and changes in
governmental policies and the need for regulatory approvals may have a material
effect on the services offered by companies in the financial services
industries. Governmental regulation may limit both the financial commitments
banks can make, including the amounts and types of loans, and the interest rates
and fees they can charge. In addition, governmental regulation in certain
foreign countries may impose interest rate controls, credit controls and price
controls.
Companies in the financial services sector are subject to rapid business
changes, significant competition, value fluctuations due to the concentration of
loans in particular industries significantly affected by economic conditions
(such as real estate or energy) and volatile performance dependent upon the
availability and cost of capital and prevailing interest rates. In addition,
general economic conditions significantly affect these companies. Credit and
other losses resulting from the financial difficulty of borrowers or other third
parties potentially may have an adverse effect on companies in these industries.
Foreign banks, particularly those of Japan, have reported financial difficulties
attributed to increased competition, regulatory changes, and general economic
difficulties.
The financial services area in the United States currently is changing
relatively rapidly as existing distinctions between various financial service
segments become less clear. For instance, recent business combinations have
included insurance, finance, and securities brokerage under single ownership.
Some primarily retail corporations have expanded into securities and insurance
fields. Investment banking, securities brokerage and investment advisory
companies are subject to government regulation and risk due to securities
trading and underwriting activities.
Many of the investment considerations discussed in connection with banks,
savings institutions and loan associations, and finance companies also apply to
insurance companies. The performance of insurance company investments will be
subject to risk from several factors. The earnings of insurance companies will
be affected by interest rates, pricing (including severe pricing competition
from time to time), claims activity, marketing competition and general economic
conditions. Particular insurance lines also will be influenced by specific
matters. Property and casualty insurer profits may be affected by certain
weather catastrophes and other disasters. Life and health insurer profits may be
affected by mortality and morbidity rates. Individual companies may be exposed
to material risks, including reserve inadequacy, problems in investment
portfolios (due to real estate or "junk" bond holdings, for example), and the
inability to collect from reinsurance carriers. Insurance companies are subject
to extensive governmental regulation, including the imposition of maximum rate
levels, which may not be adequate for
some lines of business. Proposed or potential
anti-trust or tax law changes also may affect
Prospectus Page 11
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
adversely insurance companies' policy sales, tax obligations and profitability.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Portfolio's interest and dividends from foreign issuers may be
subject to non-U.S. withholding taxes, thereby reducing the Portfolio's net
investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political or social instability, or diplomatic
developments which could affect the Portfolio's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Portfolio may invest in issuers domiciled in "emerging markets." Investing
in emerging market countries involves risks in addition to those risks involved
in foreign investing. Many emerging market countries have experienced high rates
of inflation for many years. In addition, emerging markets generally are
dependent heavily upon international trade and, accordingly, have been and
continue to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. The securities markets of
emerging market countries are substantially smaller, less developed, less liquid
and more volatile than the securities markets of the developed countries. In
addition, issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than issuers in developed
countries.
The Portfolio will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Portfolio and gains and losses realized by the Portfolio.
LOWER QUALITY DEBT SECURITIES. The Portfolio may invest up to 5% of its total
assets in below investment grade debt securities, that is, rated below BBB by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa
by Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Portfolio will not invest in debt securities
that are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
Prospectus Page 12
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Portfolio may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
In addition, the Portfolio may have difficulty disposing of lower quality
securities because they may have a thin trading market. There may be no
established retail secondary market for many of these securities, and the
Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market also may have an adverse impact on market prices of such instruments and
may make it more difficult for the Portfolio to obtain accurate market
quotations for purposes of valuing its investments. The Portfolio may also
acquire lower quality debt securities during an initial underwriting or which
are sold without registration under applicable securities laws. Such securities
involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Portfolio may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Portfolio may also incur additional expenses to the
extent it is required to seek recovery upon a default in the payment of
principal or interest on portfolio holdings, and the Portfolio may have limited
legal recourse in the event of a default.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Portfolio to
achieve capital appreciation substantially exceeding the appreciation the
Portfolio would realize if it did not make such investments. However, in order
to attempt to limit investment risk, the Portfolio will invest no more than 5%
of its total assets in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Portfolio is
authorized to enter into options, futures and forward currency transactions, the
Portfolio might not enter into any such transactions. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to
Prospectus Page 13
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
use forward currency contracts are different from those needed to select the
securities in which the Portfolio invests; (4) lack of assurance that a liquid
secondary market will exist for any particular option, futures contract or
option thereon at any particular time; (5) the possible loss of principal under
certain conditions; and (6) the possible inability of the Portfolio to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Portfolio to sell a security at a
disadvantageous time, due to the need for the Portfolio to maintain "cover" or
to set aside securities in connection with hedging transactions.
INVESTING IN SMALLER COMPANIES. While the Portfolio's holdings normally will
include securities of established suppliers of traditional products and
services, the Portfolio may invest in smaller companies which can benefit from
the development of new products and services. These smaller companies may
present greater opportunities for capital appreciation, but may also involve
greater risks than large, established issuers. Such smaller companies may have
limited product lines, markets or financial resources, and their securities may
trade less frequently and in more limited volume than the securities of larger,
more established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees and the Board of Trustees of the Portfolio have
overall responsibility for the operation of the Fund and the Portfolio,
respectively. The Boards have approved all significant agreements between the
Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administration agreement with AIM, the investment sub-advisory
and sub-administration agreement between AIM and the Sub-adviser, the agreements
with AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the investment objective and policies of the Fund
and the Portfolio and to the general supervision of the Boards. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the investment managers and administrators to the Fund and the
Portfolio include, but are not limited to, determining the composition of the
investment portfolio of the Portfolio and placing orders to buy, sell or hold
particular securities. In addition, AIM and the Sub-adviser provide the
following administration services to the Portfolio and the Fund: furnishing
corporate officers and clerical staff; providing office space, services and
equipment; and supervising all matters relating to the Portfolio's and the
Fund's operation.
For administration services, the Fund pays AIM administration fees computed
daily and payable monthly at the annualized rate of 0.25% of the Fund's average
daily net assets. AIM has appointed the Sub-adviser as the Fund's
sub-administrator. In addition, the Fund bears its pro rata portion of the
investment management and administration fees paid by the Portfolio to AIM and
the Sub-adviser. The Portfolio pays AIM a fee, based on the Portfolio's average
daily net assets at the annualized rate of .725% on the first $500 million, .70%
on the next $500 million, .675% on the next $500 million and .65% on all amounts
thereafter. Out of its aggregate fees payable by the Fund and the Portfolio, AIM
pays the Sub-adviser sub-advisory and sub-administration fees equal to 40% of
the aggregate fees AIM receives from the Fund and the Portfolio. The investment
management and administration fees paid by the Fund and the Portfolio are higher
than those paid by most mutual funds. The Fund pays all expenses not assumed by
AIM, the Sub-adviser, AIM Distributors or other agents. AIM has undertaken to
limit the Fund's expenses (exclusive of brokerage commissions, taxes, interest
and extraordinary expenses) to the
Prospectus Page 14
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
annual rate of 1.50% of the average daily net assets of the Fund's Advisor Class
shares.
Prospectus Page 15
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
The Sub-adviser also serves as the Fund's and the Portfolio's pricing and
accounting agent. For these services the Sub-adviser receives a fee consisting
of 0.03% of the first $5 billion of assets, and 0.02% of the assets in excess of
$5 billion, of the AIM Funds that are sub-advised by the Sub-adviser (other than
AIM Eastern Europe Fund). Each of these funds, including the Fund and the
Portfolio, pays an amount based upon its relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Portfolio pursuant to
an investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Portfolio, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Portfolio is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
A. James Ellman Portfolio Manager since Portfolio Manager for the Sub-adviser since 1995. Analyst for the
San Francisco 1995 Sub-adviser from 1994 to 1995.
</TABLE>
------------------------
In placing orders for the Portfolio's securities transactions, the Sub-adviser
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Sub-adviser may consider a broker/dealer's sale of
shares of the AIM Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
Advisor Class shares of the Fund. Certain Trustees and officers of the Trust are
affiliated with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
Prospectus Page 15
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Company acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Global Investment Portfolio, a Delaware business trust. Under Delaware law, the
Fund and other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However, the
Agreement and Declaration of Trust of Global Investment Portfolio disclaims
shareholder liability for acts or obligations of the Portfolio and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Portfolio or a trustee. The Agreement and
Declaration of Trust also provides for indemnification from the Portfolio
property for all losses and expenses of any shareholder held personally liable
for the Portfolio's obligations. Thus the risk of an investor incurring
financial loss on account of such liability is limited to circumstances in which
the Portfolio itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund when issued are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the Fund and
to the Portfolio.
Prospectus Page 16
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
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INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
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AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
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TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
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AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
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AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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AIM INVESTOR'S GUIDE
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
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AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
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AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM GLOBAL FINANCIAL SERVICES FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL GOVERNMENT INCOME FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Government Income Fund
(the "Fund"), which is one of several series investment portfolios comprising
AIM Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a non-diversified portfolio which seeks a high level of
current income by investing primarily in high quality U.S. and foreign
government debt securities. The Fund's secondary objectives are capital
appreciation and protection of principal through active management of its
maturity structure and currency exposure.
This Prospectus sets forth concisely information about the Fund that prospective
investors should know before investing. It should be read carefully and retained
for future reference. A Statement of Additional Information, dated September 8,
1998, has been filed with the Securities and Exchange Commission ("SEC") and is
incorporated herein by reference. The Statement of Additional Information is
available without charge upon request to the Trust at 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173, or by calling (800) 347-4246. The SEC maintains
a Web site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. Additional information about the Fund may also be obtained from
http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 5
Investment Objectives and Policies........................................................ 6
Risk Factors.............................................................................. 11
Management................................................................................ 14
Other Information......................................................................... 16
Appendix A -- Description of Debt Ratings................................................. 17
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of the Trust.
Investment Objectives: The Fund primarily seeks high current income and secondarily seeks capital appreciation and
protection of principal.
Principal Investments: The Fund invests primarily in high quality U.S. and foreign government debt obligations.
Investment Managers: The Fund is managed by AIM Advisors, Inc. ("AIM") and is sub-advised and sub-administered by INVESCO
(NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment man-
agement group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at least
1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment discretion over such
account, and (ii) the account holder pays such person as compensation for its advice and other
services an annual fee of at least 0.50% on the assets in the account; (c) any account with assets of
a least $10,000 if (i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the assets in the account;
(d) accounts advised by the Sub-adviser or one of the companies formerly affiliated with the Asset
Management Division of Liechtenstein Global Trust AG, provided such accounts were invested in Advisor
Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and (e) any of the
companies composing or affiliated with AMVESCAP PLC.
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
<TABLE>
<S> <C> <C>
Pursuant to a separate prospectus, the Fund also offers Class A and Class B shares, which represent
interests in the Fund. The Class A and Class B shares have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments must be
at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Advisor Class shares of the Fund may be exchanged for Advisor Class shares of certain
Funds in the AIM Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at net asset value
on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on a monthly
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund will achieve its investment objectives. The Fund's net asset
value will fluctuate, reflecting fluctuations in the market value of its portfolio holdings. The
value of debt securities held by the Fund generally fluctuates inversely with interest rate
movements.
The Fund will invest in foreign securities. Investments in foreign securities involve risks relating
to political and economic developments abroad and the differences between the regulations to which
U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
See "Investment Objectives and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 3
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following table (1):
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION COSTS:
<S> <C>
Maximum sales charge on purchases of shares (as a % of offering price)................................. None
Sales charges on reinvested distributions to shareholders.............................................. None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)................................................................................................ None
Redemption charges..................................................................................... None
Exchange Fees.......................................................................................... None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......................................................... 0.75%
12b-1 distribution and service fees.................................................................... None
Other expenses......................................................................................... 0.45%
-------
Total Fund Operating Expenses............................................................................ 1.16%
-------
-------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares..................................................................... $12 $37 $ 64 $142
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. Investors purchasing Advisor Class shares
through financial planners, trust companies, bank trust departments or
registered investment advisers, or under a "wrap fee" program, will be
subject to additional fees charged by such entities or by the sponsors of
such programs. Where any account advised by one of the companies composing
or affiliated with AMVESCAP PLC invests in Advisor Class shares of the Fund,
such account shall not be subject to duplicative advisory fees.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the Hypothetical Example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
Prospectus Page 4
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM GLOBAL GOVERNMENT INCOME FUND
(FORMERLY GT GLOBAL GOVERNMENT INCOME FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield reflects investment
income net of expenses over the relevant period attributable to a Fund share,
expressed as an annualized percentage of the net asset value per share for
Advisor Class shares.
Yield is a function of the type and quality of the Fund's investments, the
maturity of the securities held in the Fund's portfolio and the operating
expense ratio of the Fund. A shareholder's investment in the Fund is not insured
or guaranteed. These factors should be carefully considered by the investor
before making an investment in the Fund.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance
Prospectus Page 5
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
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 as well
as by general market conditions.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
The Fund seeks a high level of current income by investing primarily in high
quality debt securities of the U.S. and foreign governments, their agencies and
instrumentalities. Its secondary objectives are capital appreciation and
protection of principal through active management of its maturity structure and
currency exposure. There can be no assurance that the Fund will achieve its
investment objective.
At least 65% of the Fund's total assets normally are invested in debt
obligations issued or guaranteed by the U.S. or foreign governments (including
foreign states, provinces or municipalities) or their agencies, authorities or
instrumentalities including mortgage-backed securities issued by agencies or
instrumentalities of the U.S. Government or by foreign governments. For purposes
of this policy, the Fund considers debt obligations of supranational entities
organized or supported by several national governments, such as the World Bank
and the Asian Development Bank, to be "government securities."
The Fund invests primarily in high quality government debt securities. "High
quality" debt securities are those rated in the top two ratings categories of
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's, a division of
The McGraw-Hill Companies, Inc. ("S&P"), or, if not rated, determined to be of
comparable quality by the Sub-adviser. A description of Moody's and S&P ratings
is included in the Appendix to this Prospectus.
The Fund currently contemplates that it will invest principally in obligations
of the United States, Canada, Japan, the Western European nations, New Zealand
and Australia, as well as in multinational currency units. Under normal market
conditions, the Fund invests in issues of not less than three different
countries; investments in the securities of any one country, other than the
United States, normally represent no more than 40% of the Fund's total assets.
The Fund will not invest in a foreign currency or in securities denominated in a
foreign currency if such currency is not at the time of investment considered by
the Sub-adviser to be fully exchangeable into U.S. dollars (or a multinational
currency unit) without legal restriction.
The Fund may also invest up to 35% of its total assets in: (1) foreign
government securities that are not high quality but are rated at least
"investment grade," i.e., rated within the four highest ratings categories of
Moody's or S&P or, if not rated, determined by the Sub-adviser to be of
comparable quality; (2) corporate debt obligations of U.S. or foreign issuers
rated at least investment grade by Moody's or S&P, including debt obligations
convertible into equity securities or having attached warrants or rights to
purchase equity securities; (3) privately issued mortgage-backed and asset-
backed securities that are rated at least investment grade by Moody's or S&P, or
if unrated, determined by the Sub-adviser to be of comparable quality; and (4)
common stocks, preferred stocks and warrants to acquire such securities,
provided that the Fund will not invest more than 20% of its total assets in such
securities.
GENERAL POLICIES
ASSET ALLOCATION. The Fund invests in debt obligations allocated among diverse
markets and denominated in various currencies, including U.S. dollars, or in
multinational currency units such as Euros. The Fund is designed for investors
who wish to accept the risks entailed in such investments, which are different
from those associated with a portfolio consisting entirely of securities of U.S.
issuers denominated in U.S. dollars. The Fund may purchase securities that are
issued by the government or a company or financial institution of one country
but denominated in the currency of another country (or a multinational currency
unit).
The Sub-adviser allocates the assets of the Fund in securities of issuers in
countries and in currency denominations where the combination of fixed income
market returns, the price appreciation potential of fixed income securities and
currency exchange rate movements will present opportunities
Prospectus Page 6
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
primarily for high current income and secondarily for capital appreciation (and
in the case of the Fund, secondarily for Capital Appreciation and protection of
principal). In so doing, the Sub-adviser intends to take full advantage of the
different yield, risk and return characteristics that investment in the fixed
income markets of different countries can provide for U.S. investors.
Fundamental economic strength, credit quality and currency and interest rate
trends are the principal determinants of the emphasis given to various country,
geographic and industry sectors within the Fund. Securities held by the Fund may
be invested without limitation as to maturity.
The Sub-adviser selects securities of particular issuers on the basis of its
views as to the best values then currently available in the marketplace. Such
values are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the local and world
economies, movements in the general level and term of interest rates, currency
values, political developments and variations in the supply of funds available
for investment in the world bond market relative to the demands placed upon it.
The Sub-adviser generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation, interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. The Sub-adviser may seek to protect the Fund
against such negative currency movements through the use of sophisticated
investment techniques. See "Options, Futures and Forward Currency Transactions."
According to the Sub-adviser, as of the date of this Prospectus, more than 50%
of the value of all outstanding government debt obligations throughout the world
is represented by obligations denominated in currencies other than the U.S.
dollar. Moreover, from time to time, the debt securities of issuers located
outside the United States have substantially outperformed the debt obligations
of U.S. issuers. Accordingly, the Sub-adviser believes that the Fund's policy of
investing in debt securities throughout the world may enable the achievement of
results superior to those produced by mutual funds with similar objectives to
those of the Fund that invest solely in debt securities of U.S. issuers.
The Fund is designed for investors who wish to accept the risks entailed in such
investments, which are different from those associated with a portfolio
consisting entirely of securities of U.S. issuers denominated in U.S. dollars.
TEMPORARY DEFENSIVE STRATEGIES. The Sub-adviser may employ a temporary defensive
investment strategy if it determines such a strategy to be warranted due to
market, economic or political conditions. Pursuant to such a defensive strategy,
the Fund temporarily may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and/or invest up to 100% of its assets in high
quality debt securities or money market instruments of U.S. or foreign issuers.
In addition, for temporary defensive purposes, most or all of the Fund's
investments may be made in the United States and denominated in U.S. dollars. To
the extent the Fund employ a temporary defensive strategy, it will not be
invested so as to achieve directly its investment objectives. In addition,
pending investment of proceeds from new sales of Fund shares or to meet ordinary
daily cash needs, the Fund may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and may invest in high quality foreign or domestic
money market instruments. For a full description of money market instruments,
see "Selection of Debt Investments" in the "Investment Objectives and Policies"
section of the Statement of Additional Information.
BRADY BONDS. The Fund may invest in "Brady Bonds," which are debt restructurings
that provide for the exchange of cash and loans for newly issued bonds. Brady
Bonds have been issued by the countries of Albania, Argentina, Brazil, Bulgaria,
Costa Rica, Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria,
Panama, Peru, Philippines, Poland, Uruguay, Venezuela and Vietnam and are
expected to be issued by other emerging market countries. As of the date of this
Prospectus, the Fund is not aware of the occurrence of any payment defaults on
Brady Bonds. Investors should recognize, however, that Brady Bonds do not have a
long payment history. In addition, Brady Bonds are often rated below investment
grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling
Prospectus Page 7
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
interest payments based on the applicable interest rate at the time of issuance
and is adjusted at regular intervals thereafter.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The Fund may invest in
mortgage-backed and asset-backed securities of U.S. and foreign issuers,
including privately issued mortgage-backed and asset-backed securities.
Mortgage-backed securities represent direct or indirect interests in pools of
underlying mortgage loans that are secured by real property. Investors typically
receive payments out of the interest on and principal of the underlying
mortgages. Asset-backed securities are similar to mortgage-backed securities,
except that the underlying assets are other financial assets or financial
receivables, such as motor vehicle installment sales contracts, home equity
loans, leases of various types of real and personal property, and receivables
from credit cards. Any mortgage-backed and asset-backed securities purchased by
the Fund will be subject to the same rating requirements that apply to its other
investments. In addition, privately issued mortgage-backed and asset-backed
securities purchased by the Fund will be subject to the limitation of the Fund
which allows no more than 35% of its total assets to be invested in securities
of non-governmental issuers.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities and forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery of the securities. If the
Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, the Fund will
segregate cash or liquid securities equal to the value of the when-issued or
forward commitment securities with its custodian and will mark to market daily
such assets. There is a risk that the securities may not be delivered and that
the Fund may incur a loss. The Fund may invest up to 5% of its total assets in a
combination of securities purchased on a when-issued basis or with respect to
which it has entered into forward commitment agreements.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of Fund
shares. The Fund also may borrow up to 5% of its total assets for temporary or
emergency purposes other than to meet redemptions. However, the Fund will not
borrow for investment purposes, nor will the Fund purchase securities while
borrowings are outstanding.
The Fund may also enter into reverse repurchase agreements with a bank or
recognized securities dealer. Under a reverse repurchase agreement, the Fund
would sell securities and agree to repurchase them at a particular price at a
future date. At the time the Fund enters into a reverse repurchase agreement, it
will establish and maintain a segregated account with an approved custodian
containing cash or liquid securities having a value not less than the repurchase
price, including accrued interest. Reverse repurchase agreements involve the
risk that the market value of the securities retained in lieu of sale by the
Fund may decline below the price of the securities the Fund has sold but is
obligated to repurchase. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, such buyer or
its trustee or receiver may receive an extension of time to determine whether to
enforce the Fund's obligation to repurchase the securities, and the Fund's use
of the proceeds of the reverse repurchase agreement may effectively be
restricted pending such decision.
The Fund also may enter into "dollar rolls," in which the Fund sells fixed
income securities for delivery in the current month and simultaneously contracts
to repurchase substantially similar (same type, coupon and maturity) securities
on a specified future date. During the roll period, the Fund would forego
principal and interest paid on such securities. The Fund would be compensated by
the difference between the current sales price and the forward price for the
future purchase, as well as by the interest earned on the cash proceeds of the
initial sale. See "Investment Objectives and Policies" in the Statement of
Additional Information.
Prospectus Page 8
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
Reverse repurchase agreements and dollar rolls will be treated as borrowings and
will be deducted from the Fund's assets for purposes of calculating compliance
with the Fund's borrowing limitation. See "Investment Limitations" in the
Statement of Additional Information.
SECURITIES LENDING. The Fund may lend its respective portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhances the Fund's total return. At all times a loan is outstanding, the Fund
requires the borrower to maintain with the Fund's custodian, collateral
consisting of cash, U.S. government securities, or certain irrevocable letters
of credit equal to at least the value of the borrowed securities, plus any
accrued interest or such other collateral as permitted by the Fund's investment
program and regulatory agencies, and as approved by the Board. The Fund limits
its loans of portfolio securities to an aggregate of 30% of the value of its
total assets, measured at the time any such loan is made. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the loaned
securities and possible loss of rights in the collateral should the borrower
fail financially.
ZERO COUPON SECURITIES. The Fund may invest in certain zero coupon securities
that are "stripped" U.S. Treasury notes and bonds. It may also invest in zero
coupon and other deep discount securities issued by foreign governments and
domestic and foreign corporations, including certain Brady Bonds and other
foreign debt and in payment-in-kind securities. Zero coupon securities pay no
interest to holders prior to maturity, and payment-in-kind securities pay
interest in the form of additional securities. However, a portion of the
original issue discount on zero coupon securities and the "interest" on
payment-in-kind securities will be included in the Fund's income. Accordingly,
for the Fund to continue to qualify for tax treatment as a regulated investment
company and to avoid a certain excise tax (see "Taxes" in the Statement of
Additional Information), it may be required to distribute an amount that is
greater than the total amount of cash it actually receives. These distributions
must be made from the Fund's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund will not be able to purchase additional
income-producing securities with cash used to make such distributions, and its
current income ultimately may be reduced as a result. Zero coupon and
payment-in-kind securities usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS. The Fund may utilize combinations of futures on
bonds and forward currency contracts to create investment positions that have
substantially the same characteristics as bonds of the same type as those on
which the futures contracts are written. Investment positions of this type are
generally referred to as "synthetic securities."
For example, in order to establish a synthetic security position for the Fund
that is comparable to owning a Japanese government bond, the Sub-adviser might
purchase futures contracts on Japanese government bonds in the desired principal
amount and purchase forward currency contracts for Japanese Yen in an amount
equal to the then current purchase price for such bonds in the Japanese cash
market, with each contract having approximately the same delivery date.
The Sub-adviser might roll over the futures and forward currency contract
positions before taking delivery in order to continue the Fund's investment
position, or the Sub-adviser might close out those positions, thus effectively
selling the synthetic security. Further, the amount of each contract might be
adjusted in response to market conditions and the forward currency contract
might be changed in amount or eliminated in order to hedge against currency
fluctuations.
The Sub-adviser would create synthetic security positions for the Fund when it
believes that it can obtain a better yield or achieve cost savings in comparison
to purchasing actual bonds or when comparable bonds are not readily available in
the market. Synthetic security positions are subject to the risk that changes in
the value of purchased futures contracts may differ from changes in the value of
the bonds that might otherwise have been purchased in the cash market. Also,
while the Sub-adviser believes that the cost of creating synthetic security
positions generally will be materially lower than the cost of acquiring
comparable bonds in the cash market, the Fund will incur transaction costs in
connection with each purchase of a futures or forward currency contract. The use
of futures contracts and forward currency contracts to create synthetic security
positions also is subject to substantially the same risks as those that exist
when
Prospectus Page 9
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
these instruments are used in connection with hedging strategies. See "Options,
Futures and Forward Currency Transactions" below and "Options, Futures and
Currency Strategies" in the Statement of Additional Information.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies, and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the Fund's investment. The Fund may enter into such instruments
up to the full value of its portfolio assets. See "Risk Factors -- Options,
Futures and Currency Transactions" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. The Fund may also purchase and sell put and call
options on currencies, futures contracts on currencies and options on such
futures contracts to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on securities
to hedge against the risk of fluctuations in the prices of securities held by
the Fund or that the Sub-adviser intends to include in the Fund's portfolio. The
Fund also may purchase and sell put and call options on indices to hedge against
overall fluctuations in the securities markets generally or in a specific market
sector.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or market sector decline that could adversely affect the Fund's
portfolio. The Fund also may purchase index futures contracts and purchase call
options or write put options on such contracts to hedge against a general market
or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. The Fund may use interest rate futures contracts and
options thereon to hedge its portfolio against changes in the general level of
interest rates.
OTHER INDEXED SECURITIES. The Fund may invest in certain indexed securities,
which are securities whose prices are indexed to the prices of other securities,
securities indices, currencies, precious metals or other commodities, or other
financial indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined by
reference to a specific instrument or statistic. The performance of indexed
securities depends to a great extent on the performance of the security,
currency, or other instrument to which they are indexed, and may also be
influenced by interest rate changes in the United States and abroad. At the same
time, indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more volatile
than the underlying instruments. New forms of indexed securities continue to be
developed. The Fund may invest in such securities to the extent consistent with
its investment objectives.
OTHER INFORMATION. The Fund's investment objectives may not be changed without
the approval of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. The
Fund's other investment policies described herein and in the Statement of
Additional Information may be changed by the Trust's Board of Trustees without
shareholder approval.
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. See "Investment Objectives and Policies -- Short
Sales" in the Statement of Additional Information.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
Prospectus Page 10
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objectives. The Fund's net asset value will fluctuate, reflecting fluctuations
in the market value of its portfolio positions and its net currency exposure.
The value of fixed income securities held by the Fund generally fluctuates
inversely with interest rate movements. Longer term bonds held by the Fund are
subject to greater interest rate risk.
NON-DIVERSIFIED CLASSIFICATION. The Fund is classified under the Investment
Company Act of 1940 (the "1940 Act") as a "non-diversified" fund. As a result,
the Fund will be able to invest in a fewer number of issuers than if it were
classified under the 1940 Act as a "diversified" fund. To the extent that the
Fund invests in a smaller number of issuers, the value of the Fund's shares may
fluctuate more widely and the Fund may be subject to greater investment and
credit risk with respect to its portfolio.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally are not registered with the SEC, nor
are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. In addition, certain costs
attributable to foreign investing, such as custody charges, are higher than
those attributable to domestic investing. Securities of some foreign companies
are less liquid and their prices may be more volatile than securities of
comparable domestic companies. The Fund's interest and dividends from foreign
issuers may be subject to non-U.S. withholding taxes, thereby reducing its net
investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic
developments which could affect the investments of the Fund in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
CURRENCY RISK. Since the Fund normally invests substantially in securities
denominated in currencies other than the U.S. dollar, and because it may hold
foreign currencies, it will be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rates between such currencies and
the U.S. dollar. Changes in currency exchange rates will influence the value of
the Fund's shares, and also may affect the value of dividends and interest
earned by the Fund and gains and losses realized by the Fund. Currencies
generally are evaluated on the basis of fundamental economic criteria (e.g.,
relative inflation and interest rate levels and trends, growth rate forecasts,
balance of payments status and economic policies) as well as technical and
political data. The exchange rates between the U.S. dollar and other currencies
are determined by supply and demand in the currency exchange markets, the
international balance of payments, governmental intervention, speculation and
other economic and political conditions. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, a decline in the exchange rate of the
currency would adversely affect the value of the security expressed in U.S.
dollars.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The yield characteristics of
mortgage-backed and asset-backed securities differ from those of traditional
bonds. Among the major differences are that interest and principal payments are
made more frequently (usually monthly) and that principal may be prepaid at any
time because the underlying mortgage loans or other assets generally may be
prepaid at any time. Generally, prepayments on fixed-rate mortgage loans will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. Mortgage-backed and asset-backed securities may also
Prospectus Page 11
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
decrease in value as a result of increasing market interest rates and, because
of prepayments, may benefit less than other bonds from declining interest rates.
Reinvestments of prepayments may occur at lower interest rates than the original
investment, thus adversely affecting the yield of the Fund. Actual prepayment
experience may cause the yield of a mortgage-backed security to differ from what
was assumed when the Fund purchased the security. The market for privately
issued mortgage-backed and asset-backed securities is smaller and less liquid
than the market for U.S. government mortgage-backed securities.
Foreign mortgage-backed securities markets are substantially smaller than U.S.
markets, but have been established in several countries, including Germany,
Denmark, Sweden, Canada and Australia, and may be developed elsewhere. Foreign
mortgage-backed securities generally are structured similar to domestic
mortgage-backed securities, and they normally present substantially similar
investment risks as well as the other risks normally associated with foreign
securities.
SOVEREIGN DEBT. The Fund may invest in sovereign debt securities of emerging
market governments, including Brady Bonds. Investments in such securities
involve special risks. The issuer of the debt or the governmental authorities
that control the repayment of the debt may be unable or unwilling to repay
principal or interest when due in accordance with the terms of such debt.
Periods of economic uncertainty may result in the volatility of market prices of
sovereign debt obligations and in turn the Fund's net asset value, to a greater
extent than the volatility inherent in domestic fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's investments.
Emerging markets are faced with social and political issues and some of them
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs, and may have other adverse
social, political and economic consequences. Political changes or a
deterioration of a country's domestic economy or balance of trade may affect the
willingness of countries to service their sovereign debt. Although the
Sub-adviser intends to manage the Fund in a manner that will minimize the
exposure to such risks, there can be no assurance that adverse political changes
will not cause the Fund to suffer a loss of interest or principal on any of its
holdings.
In recent years, some of the emerging market countries in which the Fund expects
to invest have encountered difficulties in servicing their sovereign debt
obligations. Some of these countries have withheld payments of interest and/or
principal of sovereign debt. These difficulties have also led to agreements to
restructure external debt obligations -- in particular, commercial bank loans,
typically by rescheduling principal payments, reducing interest rates and
extending new credits to finance interest payments on existing debt. In the
future, holders of emerging market sovereign debt securities may be requested to
participate in similar rescheduling of such debt. Certain emerging market
countries are among the largest debtors to commercial banks and foreign
governments. Currently, Brazil, Mexico and Argentina are the largest debtors
among developing countries. At times certain emerging market countries have
declared moratoria on the payment of principal and interest on external debt;
such a moratorium is currently in effect in certain emerging market countries.
There is no bankruptcy proceeding by
Prospectus Page 12
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
which a creditor may collect in whole or in part sovereign debt on which an
emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Fund may invest involve great risk. As noted above, sovereign debt
obligations issued by emerging market governments generally are deemed to be the
equivalent in terms of quality to securities rated below investment grade by
Moody's and S&P. Such securities are regarded as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations and involve major risk exposure to
adverse conditions. Some of such securities, with respect to which the issuer
currently may not be paying interest or may be in payment default, may be
comparable to securities rated D by S&P or C by Moody's. The Fund may have
difficulty disposing of and valuing certain sovereign debt obligations because
there may be a limited trading market for such securities. Because there is no
liquid secondary market for many of these securities, the Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; (4) lack of assurance
that a liquid secondary market will exist for any particular option, futures
contract or option thereon at any particular time; (5) the possible loss of
principal under certain conditions; and (6) the possible inability of the Fund
to purchase or sell a portfolio security at a time when it would otherwise be
favorable for it to do so, or the possible need for the Fund to sell a security
at a disadvantageous time, due to the need for the Fund to maintain "cover" or
to set aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets, in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
Prospectus Page 13
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust and persons or companies furnishing services to the Fund,
including the investment management and administrative services agreement with
AIM, the investment sub-advisory and sub-administration agreement between AIM
and the Sub-adviser, the agreements with AIM Distributors regarding distribution
of the Fund's shares, the custody agreement and the transfer agency agreement.
The day-to-day operation of the Fund is delegated to the officers of the Trust,
subject always to the investment objectives and policies of the Fund and to the
general supervision of the Trust's Board. See "Trustees and Executive Officers"
in the Statement of Additional Information for information on the Trustees of
the Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the investment portfolio of
the Fund and placing orders to buy, sell or hold particular securities. In
addition, AIM and the Sub-adviser provide the following administration services
to the Fund: furnishing corporate officers and clerical staff; providing office
space, services and equipment; and supervising all matters relating to the
Fund's operation.
The Fund pays AIM investment management and administration fees computed daily
and payable monthly, based on the average daily net assets, for such services at
the annualized rate of .725% on the first $500 million, .70% on the next $1
billion, .675% on the next $1 billion, and .65% on amounts thereafter. Out of
the aggregate fees payable by the Fund, AIM pays the Sub-adviser sub-advisory
and sub-administration fees equal to 40% of the aggregate fees AIM receives from
the Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-adviser, AIM Distributors or any other agents. AIM has
undertaken to limit the expenses of the Advisor Class shares of the Fund
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 1.50% of the average daily net assets of the
Fund's Advisor Class shares.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment advisory
agreement, dated as of May 29, 1998 (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its subsidiaries, manages or advises
approximately 90 investment company portfolios encompassing a broad range of
investment objectives. The Sub-adviser, 50 California Street, 27th Floor, San
Francisco, California 94111, and 1166 Avenue of the Americas, New York, New York
10036, serves as the sub-adviser to the Fund pursuant to an investment
sub-advisory and sub-administrative agreement dated as of May 29, 1998. Prior to
May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset Management, Inc.
On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the former indirect
parent organization of the Sub-adviser, consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included the Sub-adviser and certain other affiliates. As a
result of this transaction, the Sub-adviser is now an indirect wholly owned
subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and its worldwide
asset management affiliates provided investment management and/or administrative
services to institutional, corporate and individual clients around the world
since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients
Prospectus Page 14
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an
independent investment management group that has a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices, including investment offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong,
London, Singapore, Sydney, Tokyo and Toronto. In managing the Fund, the
Sub-adviser employs a team approach, taking advantage of its investment
resources around the world.
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau Portfolio Manager since Chief Investment Officer for Global Fixed Income for the Sub-adviser
New York 1996 since October 1996. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from July
1995 to October 1996. Employed by Chancellor Capital Management,
Inc. ("Chancellor Capital"), a predecessor of the Sub-Adviser, from
1995 to October 1996. Senior Vice President and Senior Portfolio
Manager for Fiduciary Trust Company International from 1993 to
1995.
David B. Hughes Portfolio Manager since Head of Global Fixed Income, North America, for the Sub- adviser
New York 1998 since January 1998. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from July
1995 to December 1997. Employed by Chancellor Capital from July
1995 to October 1996. Assistant Vice President of Fiduciary Trust
Company International from 1994 to 1995. Assistant Treasurer at the
Bankers Trust Company from 1991 to 1994.
</TABLE>
------------------------
In placing orders for the Fund's securities transactions, the Sub-adviser seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-adviser may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions for the Fund may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
the Advisor Class shares of the Fund. Certain Trustees and officers of the Trust
are affiliated with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
Prospectus Page 15
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust.
From time to time, the Trust may establish other funds, each corresponding to a
distinct investment portfolio and a distinct series of the Trust's shares.
Shares of each fund are entitled to one vote per share (with proportional voting
for fractional shares) and are freely transferable. Shareholders have no
preemptive rights. Other than the automatic conversion of Class B shares to
Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that Class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 16
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
APPENDIX A
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the four
categories shown:
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 edged." 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 risk appear somewhat
larger than the 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
some time 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.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the four categories
shown:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
Prospectus Page 17
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
Prospectus Page 18
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
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pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
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TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
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Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
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AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
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HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
A-8
<PAGE>
AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
A-9
<PAGE>
AIM INVESTOR'S GUIDE
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
A-10
<PAGE>
AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
A-11
<PAGE>
AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL GROWTH & INCOME FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Growth & Income Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a non-diversified portfolio which seeks long-term capital
appreciation together with current income. The Fund invests in a global
portfolio of both equity and debt securities, in such relative proportions as
deemed most appropriate by the Fund's investment sub-adviser, INVESCO (NY), Inc.
(the "Sub-adviser"), in view of then-current economic and market conditions.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information dated
September 8, 1998 has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 5
Investment Objectives and Policies........................................................ 6
Management................................................................................ 10
Other Information......................................................................... 12
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of the Trust.
Investment Objective: The Fund seeks long-term capital appreciation together with current income.
Principal Investments: The Fund invests primarily in blue-chip equity securities and high quality government bonds of
issuers located in the United States and throughout the world.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by the
Sub-adviser. AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate and individual
clients around the world. AIM and the Sub-adviser are both indirect wholly owned subsidiaries of
AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment management group that
has a significant presence in the institutional and retail segment of the investment management
industry in North America and Europe, and a growing presence in Asia. AIM was organized in 1976 and,
together with its subsidiaries, currently advises approximately 90 investment company portfolios.
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at least
1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment discretion over such
account, and (ii) the account holder pays such person as compensation for its advice and other
services an annual fee of at least 0.50% on the assets in the account; (c) any account with assets of
a least $10,000 if (i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the assets in the account;
(d) accounts advised by the Sub-adviser or one of the companies formerly affiliated with the Asset
Management Division of Liechtenstein Global Trust AG, provided such accounts were
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
invested in Advisor Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and
(e) any of the companies affiliated with AMVESCAP PLC. Pursuant to a separate prospectus, the Fund
also offers Class A and Class B shares, which represent interests in the Fund. The Class A and Class
B shares have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments must be
at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"), Advisor Class shares of the Fund may be exchanged for Advisor Class shares of certain
funds in The AIM Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at net asset value
on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on a quarterly
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund will achieve its investment objective. The Fund's net asset value
will fluctuate, reflecting fluctuations in the market value of its portfolio holdings. The value of
debt securities held by the Fund generally fluctuates inversely with interest rate movements. Certain
investment grade debt securities may possess speculative qualities.
The Fund may invest in foreign securities. Investments in foreign securities involve risks relating
to political and economic developments abroad and the differences between the regulations to which
U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
See "Investment Objective and Policies."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 3
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
TABLE OF FEES AND EXPENSES The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Fund are reflected in the
following table (1):
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price)................................. None
Sales charges on reinvested distributions to shareholders.............................................. None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)................................................................................................ None
Redemption charges..................................................................................... None
Exchange Fees.......................................................................................... None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......................................................... 0.97%
12b-1 distribution and service fees.................................................................... None
Other expenses......................................................................................... 0.32%
-------
Total Fund Operating Expenses............................................................................ 1.29%
-------
-------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares..................................................................... $13 $41 $ 71 $156
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. Investors purchasing Advisor Class shares
through financial planners, trust companies, bank trust departments or
registered investment advisers, or under a "wrap fee" program, will be
subject to additional fees charged by such entities or by the sponsors of
such programs. Where any account advised by one of the companies affiliated
with AMVESCAP PLC invests in Advisor Class shares of the Fund, such account
shall not be subject to duplicative advisory fees.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the Hypothetical Example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
Prospectus Page 4
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM GLOBAL GROWTH & INCOME FUND
(FORMERLY GT GLOBAL GROWTH & INCOME FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield reflects investment
income net of expenses over the relevant period attributable to a Fund share,
expressed as an annualized percentage of net asset value per share for Advisor
Class shares.
Yield is a function of the type and quality of the Fund's investments, the
maturity of the securities held in the Fund's portfolio and the operating
expense ratio of the Fund. A shareholder's investment in the Fund is not insured
or guaranteed. These factors should be carefully considered by the investor
before making an investment in the Fund.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 5
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
INVESTMENT OBJECTIVE
AND POLICIES
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The Fund's investment objective is long-term capital appreciation together with
current income. The Fund seeks its objective by investing in a global portfolio
of both equity and debt securities, allocated among diverse international
markets. There is no assurance that the Fund will achieve its investment
objective.
At least 65% of the Fund's total assets normally will be invested in a
combination of blue-chip equity securities and high quality government bonds.
The Fund considers an equity security to be "blue chip" if: (i) during the
issuer's most recent fiscal year the security offered an above average dividend
yield relative to the latest reported dividend yield on the Morgan Stanley
Capital International World Index; AND (ii) the total equity market
capitalization of the issuer is at least $1 billion. Government bonds are deemed
to be high quality if at the time of the Fund's investment they are rated within
one of the two highest ratings categories of Moody's Investors Service, Inc.
("Moody's") or by Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. ("S&P"), or, if not rated, are deemed to be of equivalent quality in the
judgment of the Sub-adviser.
Up to 35% of the Fund's total assets may be invested in other equity securities
and investment grade government and corporate debt obligations which the
Sub-adviser believes will assist the Fund in achieving its objective.
"Investment grade" debt securities are those rated within one of the four
highest ratings categories of Moody's or S&P, or, if not rated, deemed to be of
equivalent quality in the judgment of the Sub-adviser.
Equity securities that the Fund may purchase include common stocks, preferred
stocks and warrants to acquire such stocks and other equity securities.
Government bonds that the Fund may purchase include debt obligations issued or
guaranteed by the United States or foreign governments (including foreign
states, provinces or municipalities) or their agencies, authorities or
instrumentalities and debt obligations of supranational entities organized or
supported by several national governments, such as the World Bank and the Asian
Development Bank. The debt obligations held by the Fund may include debt
obligations convertible into equity securities or having attached warrants or
rights to purchase equity securities. The Fund may purchase securities that are
issued by the government or a corporation or financial institution of one nation
but denominated in the currency of another nation (or a multinational currency
unit).
According to the Sub-adviser, as of the date of this Prospectus, more than 50%
of the total equity market capitalization worldwide is represented by non-U.S.
equity securities, and more than 50% of the value of all outstanding government
debt obligations throughout the world is represented by obligations denominated
in currencies other than the U.S. dollar. Moreover, from time to time the equity
and debt securities of issuers located outside the United States have
substantially outperformed the equity and debt securities of U.S. issuers.
Accordingly, the Sub-adviser believes that the Fund's policy of investing in a
global portfolio of equity and debt securities may enable the achievement of
long-term results superior to those produced by mutual funds with similar
objectives to that of the Fund that invest solely in U.S. equity and debt
securities.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. Consistent with the Fund's
investment objective, the Sub-adviser employs a conservative investment style in
managing the Fund's assets. In so doing the Sub-adviser attempts to limit
volatility and risk to capital. The Sub-adviser allocates the Fund's assets
among securities of countries and in currency denominations where opportunities
for meeting the Fund's investment objective are expected to be the most
attractive. The Sub-adviser attempts to identify those countries and industries
where economic and political factors are likely to produce above-average growth
rates and to further identify companies in such countries and industries that
are best positioned and managed to benefit from these factors.
The Fund currently contemplates that it will invest principally in securities of
issuers in the United States, Canada, Japan, Western Europe, New Zealand and
Australia. The Fund may invest substantially in securities denominated in one or
more currencies. Under normal conditions, the
Prospectus Page 6
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
Fund invests in issuers of not less than three different countries and issuers
of any one country, other than the United States, will represent no more than
40% of the Fund's total assets.
The relative proportions of equity and debt securities held by the Fund at any
one time will vary, depending upon the Sub-adviser's assessment of global
political and economic conditions and the relative strengths and weaknesses of
the world equity and debt markets. To enable the Fund to respond to general
economic changes and market conditions around the world, the Fund is authorized
to invest up to 100% of its total assets in either equity securities or debt
securities.
In selecting equity securities for investment, the Sub-adviser attempts to
identify and acquire only securities it deems to represent high or improving
investment quality. Securities representing high investment quality generally
will include those of well-known, established and successful issuers that the
Sub-adviser believes will continue to be successful in the future. Securities
representing improving investment quality may include those of an issuer that
has improved its sales or earnings or of an issuer the balance sheet and
financial condition of which is improving. The Sub-adviser seeks to avoid
investing in equity securities that appear overly speculative or risky, even if
they have attractive features or investment potential.
In evaluating debt securities considered for the Fund, the Sub-adviser analyzes
their yield, maturity, issue classification and quality characteristics, coupled
with expectations regarding local and world economies, movements in the general
level and term of interest rates, currency values, political developments, and
variations in the supply of funds available for investment in the world bond
market relative to the demands placed upon it. There are no limitations on the
maximum or minimum maturities of the debt securities considered by the Fund or
on the average weighted maturity of the debt portion of the Fund's portfolio.
Should the rating of a debt security be revised while such security is owned by
the Fund, the Sub-adviser will evaluate what action, if any, is appropriate with
respect to such security.
The Sub-adviser generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation and interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. The Fund may seek to protect itself against
negative currency movements by engaging in hedging techniques through the use of
options, futures and forward currency contracts.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Fund may hold cash (U.S.
dollars, foreign currencies or multinational currency units such as Euros) and/
or invest any portion or all of its assets in high quality money market
instruments of U.S. or foreign issuers. In addition, for temporary defensive
purposes, most or all of the Fund's investments may be made in the United States
and denominated in U.S. dollars. To the extent the Fund adopts a temporary
defensive posture, it will not be invested so as to directly achieve its
investment objective. In addition, pending investment of proceeds from new sales
of Fund shares or in order to meet ordinary daily cash needs, the Fund may hold
cash (U.S. dollars, foreign currencies or multinational currency units) and may
invest in foreign or domestic high quality money market instruments. For a full
description of money market instruments, see "Money Market Instruments" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of Fund
shares. The Fund also may borrow up to 5% of its total assets for temporary or
emergency purposes other than to meet redemptions. The Fund may borrow up to
33 1/3% of its total assets. However, the Fund will not purchase securities
while borrowings in excess of 5% of the Fund's total assets are outstanding. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
Prospectus Page 7
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. The Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. While a loan is outstanding, the borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to at least 100% of the value of the
borrowed securities, plus any accrued interest or such other collateral as
permitted by the Fund's investment program and regulatory agencies, and as
approved by the Board. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Fund's net investment income from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing the Fund's net investment
income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic or
economic developments which could affect the Fund's investments in those
countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, rate of savings and capital reinvestment, resource
self-sufficiency and balance of payments positions. Investments in foreign
government securities involve special risks, including the risk that the
government issuers may be unable or unwilling to repay principal and interest
when due.
The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. To attempt to increase
return, the Fund may write call options on securities. This strategy will be
employed only when, in the opinion of the Sub-adviser, the size of the premium
the Fund receives for writing the option is adequate to compensate the Fund
against the risk that appreciation in the underlying security may not be fully
realized if the option is exercised. The Fund also is authorized to write put
options to attempt to enhance return, although it does not have the current
intention of so doing.
The Fund may also use forward currency contracts, futures contracts, options on
securities, options on currencies, options on indices and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with the Fund's investments. These instruments
are often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency, or an index of securities). The
Fund may enter into such instruments up to the full value of its portfolio
assets. See "Options, Futures and Currency Strategies" in the Statement of
Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar, or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. The Fund also may purchase and sell put and call
options on currencies, futures contracts on
Prospectus Page 8
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
currencies and options on such futures contracts to hedge the Fund's portfolio
against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-adviser intends to include in the
Fund's portfolio. The Fund also may purchase and sell put and call options on
stock indices to hedge against overall fluctuations in the securities markets or
in a specific market sector.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or a specific market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general market or market sector advance and thereby attempt to lessen the cost
of future securities acquisitions. Similarly, the Fund may use interest rate
futures contracts and options thereon to hedge the debt portion of its portfolio
against changes in the general level of interest rates.
Although the Fund is authorized to enter into options, futures and forward
currency transactions, the Fund might not enter into any such transactions.
Options, futures and foreign currency transactions involve certain risks, which
include: (1) dependence on the Sub-adviser's ability to predict movements in the
prices of individual securities, fluctuations in the general securities markets
and movements in interest rates and currency markets; (2) imperfect correlation,
or even no correlation, between movements in the price of forward contracts,
options, futures contracts or options thereon and movements in the price of the
currency or security hedged or used for cover; (3) the fact that the skills and
techniques needed to trade options, futures contracts and options thereon or to
use forward currency contracts are different from those needed to select the
securities in which the Fund invests; (4) the lack of assurance that a liquid
secondary market will exist for any particular option, futures contract or
option thereon at any particular time; (5) the possible loss of principal under
certain conditions; and (6) the possible inability of the Fund to purchase or
sell a portfolio security at a time when it would otherwise be favorable for it
to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
OTHER POLICIES AND RISKS. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions. Equity securities,
particularly common stocks, generally represent the most junior position in an
issuer's capital structure, and entitle holders to an interest in the assets of
an issuer, if any, remaining after all more senior claims have been satisfied.
The value of equity securities held by the Fund will fluctuate in response to
general market and economic developments, as well as developments affecting the
particular issuers of such securities. In addition, the value of debt securities
held by the Fund generally will fluctuate with changes in the perceived
creditworthiness of the issuers of such securities and movements in interest
rates. Investment grade debt securities rated Baa by Moody's are described by
Moody's as having speculative characteristics, and therefore may be affected by
economic conditions and changes in the circumstances of their issuers to a
greater extent than higher rated bonds.
The Fund may invest up to 15% of its net assets in illiquid securities and other
securities for which no readily available market exists. The Fund may also
invest up to 5% of its total assets in a combination of securities purchased on
a when-issued basis or with respect to which it has entered into forward
commitment agreements.
The Fund is classified under the Investment Company Act of 1940, as amended
("1940 Act") as a "non-diversified" fund. As a result, the Fund will be able to
invest in a fewer number of issuers than if it were classified under the 1940
Act as a "diversified" fund. To the extent that the Fund invests in a smaller
number of issuers, the value of the Fund's shares may fluctuate more widely and
the Fund may be subject to greater investment and credit risk with respect to
its portfolio.
OTHER INFORMATION. The Fund's investment objective may not be changed without
the approval of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the
Prospectus Page 9
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
Statement of Additional Information. Unless specifically noted, the Fund's
investment policies described in this Prospectus and in the Statement of
Additional Information may be changed by the Trust's Board of Trustees without
shareholder approval. The Fund's policies regarding lending, and the percentage
of Fund assets that may be committed to borrowing, are fundamental policies and
may not be changed without shareholder approval. If a percentage restriction on
investment or utilization of assets in an investment policy or restriction is
adhered to at the time an investment is made, a later change in percentage
ownership of a security or kind of securities resulting from changing market
values or a similar type of event will not be considered a violation of the
Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively, in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment management and administration
agreement with AIM, the investment sub-advisory and sub-administration agreement
between AIM and the Sub-adviser, the agreements with AIM Distributors regarding
distribution of the Fund's shares, the custody agreement and the transfer agency
agreement. The day-to-day operations of the Fund are delegated to the officers
of the Trust, subject always to the objective and policies of the Fund and to
the general supervision of the Trust's Board of Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the Fund's portfolio and
placing orders to buy, sell or hold particular securities; furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
the Fund pays AIM investment management and administration fees, computed daily
and paid monthly, based on the average daily net assets, at the annualized rate
of .975% on the first $500 million, .95% on the next $500 million, .925% on the
next $500 million and .90% on amounts thereafter. Out of the aggregate fees
payable by the Fund, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-adviser, AIM Distributors or other agents. AIM has
undertaken to limit the Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the annual rate of 1.40% of the
average daily net assets of the Fund's Advisor Class shares.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser, 50 California Street, 27th
Floor, San
Prospectus Page 10
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
Francisco, California 94111, and 1166 Avenue of the Americas, New York, New York
10036, serves as the sub-adviser to the Fund pursuant to an investment
sub-advisory and sub-administration agreement dated as of May 29, 1998. Prior to
May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset Management, Inc.
On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the former indirect
parent organization of the Sub-adviser, consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included the Sub-adviser and certain other affiliates. As a
result of this transaction, the Sub-adviser is now an indirect wholly owned
subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and its worldwide
asset management affiliates provided investment management and/or administrative
services to institutional, corporate and individual clients around the world
since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------ ------------------------------------ ------------------------------------------------------------
<S> <C> <C>
Michael Lindsell Portfolio Manager since 1998 Head of Investment Strategy for Global Equities for the
London Sub-adviser and INVESCO GT Asset Management PLC (London)
("GT Asset Management") since 1996. Chief Investment
Officer for Japan for INVESCO GT Asset Management Asia Ltd.
(Hong Kong) ("GT Asset Management Asia") and Portfolio
Manager for the Sub-adviser from 1992 to 1996. Director of
Warburg Asset Management (Tokyo) prior to thereto. GT Asset
Management and GT Asset Management Asia are affiliates of
the Sub-adviser.
Michael McDonagh Portfolio Manager since 1998 Portfolio Manager for GT Asset Management since 1992 and for
London the Sub-adviser since October 1988. Portfolio Manager for
GT Asset Management Asia from 1992 to 1997.
Paul Griffiths Portfolio Manager since 1995 Head of Global Fixed Income for the Sub-adviser and GT Asset
London Management since June 1997. Portfolio Manager from 1994 to
1997. Global Bond Fund Manager for Lazard Investors from
1993 to 1994. Global Bond Fund Manager for Sanwa
International PLC from 1991 to 1993.
</TABLE>
In placing securities orders for the Fund's portfolio transactions, the
Sub-adviser seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-adviser may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions may be executed
through affiliates of AIM or the Sub-adviser.
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the
Prospectus Page 11
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
"Distribution Agreement"), with AIM Distributors, a registered broker-dealer and
a wholly owned subsidiary of AIM, to act as the distributor of the Advisor Class
shares of the Fund. Certain Trustees and officers of the Trust are affiliated
with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998 the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Company's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that Class. The shares of the Fund and the
Company's other funds will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 12
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
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AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
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AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
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AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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<PAGE>
AIM INVESTOR'S GUIDE
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
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<PAGE>
AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
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AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM GLOBAL GROWTH & INCOME FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL HEALTH CARE FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Health Care Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a diversified portfolio which seeks long-term capital
appreciation by investing primarily in equity securities of health care
companies throughout the world.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL HEALTH CARE FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 5
Investment Objective and Policies......................................................... 6
Risk Factors.............................................................................. 9
Management................................................................................ 12
Other Information......................................................................... 14
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a diversified series of the Trust.
Investment Objective: Fund seeks long-term capital appreciation.
Principal Investments: The Fund invests primarily in equity securities of health care companies throughout the world.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and are sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at least
1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment discretion over such
account, and (ii) the account holder pays such person as compensation for its advice and other
services an annual fee of at least 0.50% on the assets in the account; (c) any account with assets of
a least $10,000 if (i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the assets in the account;
(d) accounts advised by the Sub-adviser or one of the companies formerly affiliated with
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL HEALTH CARE FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
the Asset Management Division of Liechtenstein Global Trust AG, provided such accounts were invested
in Advisor Class shares of any of the other funds in The AIM Family of Funds that are sub-advised by
the Sub-adviser ("AIM Funds") on May 29, 1998; (e) any of the companies composing or affiliated with
AMVESCAP PLC; and (f) AIM Global Trends Fund. Pursuant to a separate prospectus, the Fund also offers
Class A and Class B shares, which represent interests in the Fund. The Class A and Class B shares
have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments must be
at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds") Advisor Class shares of the Fund may be exchanged for Advisor Class shares of certain
funds in The AIM Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at the Fund's net
asset value on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund will achieve its investment objective. The Fund's net asset value
will fluctuate, reflecting fluctuations in the market value of its Portfolio's portfolio holdings.
The Fund's policy of concentrating its investments in companies in its particular industries may
cause the Fund's net asset value to fluctuate more than if it invested in a greater number of
industries.
The Fund may invest in foreign securities. Investments in foreign securities involve risks relating
to political and economic developments abroad and the differences between the regulations to which
U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL HEALTH CARE FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund may invest up to 5% of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following tables (1):
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares
(as a % of offering price)............................................................................ None
Sales charges on reinvested distributions to shareholders.............................................. None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)................................................................................................. None
Redemption charges..................................................................................... None
Exchange fees.......................................................................................... None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......................................................... 0.97%
12b-1 distribution and service fees.................................................................... None
Other expenses (after reimbursements).................................................................. 0.33%
-------
Total Fund Operating Expenses.......................................................................... 1.30%
-------
-------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ---- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares............... $13 $41 $ 72 $158
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect AIM's undertaking to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 1.50% of the average daily net assets of the Fund's Advisor
Class shares. "Other expenses" include custody, transfer agency, legal,
audit and other operating expenses. See "Management" herein and the
Statement of Additional Information for more information. Investors
purchasing Advisor Class shares through financial planners, trust companies,
bank trust departments or registered investment advisers, or under a "wrap
fee" program, will be subject to additional fees charged by such entities or
by the sponsors of such programs. Where any account advised by one of the
companies composing or affiliated with AMVESCAP PLC invests in Advisor Class
shares of the Fund, such account shall not be subject to duplicative
advisory fees.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the Hypothetical Example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
Prospectus Page 4
<PAGE>
AIM GLOBAL HEALTH CARE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM GLOBAL HEALTH CARE FUND
(FORMERLY GT GLOBAL HEALTH CARE FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 5
<PAGE>
AIM GLOBAL HEALTH CARE FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital appreciation. It seeks its
objective by investing primarily in equity securities of health care companies
throughout the world. There can be no assurance that the Fund will achieve its
investment objective.
At least 65% of the Fund's total assets normally will be invested in common and
preferred stocks, and warrants to acquire such securities, issued by health care
companies. A "health care" company is an entity in which (i) at least 50% of
either the revenues or earnings was derived from health care activities, or (ii)
at least 50% of the assets was devoted to such activities, based on the
company's most recent fiscal year. The remainder of the Fund's assets may be
invested in debt securities issued by health care companies and/or equity and
debt securities of companies outside of the health care industry, which, in the
opinion of the Sub-adviser, stand to benefit from developments in the health
care industries.
GLOBAL HEALTH CARE INDUSTRIES INVESTMENT. Examples of health care companies
include those that are substantially engaged in the design, manufacture or sale
of products or services used for or in connection with health care or medicine.
Such firms may include pharmaceutical companies; firms that design, manufacture,
sell or supply medical, dental and optical products, hardware or services;
companies involved in biotechnology, medical diagnostic, and biochemical
research and development; and companies involved in the ownership and/or
operation of health care facilities.
The Fund expects that, from time to time, a significant portion of its assets
may be invested in the securities of U.S. issuers. Health care industries,
however, are global industries with significant, growing markets outside of the
United States. A sizeable portion of the companies which comprise the health
care industries are headquartered outside of the United States, and many
important pharmaceutical and biotechnology discoveries and technological
breakthroughs have occurred outside of the United States, primarily in Japan,
the United Kingdom and Western Europe.
The Sub-adviser believes that the global health care industries offer attractive
long-term supply/ demand dynamics. While the United States, Western Europe, and
Japan presently account for a substantial portion of health care expenditures,
this should change dramatically in the coming decade if the populations of
developing countries devote an increasing percentage of income to health care.
Additionally, the Sub-adviser believes demographics on aging point to a
significant increase in demand from the industrialized nations, as the elderly
account for a growing proportion of worldwide health care spending. Finally, in
the Sub-adviser's view, technology will continue to expand the range of products
and services offered, with new drugs, medical devices and surgical procedures
addressing medical conditions previously considered untreatable.
In addition to these underlying trends, the United States is presently
experiencing a period of rapid and profound change in its own health care
system, marked by the rise of managed care, the formation of health care
delivery networks, and widespread consolidation across all segments of the
industry. The Sub-adviser believes that this transition offers investment
opportunities in those companies acting as consolidators or otherwise gaining
market share at the expense of less efficient competitors.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION.
The Fund expects that, from time to time, a significant portion of its assets
may be invested in the securities of domestic issuers. The industry represented
in the Fund, however, is a global industry with significant, growing markets
outside of the United States. A sizeable proportion of the companies which
comprise the health care industries are headquartered outside of the United
States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Fund. The Sub-adviser uses its financial expertise in
markets located throughout the world and the substantial global resources of
AMVESCAP PLC in attempting to identify those countries and companies then
providing
Prospectus Page 6
<PAGE>
AIM GLOBAL HEALTH CARE FUND
the greatest potential for long-term capital appreciation. In this fashion, the
Sub-adviser seeks to enable shareholders to capitalize on the substantial
investment opportunities and the potential for long-term growth of capital
presented by the global industries represented in the Fund.
The Sub-adviser allocates the Fund's assets among securities of countries and in
currency denominations where opportunities for meeting the Fund's investment
objective are expected to be the most attractive. The Fund may invest
substantially in securities denominated in one or more currencies. Under normal
conditions, the Fund invests in the securities of issuers located in at least
three countries, including the United States; investments in securities of
issuers in any one country, other than the United States, will represent no more
than 50% of the Fund's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Fund may invest up to 100%
of its total assets in cash (U.S. dollars, foreign currencies or multinational
currency units such as Euros) and/or high quality debt securities or money
market instruments of U.S. or foreign issuers. In addition, for temporary
defensive purposes, most or all of the Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Fund adopts a
temporary defensive posture, it will not be invested so as to achieve directly
its investment objective. In addition, pending investment of proceeds from new
sales of Fund shares or to meet its ordinary daily cash needs, the Fund may hold
cash (U.S. dollars, foreign currencies or multinational currency units) and may
invest in foreign or domestic high quality money market instruments. For a full
description of money market instruments, see "Money Market Instruments" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Fund to participate in privatizations may be limited by local law,
or the terms on which the Fund may be permitted to participate may be less
advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Fund may invest up to 10% of its
total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Fund would
bear its ratable share of that investment company's expenses, including its
advisory and administration fees. At the same time, the Fund would continue to
pay its own management fees and other expenses. AIM and the Sub-adviser will
waive their advisory fees to the extent that the Fund invests in an Affiliated
Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemptions of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed
Prospectus Page 7
<PAGE>
AIM GLOBAL HEALTH CARE FUND
upon price which includes an interest component. A "roll" borrowing transaction
involves the Fund's sale of securities together with its commitment (for which
the Fund may receive a fee) to purchase similar, but not identical, securities
at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. The Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. While a loan is outstanding, the borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to at least the value of the
borrowed securities, plus any accrued interest or such other collateral as
permitted by the Fund's investment program and regulatory agencies, and as
approved by the Board. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, the Fund will
segregate cash or liquid securities equal to the value of the when-issued or
forward commitment securities with its custodian and will mark to market daily
such assets. There is a risk that the securities may not be delivered and that
the Fund may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Fund may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on such futures
contracts to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-adviser intends to include in the
Fund's portfolio. The Fund also may purchase and sell put and call options on
stock indexes to hedge against overall fluctuations in the securities markets
generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
affect adversely the Fund's holdings. The Fund also may purchase stock index
futures contracts and purchase call options or write put options on such
contracts to
Prospectus Page 8
<PAGE>
AIM GLOBAL HEALTH CARE FUND
hedge against a general stock market or market sector advance and thereby
attempt to lessen the cost of future securities acquisitions. The Fund may use
interest rate futures contracts and options thereon to hedge the debt portion of
its portfolio against changes in the general level of interest rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by the Trust's
Board of Trustees without shareholder approval. The Fund's policies regarding
concentration and lending, and the percentage of the Fund's assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively, in the Investment
Objectives and Policies section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset values will fluctuate reflecting fluctuations in
the market value of the Fund's portfolio positions. Equity securities,
particularly common stocks, generally represent the most junior position in an
issuer's capital structure, and entitle holders to an interest in the assets of
an issuer, if any, remaining after all more senior claims have been satisfied.
The value of equity securities held by the Fund will fluctuate in response to
general market and economic developments, as well as developments affecting the
particular issuers of such securities. In addition, the value of debt securities
held by the Fund generally will fluctuate with changes in the perceived
creditworthiness of the issuers of such securities and interest rates.
Because the Fund focuses its investments on particular industries, an investment
in each may be more volatile than that of other investment companies that do not
concentrate their investments in such a manner. Moreover, the value of the
shares of the Fund will be especially susceptible to factors affecting the
industries in which it focuses. Accordingly, the Fund should not be considered a
complete investment program.
HEALTH CARE INDUSTRIES. Health care industries generally are subject to
substantial governmental regulation. Changes in governmental policy or
regulation could have a material effect on the demand for products and services
offered by companies in the health care industries and therefore could affect
the performance of the Fund. Regulatory approvals are generally required before
new drugs and medical devices or procedures may be introduced and before the
acquisition of additional facilities by health care providers. In addition, the
products and services offered by such companies may be subject to rapid
obsolescence caused by technological and scientific advances.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
Prospectus Page 9
<PAGE>
AIM GLOBAL HEALTH CARE FUND
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Fund's interest and dividends from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing the Fund's net investment
income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic
developments which could affect the Fund's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Fund may invest in issuers domiciled in "emerging markets." Investing in
emerging market countries involves risks in addition to those risks involved in
foreign investing. Many emerging market countries have experienced high rates of
inflation for many years. In addition, emerging markets generally are dependent
heavily upon international trade and, accordingly, have been and continue to be
affected adversely by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. The securities markets of emerging
market countries are substantially smaller, less developed, less liquid and more
volatile than the securities markets of the developed countries. In addition,
issuers in emerging markets typically are subject to a greater degree of change
in earnings and business prospects than issuers in developed countries.
The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Funds' shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund.
LOWER QUALITY DEBT SECURITIES. The Fund may invest up to 5% of its total assets
in below investment grade debt securities, that is, rated below BBB by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa by
Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Fund will not invest in debt securities that
are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
Prospectus Page 10
<PAGE>
AIM GLOBAL HEALTH CARE FUND
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Fund. If an issuer exercises these provisions in a declining
interest rate market, the Fund may have to replace the security with a lower
yielding security, resulting in a decreased return for investors. In addition,
the Fund may have difficulty disposing of lower quality securities because they
may have a thin trading market. There may be no established retail secondary
market for many of these securities, and the Fund anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market also may have an adverse impact
on market prices of such instruments and may make it more difficult for the Fund
to obtain accurate market quotations for purposes of valuing the Fund's
portfolio investments. The Fund may also acquire lower quality debt securities
during an initial underwriting or which are sold without registration under
applicable securities laws. Such securities involve special considerations and
risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Fund may also incur additional expenses to the extent it
is required to seek recovery upon a default in the payment of principal or
interest on portfolio holdings, and the Fund may have limited legal recourse in
the event of a default.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Fund to achieve
capital appreciation substantially exceeding the appreciation the Fund would
realize if it did not make such investments. However, in order to attempt to
limit investment risk, the Fund will invest no more than 5% of its total assets
in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; (4) lack of assurance
that a liquid secondary market will exist for any particular option, futures
contract or option thereon at any particular time; (5) the possible loss of
principal under certain conditions; and (6) the possible inability of the Fund
to purchase or sell a portfolio security at a time when it would otherwise be
favorable for it to do so, or the possible need for the
Prospectus Page 11
<PAGE>
AIM GLOBAL HEALTH CARE FUND
Fund to sell a security at a disadvantageous time, due to the need for the Fund
to maintain "cover" or to set aside securities in connection with hedging
transactions.
INVESTING IN SMALLER COMPANIES. While the Fund's portfolio normally will include
securities of established suppliers of traditional products and services, the
Fund may invest in smaller companies which can benefit from the development of
new products and services. These smaller companies may present greater
opportunities for capital appreciation, but may also involve greater risks than
large, established issuers. Such smaller companies may have limited product
lines, markets or financial resources, and their securities may trade less
frequently and in more limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such smaller
companies may fluctuate to a greater degree than the prices of the securities of
other issuers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment management and administration
agreement with AIM, the investment sub-advisory and sub-administration agreement
between AIM and the Sub-adviser, the agreements with AIM Distributors regarding
distribution of the Fund's shares, the custody agreement and the transfer agency
agreement. The day-to-day operations of the Fund is delegated to the officers of
the Trust, subject always to the investment objective and policies of the Fund
and to the general supervision of the Trust's Board of Trustees. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Company's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the investment portfolio of
the Fund and placing orders to buy, sell or hold particular securities. In
addition, AIM and the Sub-adviser provide the following administration services
to the Fund: furnishing corporate officers and clerical staff; providing office
space, services and equipment; and supervising all matters relating to the
Funds' operation.
For investment management and administration services provided to the Fund, the
Fund pays AIM a fee computed daily and paid monthly based on the Fund's average
daily net assets at the annualized rate of .975% on the first $500 million, .95%
on the next $500 million, .925% on the next $500 million and .90% on amounts
thereafter. Out of the aggregate fees payable by the Fund, AIM pays the
Sub-adviser sub-advisory and sub-administration fees equal to 40% of the
aggregate fees AIM receives from the Fund.
The Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM Distributors
or other agents. AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 1.50% of the average daily net assets of the Fund's Advisor Class
shares.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser, 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the
Prospectus Page 12
<PAGE>
AIM GLOBAL HEALTH CARE FUND
Americas, New York, New York 10036, serves as the sub-adviser to the Fund
pursuant to an investment sub-advisory and sub-administration agreement dated as
of May 29, 1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor
LGT Asset Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of the Sub-adviser, consummated
a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired
LGT's Asset Management Division, which included the Sub-adviser and certain
other affiliates. As a result of this transaction, the Sub-adviser is now an
indirect wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the
Sub-adviser and its worldwide asset management affiliates provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Michael Yellen Portfolio Manager since Portfolio Manager for the Sub-adviser since 1996. Research analyst
San Francisco 1996 for the Sub-adviser from 1994 to 1996. Securities analyst and
Co-Portfolio Manager for Franklin Resources, Inc. (San Mateo, CA)
from 1991 to 1994.
</TABLE>
------------------------
In placing orders for the Fund's securities transactions, the Sub-adviser seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-adviser may consider a broker/dealer's sale of shares
of The AIM Family of Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Funds will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Other Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
the Advisor Class shares of the Fund. Certain Trustees and officers of the Trust
are affiliated with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
Prospectus Page 13
<PAGE>
AIM GLOBAL HEALTH CARE FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware Business trust
on May 7, 1998. On September 4, 1998, the Company acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges, except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 14
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
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<PAGE>
AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
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<PAGE>
AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
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<PAGE>
AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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<PAGE>
AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
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HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
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AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
A-11
<PAGE>
AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM GLOBAL HEALTH CARE FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL HIGH INCOME FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global High Income Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-ended, series, management investment
company. The Fund is a diversified portfolio which primarily seeks high current
income and secondarily seeks capital appreciation by investing all of its
investable assets in the Global High Income Portfolio ("Portfolio"), which, in
turn, invests primarily in the debt securities of issuers located in emerging
markets. The Portfolio's investment objectives are identical to those of the
Fund.
The investment experience of the Fund will correspond directly with the
investment experience of the Portfolio.
THE PORTFOLIO INVESTS UP TO 100% OF ITS TOTAL ASSETS, IN LOWER QUALITY AND
UNRATED FOREIGN GOVERNMENT BONDS WHOSE CREDIT QUALITY IS GENERALLY CONSIDERED
THE EQUIVALENT OF U.S. CORPORATE DEBT SECURITIES COMMONLY KNOWN AS "JUNK BONDS."
INVESTMENTS OF THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF PRINCIPAL AND
INTEREST. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN
INVESTMENT IN THE FUND. SEE "INVESTMENT OBJECTIVES AND POLICIES" AND "RISK
FACTORS."
This Prospectus sets forth concisely information about the Fund that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information, dated September 8,
1998, has been filed with the Securities and Exchange Commission ("SEC") and is
incorporated herein by reference. The Statement of Additional Information is
available without charge upon written request to the Trust at 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173, or by calling 1-800 347-4246. The SEC
maintains a Web site at http://www.sec.gov that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Fund. Additional information about the fund may also
be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL HIGH INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objectives and Policies........................................................ 7
Risk Factors.............................................................................. 14
Management................................................................................ 19
Other Information......................................................................... 21
Appendix A -- Description of Debt Ratings................................................. 23
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C>
The Fund and the Portfolio: The Fund is a non-diversified series of the Trust. The Portfolio
is a non- diversified, open-end management investment company.
Investment Objectives: The Fund primarily seeks high current income and secondarily
seeks capital appreciation.
Principal Investments: The Fund invests all of its investable assets in the Portfolio,
which, in turn, invests primarily in debt securities of issuers
located in emerging markets.
Investment Managers: The Portfolio is managed by A I M Advisors, Inc. ("AIM") and is
sub-advised and sub-administered by INVESCO (NY), Inc. (the
"Sub-adviser"). AIM and the Sub-adviser and their worldwide asset
management affiliates provide investment management and/or
administrative services to institutional, corporate and
individual clients around the world. AIM and the Sub-adviser are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP
PLC and its subsidiaries are an independent investment management
group that has a significant presence in the institutional and
retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently
advises approximately 90 investment company portfolios.
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL HIGH INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations which have at
least 1,000 employees; (b) any account with assets of at least
$10,000 if (i) a financial planner, trust company, bank trust
department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an
annual fee of at least 0.50% on the assets in the account; (c)
any account with assets of a least $10,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
0.50% on the assets in the account; (d) accounts advised by the
Sub-adviser or one of the companies formerly affiliated with the
Asset Management Division of Liechtenstein Global Trust AG,
provided such accounts were invested in Advisor Class shares of
any of the funds in The AIM Family of Funds on May 29, 1998 and;
(e) any of the companies composing or affiliated with AMVESCAP
PLC. Pursuant to a separate prospectus, the Fund also offers
Class A and Class B shares, which represent interests in the
Fund. The Class A and Class B shares have different distribution
arrangements.
Initial investments in Advisor Class shares must be at least $500
and additional investments must be at least $50. The distributor
of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How
to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Advisor
Class shares of the Fund may be exchanged for Advisor Class
shares of certain funds in The AIM Family of Funds in the manner
and subject to the policies and charges set forth herein. See
"Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a
portion of their shares at net asset value on any business day.
See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net
investment income, if any, on a monthly basis. The Fund makes
distributions of realized capital gains, if any, on an annual
basis. Dividends and distributions of the Fund may be reinvested
at net asset value without payment of a sales charge in the
Fund's shares or may be invested in shares of the other funds in
The AIM Family of Funds. See "Dividends, Distributions and Tax
Matters."
Risk Factors: There is no assurance that the Fund or the Portfolio will achieve
its investment objectives. The Fund's net asset value will
fluctuate, reflecting fluctuations in the market value of its or
its corresponding Portfolio's securities holdings. The value of
debt securities held by the Portfolio generally fluctuates
inversely with interest rate movements.
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL HIGH INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
The Portfolio will invest in foreign securities. Investments in
foreign securities involve risks relating to political and
economic developments abroad and the differences between the
regulations to which U.S. and foreign issuers are subject.
Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency
exchange rates will affect the Fund's or the Portfolio's net
asset value, earnings and gains and losses realized on sales of
securities. Securities of foreign companies may be less liquid
and their prices more volatile than those of securities of
comparable U.S. companies. The Portfolio will normally invest at
least 65% of its total assets in debt securities of issuers in
emerging markets. Such investments entail greater risks than
investing in securities of issuers in developed markets.
The Portfolio may engage in certain foreign currency, options and
futures transactions to attempt to hedge against the overall
level of investment and currency risk associated with its present
or planned investments. Such transactions involve certain risks
and transaction costs.
The Portfolio may invest up to 100% of its total assets in debt
securities rated below investment grade or, if not rated,
determined by the Sub-adviser to be of comparable quality.
Investments of this type are subject to greater risk of loss of
principal and interest.
See "Investment Objectives and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL HIGH INCOME FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following table (1):
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price)................................. None
Sales charges on reinvested distributions to shareholders.............................................. None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)................................................................................................. None
Redemption charges..................................................................................... None
Exchange fees.......................................................................................... None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......................................................... 0.90%
12b-1 distribution and service fees.................................................................... None
Other expenses......................................................................................... 0.33%
------
Total Fund Operating Expenses.......................................................................... 1.23%
------
------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
----- ------ ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares...................................... $ 13 $ 39 $ 68 $ 150
</TABLE>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. Investors purchasing Advisor Class shares
through financial planners, trust companies, bank trust departments or
registered investment advisers, or under a "wrap fee" program, will be
subject to additional fees charged by such entities or by the sponsors of
such programs. Where any account advised by one of the companies composing
or affiliated with AMVESCAP PLC invests in Advisor Class shares of the Fund,
such account shall not be subject to duplicative advisory fees. The Board of
Trustees of the Trust believes that the aggregate per share expenses of the
Fund and its Portfolio will be less than or approximately equal to the
expenses which the Fund would incur if the assets of that Fund were invested
directly in the type of securities being held by the Portfolio.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S
DIRECT AND INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The
table and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds; the 5%
annual return is not a prediction of and does not represent the Fund's or
the Portfolio's projected or actual performance.
Prospectus Page 5
<PAGE>
AIM GLOBAL HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes for
[ ] have been audited by [ ], independent accountants, whose
reports thereon appear in the Statement of Additional Information.
AIM GLOBAL HIGH INCOME FUND
(FORMERLY GT GLOBAL HIGH INCOME FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return. The Fund's total return shows its
overall change in value, including changes in share price and assuming all the
Fund's dividends and capital gain distributions are reinvested. A cumulative
total return reflects the Fund's performance over a stated period of time. An
average annual total return reflects the hypothetical compounded annual rate of
return that would have produced the same cumulative total return if the Fund's
performance had been constant over the entire period. BECAUSE AVERAGE ANNUAL
RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN, INVESTORS SHOULD
RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR RESULTS. To
illustrate the components of overall performance, the Fund may separate its
cumulative and average annual returns into income results and capital gains or
losses.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield reflects investment
income net of expenses over the relevant period attributable to the Fund share,
expressed as an annualized percentage of the net asset value per share for
Advisor Class shares.
Yield is a function of the type and quality of the Fund's investments, the
maturity of the securities held in the Fund's portfolio and the operating
expense ratio of the Fund. A shareholder's investment in the Fund is not insured
or guaranteed. These factors should be carefully considered by the investor
before making an investment in the Fund.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM GLOBAL HIGH INCOME FUND
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
The Fund primarily seeks high current income, and secondarily seeks capital
appreciation. It seeks its objectives by investing all of its investable assets
in the Portfolio, which in turn seeks the same objectives as the Fund by
normally investing at least 65% of its total assets in debt securities of
issuers in emerging markets. There can be no assurance that the Fund or the
Portfolio will achieve its investment objectives.
The Portfolio intends to invest in the following types of debt securities:
bonds, notes and debentures of emerging market governments; securities issued or
guaranteed by such governments' agencies or instrumentalities; securities issued
or guaranteed by the central banks of emerging market countries; and securities
issued by other banks and companies in such countries and securities denominated
in or indexed to the currencies of emerging markets. Under current market
conditions, the Portfolio expects its investments in emerging market securities
to consist substantially of Brady Bonds (see "General Policies -- Brady Bonds,"
below) and other sovereign debt securities.
The Portfolio may also invest up to 35% of its total assets in (1) equity
securities of issuers in emerging markets included in the list below under the
caption "Emerging Markets"; (2) equity and debt securities of issuers in
developed countries, including the United States; (3) securities of issuers in
emerging markets not included in the emerging markets list, if investing therein
becomes feasible and desirable subsequent to the date of this Prospectus; and
(4) cash and money market instruments. In evaluating investments in securities
of issuers in developed markets, the Sub-adviser will consider, among other
things, the business activities of the issuer in emerging markets and the impact
that developments in emerging markets are likely to have on the issuer's
financial condition.
Under normal circumstances, substantially all of the Portfolio's assets will be
invested in debt securities of both governmental and corporate issuers in
emerging markets. Emerging markets debt securities generally are considered to
have a credit quality below investment grade, as defined above. Lower quality
securities involve a high degree of risk and are predominantly speculative.
These debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds." See "Risk Factors." Many emerging market debt
securities are not rated by U.S. ratings agencies such as Moody's and S&P. The
Portfolio's ability to achieve its investment objectives is thus more dependent
on the Sub-adviser's credit analysis. The Portfolio may invest in securities
that are in default as to payment of principal and/or interest.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, investors
should be aware that the Fund, unlike mutual funds that directly acquire and
manage their own portfolios of securities, seeks to achieve its investment
objectives by investing all of its investable assets in the Portfolio, which is
a separate investment company. Because the Fund will invest only in the
Portfolio, the Fund's shareholders will acquire only an indirect interest in the
investments of the Portfolio.
The Fund may redeem its investment from the Portfolio at any time, if the Board
of Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment
objectives, policies or limitations that is not approved by the Board or the
shareholders of the Fund could require the Fund to redeem its interest in the
Portfolio. Any such redemption could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. In
addition, a distribution in kind could result in a less diversified portfolio of
investments for the Fund and could adversely affect its liquidity. Upon
redemption, the Board would consider what action might be taken, including the
investment of all the investable assets of the Fund in another pooled investment
entity having substantially the same investment objectives as the Fund or the
retention by the Fund of its own investment adviser to manage its assets in
accordance with its investment objectives, policies and limitations discussed
herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the
Prospectus Page 7
<PAGE>
AIM GLOBAL HIGH INCOME FUND
Portfolio's expenses and will invest in the Portfolio on the same terms and
conditions. However, if another investment company invests any or all of its
assets in the Portfolio, it would not be required to sell its shares at the same
public offering price as the Fund and may charge different sales commissions.
Therefore, investors in the Fund may experience different returns than investors
in another investment company that invests exclusively in the Portfolio. As of
the date of this Prospectus, the Fund is the only institutional investor in the
Portfolio.
Investors in the Fund should be aware that the Fund's investment in the
Portfolio may be materially affected by the actions of other large investors, if
any, in the Portfolio. For example, as with all open-end investment companies,
if a large investor were to redeem its interest in the Portfolio, (1) the
Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
GENERAL POLICIES
ASSET ALLOCATION. The Portfolio invests in debt obligations allocated among
diverse markets and denominated in various currencies, including U.S. dollars,
or in multinational currency units such as Euros. The Fund is designed for
investors who wish to accept the risks entailed in such investments, which are
different from those associated with a portfolio consisting entirely of
securities of U.S. issuers denominated in U.S. dollars. The Portfolio may
purchase securities that are issued by the government or a company or financial
institution of one country but denominated in the currency of another country
(or a multinational currency unit).
The Sub-adviser allocates the assets of the Portfolio in securities of issuers
in countries and in currency denominations where the combination of fixed income
market returns, the price appreciation potential of fixed income securities and
currency exchange rate movements will present opportunities primarily for high
current income and secondarily for capital appreciation. In so doing, the Sub-
adviser intends to take full advantage of the different yield, risk and return
characteristics that investment in the fixed income markets of different
countries can provide for U.S. investors. Fundamental economic strength, credit
quality and currency and interest rate trends are the principal determinants of
the emphasis given to various country, geographic and industry sectors within
the Portfolio. Securities held by the Portfolio may be invested in without
limitation as to maturity.
The Sub-adviser selects securities of particular issuers on the basis of its
views as to the best values then currently available in the marketplace. Such
values are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the local and world
economies, movements in the general level and term of interest rates, currency
values, political developments and variations in the supply of funds available
for investment in the world bond market relative to the demands placed upon it.
The Sub-adviser generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation, interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. The Sub-adviser may seek to protect the
Portfolio against such negative currency movements through the use of
sophisticated investment techniques. See "Options, Futures and Forward Currency
Transactions" and "Swaps, Caps, Floors and Collars."
According to the Sub-adviser, as of the date of this Prospectus, more than 50%
of the value of all outstanding government debt obligations throughout the world
is represented by obligations denominated in currencies other than the U.S.
dollar. Moreover, from time to time, the debt securities of issuers located
outside the United States have substantially outperformed the debt obligations
of U.S. issuers. Accordingly, the Sub-adviser believes that the Portfolio's
policy of investing in debt securities of issuers in emerging markets may enable
the achievement of results superior to those produced by mutual funds with
similar objectives to those of the Fund and the Portfolio that invest solely in
debt securities of U.S. issuers.
The Fund is designed for investors who wish to accept the risks entailed in such
investments, which are different from those associated with a portfolio
consisting entirely of securities of U.S. issuers denominated in U.S. dollars.
TEMPORARY DEFENSIVE STRATEGIES. The Sub-adviser may employ a temporary defensive
investment strategy if it determines such a strategy to be
Prospectus Page 8
<PAGE>
AIM GLOBAL HIGH INCOME FUND
warranted due to market, economic or political conditions. Pursuant to such a
defensive strategy, the Portfolio temporarily may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and/or invest up to 100% of
its respective assets in high quality debt securities or money market
instruments of U.S. or foreign issuers. In addition, for temporary defensive
purposes, most or all of the Portfolio's investments may be made in the United
States and denominated in U.S. dollars. To the extent the Portfolio employs a
temporary defensive strategy, it will not invest so as to achieve directly its
investment objectives. In addition, pending investment of proceeds from new
sales of Fund shares or to meet ordinary daily cash needs, the Portfolio may
hold cash (U.S. dollars, foreign currencies or multinational currency units) and
may invest in high quality foreign or domestic money market instruments. For a
full description of money market instruments, see "Selection of Debt
Investments" in the "Investment Objectives and Policies" section of the
Statement of Additional Information.
EMERGING MARKET SECURITIES. The Portfolio considers "emerging markets" to
consist of all countries determined by the Sub-adviser to have developing or
emerging economies and markets. These countries generally include every country
in the world except the United States, Canada, Japan, Australia, New Zealand and
most countries located in Western Europe. The Portfolio will consider investment
in the following emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
The Portfolio will not be invested in all such markets at all times. Moreover,
investing in some of those markets currently may not be desirable or feasible,
due to the lack of adequate custody arrangements, overly burdensome repatriation
requirements and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus and the Statement of Additional Information, an
issuer in an emerging market is an entity: (i) for which the principal
securities trading market is an emerging market, as defined above; (ii) that
(alone or on a consolidated basis) derives 50% or more of its total revenue from
either goods produced, sales made or services performed in emerging markets; or
(iii) organized under the laws of, or with a principal office in, an emerging
market.
BRADY BONDS. The Portfolio may invest in "Brady Bonds," which are debt
restructurings that provide for the exchange of cash and loans for newly issued
bonds. Brady Bonds have been issued by the countries of Albania, Argentina,
Brazil, Bulgaria, Costa Rica, Dominican Republic, Ecuador, Ivory Coast, Jordan,
Mexico, Nigeria, Panama, Peru, Philippines, Poland, Uruguay, Venezuela and
Vietnam and are expected to be issued by other emerging market countries. As of
the date of this Prospectus, the Portfolio is not aware of the occurrence of any
payment defaults on Brady Bonds. Investors should recognize, however, that Brady
Bonds do not have a long payment history. In addition, Brady Bonds are often
rated below investment grade.
The Portfolio may invest in either collateralized or uncollateralized Brady
Bonds. U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed
rate par bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time of issuance and is adjusted at
regular intervals thereafter.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Portfolio may invest in fixed and
floating rate loans ("Loans") arranged through private negotiations between a
foreign entity and one or more financial institutions ("Lenders"). The majority
of the
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AIM GLOBAL HIGH INCOME FUND
Portfolio's investments in Loans in emerging markets is expected to be in the
form of participations in Loans ("Participations") and assignments of portions
of Loans from third parties ("Assignments"). Participations typically will
result in the Portfolio having a contractual relationship only with the Lender,
not with the borrower government. The Portfolio will have the right to receive
payments of principal, interest and any fees to which it is entitled only from
the Lender selling the Participation and only upon receipt by the Lender of the
payments from the borrower. In connection with purchasing Participations, the
Portfolio generally will have no right to enforce compliance by the borrower
with the terms of the loan agreement relating to the loan ("Loan Agreement"),
nor any rights of set-off against the borrower, and the Portfolio may not
directly benefit from any collateral supporting the Loan in which it has
purchased the Participation. As a result, the Portfolio will assume the credit
risk of both the borrower and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the
Portfolio may be treated as a general creditor of the Lender and may not benefit
from any set-off between the Lender and the borrower. The Portfolio will acquire
Participations only if the Lender interpositioned between the Portfolio and the
borrower is determined by the Sub-adviser to be creditworthy. When the Portfolio
purchases Assignments from Lenders, the Portfolio will acquire direct rights
against the borrower on the Loan. However, since Assignments are arranged
through private negotiations between potential assignees and assignors, the
rights and obligations acquired by the Portfolio as the purchaser of an
Assignment may differ from, and be more limited than, those held by the
assigning Lender.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities and forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery of the
securities. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
The Portfolio may also sell securities on a "when, as and if issued" basis for
hedging purposes. Under such a transaction, the Portfolio is required to deliver
at a future date a security it does not presently hold, but which it has a right
to receive if the security is issued. Issuance of the security may not occur, in
which case the Portfolio would have no obligation to the other party, and would
not receive payment for the sale. Selling securities on a "when, as and if
issued" basis may reduce risk of loss to the extent that such a sale wholly or
partially offsets unfavorable price movements on the investments being hedged.
However, such sales also limit the amount the Portfolio can receive if the
"when, as and if issued" security is in fact issued.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio is
authorized to borrow money from banks in an amount up to 33 1/3% of its total
assets (including the amount borrowed), less all liabilities and indebtedness
other than the borrowings and may use the proceeds of such borrowings for
investment purposes. The Portfolio will borrow for investment purposes only when
the Sub-adviser believes that such borrowings will benefit the Portfolio after
taking into account considerations such as the costs of the borrowing and the
likely investment returns on the securities purchased with the borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Portfolio creates the opportunity for increased
net income and appreciation but, at the same time, involves special risk
considerations. For example, leveraging might exaggerate changes in the net
asset value of Fund shares and in the yield realized by the Portfolio. Although
the principal amount of such borrowings will be fixed, the Portfolio's assets
may change in value during the time the borrowing is outstanding. By leveraging
the Portfolio, changes in net asset values,
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AIM GLOBAL HIGH INCOME FUND
higher or lower, may be greater in degree than if leverage was not employed. To
the extent the income derived from the assets obtained with borrowed funds
exceeds the interest and other expenses that the Portfolio will have to pay, the
Portfolio's net income will be greater than if borrowing was not used.
Conversely, if the income from the assets obtained with borrowed funds is not
sufficient to cover the cost of borrowing, the net income of the Portfolio will
be less than if borrowing were not used, and therefore the amount available for
distribution to shareholders as dividends will be reduced. The Portfolio each
expects that some of its borrowings may be made on a secured basis.
In addition to the foregoing borrowings, the Portfolio may borrow money for
temporary or emergency purposes or payments in an amount not exceeding 5% of the
value of its total assets (not including the amount borrowed) provided that the
total amount borrowed by the Portfolio for any purpose does not exceed 33 1/3%
of its total assets.
The Portfolio may also enter into reverse repurchase agreements with a bank or
recognized securities dealer. Under a reverse repurchase agreement, the
Portfolio would sell securities and agree to repurchase them at a particular
price at a future date. At the time the Portfolio enters into a reverse
repurchase agreement, it will establish and maintain a segregated account with
an approved custodian containing cash or liquid securities having a value not
less than the repurchase price, including accrued interest. Reverse repurchase
agreements involve the risk that the market value of the securities retained in
lieu of sale by the Portfolio may decline below the price of the securities the
Portfolio has sold but is obligated to repurchase. In the event the buyer of
securities under a reverse repurchase agreement files for bankruptcy or becomes
insolvent, such buyer or its trustee or receiver may receive an extension of
time to determine whether to enforce the Portfolio's obligation to repurchase
the securities, and the Portfolio's use of the proceeds of the reverse
repurchase agreement may effectively be restricted pending such decision.
The Portfolio also may enter into "dollar rolls," in which the Portfolio sells
fixed income securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar (same type, coupon and maturity)
securities on a specified future date. During the roll period, the Portfolio
would forego principal and interest paid on such securities. The Portfolio would
be compensated by the difference between the current sales price and the forward
price for the future purchase, as well as by the interest earned on the cash
proceeds of the initial sale. See "Investment Objectives and Policies" in the
Statement of Additional Information.
Reverse repurchase agreements and dollar rolls will be treated as borrowings and
will be deducted from the Portfolio's assets for purposes of calculating
compliance with the Portfolio's borrowing limitation. See "Investment
Limitations" in the Statement of Additional Information.
SECURITIES LENDING. The Portfolio may lend its respective portfolio securities
to broker/dealers or to other institutional investors. Securities lending allows
a Fund to retain ownership of the securities loaned and, at the same time,
enhances a Fund's total return. At all times a loan is outstanding, the
Portfolio requires the borrower to maintain with the Portfolio's custodian,
collateral consisting of cash, U.S. government securities, or certain
irrevocable letters of credit equal to at least the value of the borrowed
securities, plus any accrued interest or such other collateral as permitted by a
Fund's investment program and regulatory agencies, and as approved by the Board.
The Portfolio limits its loans of portfolio securities to an aggregate of 30% of
the value of its total assets, measured at the time any such loan is made. The
risks in lending portfolio securities, as with other extensions of secured
credit, consist of possible delays in receiving additional collateral or in
recovery of the loaned securities and possible loss of rights in the collateral
should the borrower fail financially.
ZERO COUPON SECURITIES. The Portfolio may invest in certain zero coupon
securities that are "stripped" U.S. Treasury notes and bonds. They also may
invest in zero coupon and other deep discount securities issued by foreign
governments and domestic and foreign corporations, including certain Brady Bonds
and other foreign debt and in payment-in-kind securities. Zero coupon securities
pay no interest to holders prior to maturity, and payment-in-kind securities pay
interest in the form of additional securities. However, a portion of the
original issue discount on zero coupon securities and the "interest" on
payment-in-kind securities will be included in the Portfolio's income.
Accordingly, for a Fund to continue to qualify for tax treatment as a regulated
investment company and to avoid a certain excise tax (see "Taxes" in the
Statement of Additional Information), it may be required to distribute an amount
that is greater than its share of the total amount of cash the Portfolio
actually receives. These distributions must be made from the Fund's, or its
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AIM GLOBAL HIGH INCOME FUND
share of the Portfolio's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Portfolio will not be able to purchase
additional income-producing securities with cash used to make such
distributions, and its current income ultimately may be reduced as a result.
Zero coupon and payment-in-kind securities usually trade at a deep discount from
their face or par value and will be subject to greater fluctuations of market
value in response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS. The Portfolio may utilize combinations of futures
on bonds and forward currency contracts to create investment positions that have
substantially the same characteristics as bonds of the same type as those on
which the futures contracts are written. Investment positions of this type are
generally referred to as "synthetic securities."
For example, in order to establish a synthetic security position the Portfolio
that is comparable to owning a Japanese government bond, the Sub-adviser might
purchase futures contracts on Japanese government bonds in the desired principal
amount and purchase forward currency contracts for Japanese Yen in an amount
equal to the then current purchase price for such bonds in the Japanese cash
market, with each contract having approximately the same delivery date.
The Sub-adviser might roll over the futures and forward currency contract
positions before taking delivery in order to continue the Portfolio's investment
position, or the Sub-adviser might close out those positions, thus effectively
selling the synthetic security. Further, the amount of each contract might be
adjusted in response to market conditions and the forward currency contract
might be changed in amount or eliminated in order to hedge against currency
fluctuations.
The Sub-adviser would create synthetic security positions for the Portfolio when
it believes that it can obtain a better yield or achieve cost savings in
comparison to purchasing actual bonds or when comparable bonds are not readily
available in the market. Synthetic security positions are subject to the risk
that changes in the value of purchased futures contracts may differ from changes
in the value of the bonds that might otherwise have been purchased in the cash
market. Also, while the Sub-adviser believes that the cost of creating synthetic
security positions generally will be materially lower than the cost of acquiring
comparable bonds in the cash market, the Portfolio will incur transaction costs
in connection with each purchase of a futures or forward currency contract. The
use of futures contracts and forward currency contracts to create synthetic
security positions also is subject to substantially the same risks as those that
exist when these instruments are used in connection with hedging strategies. See
"Options, Futures and Forward Currency Transactions" below and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies, and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the Portfolio's investment. The Portfolio also may enter into
interest rate, currency and index swaps and purchase or sell related caps,
floors and collars and other similar instruments. See "Swaps, Caps, Floors and
Collars" below. These instruments are often referred to as "derivatives," which
may be defined as financial instruments whose performance is derived, at least
in part, from the performance of another asset (such as a security, currency or
an index of securities). The Portfolio may enter into such instruments up to the
full value of its portfolio assets. See "Risk Factors -- Options, Futures and
Forward Currency Transactions" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to the Portfolio's portfolio positions. The Portfolio also may purchase
and sell put and call options on currencies, futures contracts on currencies and
options on such futures contracts to hedge against movements in exchange rates.
In addition, the Portfolio may purchase and sell put and call options on
securities to hedge against the risk of fluctuations in the prices of securities
held by the Portfolio or that the Sub-adviser intends to include in the
Portfolio's holdings. The Portfolio also may purchase and sell put and call
options on
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AIM GLOBAL HIGH INCOME FUND
indices to hedge against overall fluctuations in the securities markets
generally or in a specific market sector.
Further, the Portfolio may sell index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general market or market sector decline that could adversely affect the
Portfolio's holdings. The Portfolio also may purchase index futures contracts
and purchase call options or write put options on such contracts to hedge
against a general market or market sector advance and thereby attempt to lessen
the cost of future securities acquisitions. The Portfolio may use interest rate
futures contracts and options thereon to hedge its portfolio against changes in
the general level of interest rates.
SWAPS, CAPS, FLOORS AND COLLARS. The Portfolio may enter into interest rate,
currency and index swaps, and purchase or sell related caps, floors and collars
and other derivative instruments. The Portfolio expects to enter into these
transactions primarily to preserve a return or spread on a particular investment
or portion of its portfolio, to protect against currency fluctuations, as a
technique for managing the portfolio's duration (I.E., the price sensitivity to
changes in interest rates) or to protect against any increase in the price of
securities the Portfolio anticipates purchasing at a later date. The Portfolio
intends to use these transactions as hedges, and neither will sell interest rate
caps or floors if it does not own securities or other instruments providing an
income stream roughly equivalent to what the Portfolio may be obligated to pay.
Interest rate swaps involve the exchange by the Portfolio with another party of
their respective commitments to pay or receive interest (for example, an
exchange of floating rate payments for fixed rate payments) with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount based on changes in the values of the reference
indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a combination of a
cap and a floor that preserves a certain return within a predetermined range of
interest rates or values.
INDEXED COMMERCIAL PAPER. The Portfolio may invest without limitation in
commercial paper which is indexed to certain specific foreign currency exchange
rates. The terms of such commercial paper provide that its principal amount is
adjusted upwards or downwards (but not below zero) at maturity to reflect
changes in the exchange rate between two currencies while the obligation is
outstanding. The Portfolio will purchase such commercial paper with the currency
in which it is denominated and, at maturity, will receive interest and principal
payments thereon in that currency, but the amount of principal payable by the
issuer at maturity will change in proportion to the change (if any) in the
exchange rate between the two specified currencies between the date the
instrument is issued and the date the instrument matures. While such commercial
paper entails the risk of loss of principal, the potential for realizing gains
as a result of changes in foreign currency exchange rates enables the Portfolio
to hedge against a decline in the U.S. dollar value of investments denominated
in foreign currencies while seeking to provide an attractive money market rate
of return. The Portfolio will not purchase such commercial paper for
speculation.
OTHER INDEXED SECURITIES. The Portfolio may invest in certain other indexed
securities, which are securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals or other
commodities, or other financial indicators. Indexed securities typically, but
not always, are debt securities or deposits whose value at maturity or coupon
rate is determined by reference to a specific instrument or statistic. The
performance of indexed securities depends to a great extent on the performance
of the security, currency, or other instrument to which they are indexed, and
may also be influenced by interest rate changes in the United States and abroad.
At the same time, indexed securities are subject to the credit risks associated
with the issuer of the security, and their values may decline substantially if
the issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments. New forms of indexed securities
continue to be developed. The Portfolio may invest in such securities to the
extent consistent with its investment objectives.
OTHER INFORMATION. The Fund's investment objectives may not be changed without
the approval of a
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AIM GLOBAL HIGH INCOME FUND
majority of the Fund's outstanding voting securities. A "majority of the Fund's
outstanding voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares. In addition, the
Fund has adopted certain investment limitations which also may not be changed
without shareholder approval. A complete description of these limitations is
included in the Statement of Additional Information. Unless specifically noted,
the Fund's investment policies described in this Prospectus and in the Statement
of Additional Information are not fundamental policies and may be changed by the
Trust's Board of Trustees without shareholder approval. The investment policies
of the Fund are identical to the investment policies of the Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is not
required to change the investment objectives, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objectives.
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. See "Investment Objectives and Policies -- Short
Sales" in the Statement of Additional Information.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Portfolio's investment policies or restrictions.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objectives. The Portfolio's net asset value will fluctuate,
reflecting fluctuations in the market value of its portfolio positions and its
net currency exposure. The value of fixed income securities held by the
Portfolio generally fluctuates inversely with interest rate movements. Longer
term bonds held by the Portfolio are subject to greater interest rate risk.
NON-DIVERSIFIED CLASSIFICATION. The Fund and the Portfolio are classified under
the Investment Company Act of 1940 (the "1940 Act") as a "non-diversified" fund.
As a result, the Portfolio will be able to invest in a fewer number of issuers
than if it were classified under the 1940 Act as a "diversified" fund. To the
extent that the Portfolio invests in a smaller number of issuers, the value of
the Fund's shares may fluctuate more widely and the Portfolio may be subject to
greater investment and credit risk with respect to the portfolios.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally are not registered with the SEC, nor
are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. In addition, certain costs
attributable to foreign investing, such as custody charges, are higher than
those attributable to domestic investing. Securities of some foreign companies
are less liquid and their prices may be more volatile than securities of
comparable domestic companies. The Portfolio's interest and dividends from
foreign issuers may be subject to non-U.S. withholding taxes, thereby reducing
their net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political or social instability, or diplomatic
developments which could affect the investments of the Portfolio in those
countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, rate of savings and
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AIM GLOBAL HIGH INCOME FUND
capital reinvestment, resource self-sufficiency and balance of payments
positions.
CURRENCY RISK. Since the Portfolio normally invests substantially in securities
denominated in currencies other than the U.S. dollar, and because they may hold
foreign currencies, they will be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rates between such currencies and
the U.S. dollar. Changes in currency exchange rates will influence the value of
the Fund's shares, and also may affect the value of dividends and interest
earned by the Fund and gains and losses realized by the Fund. Currencies
generally are evaluated on the basis of fundamental economic criteria (e.g.,
relative inflation and interest rate levels and trends, growth rate forecasts,
balance of payments status and economic policies) as well as technical and
political data. The exchange rates between the U.S. dollar and other currencies
are determined by supply and demand in the currency exchange markets, the
international balance of payments, governmental intervention, speculation and
other economic and political conditions. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, a decline in the exchange rate of the
currency would adversely affect the value of the security expressed in U.S.
dollars.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Portfolio should be
considered speculative. Investors are strongly advised to consider carefully the
special risks involved in emerging markets, which are in addition to the usual
risks of investing in developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Portfolio could lose its entire investment in that market.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Portfolio to make intended securities purchases due to
settlement problems could cause the Portfolio to forego attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Portfolio due to subsequent
declines in value of the portfolio security or, if the Portfolio has entered
into a contract to sell the security, could result in possible liability to the
purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Portfolio's portfolio securities in
such markets may not be readily available. Section 22(e) of the 1940 Act
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AIM GLOBAL HIGH INCOME FUND
permits a registered investment company to suspend redemption of its shares for
any period during which an emergency exists, as determined by the SEC.
Accordingly, when the Portfolio believes that appropriate circumstances warrant,
it will promptly apply to the SEC for a determination that an emergency exists
within the meaning of Section 22(e) of the 1940 Act. During the period
commencing from the Portfolio's identification of such conditions until the date
of SEC action, the portfolio securities of the Portfolio in the affected markets
will be valued at fair value as determined in good faith by or under the
direction of the Trust's or the Portfolio's Boards of Trustees.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Portfolio may have difficulty disposing
of Assignments and Participations. The liquidity of such securities is limited
and the Portfolio anticipates that such securities could be sold only to a
limited number of institutional investors. The lack of a liquid secondary market
could have an adverse impact on the value of such securities and on the
Portfolio's ability to dispose of particular Assignments or Participations when
necessary to meet the Portfolio's liquidity needs or in response to a specific
economic event, such as a deterioration in the creditworthiness of the borrower.
The lack of a liquid secondary market for Assignments and Participations also
may make it more difficult for the Portfolio to assign a value to those
securities for purposes of valuing the Portfolio's portfolio and calculating its
net asset value.
SOVEREIGN DEBT. The Portfolio may invest in sovereign debt securities of
emerging market governments, including Brady Bonds. Investments in such
securities involve special risks. The issuer of the debt or the governmental
authorities that control the repayment of the debt may be unable or unwilling to
repay principal or interest when due in accordance with the terms of such debt.
Periods of economic uncertainty may result in the volatility of market prices of
sovereign debt obligations and in turn a Fund's net asset value, to a greater
extent than the volatility inherent in domestic fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Portfolio's
investments. Emerging markets are faced with social and political issues and
some of them have experienced high rates of inflation in recent years and have
extensive internal debt. Among other effects, high inflation and internal debt
service requirements may adversely affect the cost and availability of future
domestic sovereign borrowing to finance governmental programs, and may have
other adverse social, political and economic consequences. Political changes or
a deterioration of a country's domestic economy or balance of trade may affect
the willingness of countries to service their sovereign debt. Although the
Sub-adviser intends to manage the Portfolio in a manner that will minimize the
exposure to such risks, there can be no assurance that adverse political changes
will not cause the Portfolio to suffer a loss of interest or principal on any of
its holdings.
In recent years, some of the emerging market countries in which the Portfolio
expects to invest have encountered difficulties in servicing their sovereign
debt obligations. Some of these countries have withheld payments of interest
and/or principal of sovereign debt. These difficulties have also led to
agreements to restructure external debt obligations -- in particular, commercial
bank loans, typically by rescheduling principal payments, reducing interest
rates and extending new credits to finance interest payments on existing debt.
In the future, holders of emerging market sovereign debt securities may be
requested to participate in similar rescheduling of such debt. Certain
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emerging market countries are among the largest debtors to commercial banks and
foreign governments. Currently, Brazil, Mexico and Argentina are the largest
debtors among developing countries. At times certain emerging market countries
have declared moratoria on the payment of principal and interest on external
debt; such a moratorium is currently in effect in certain emerging market
countries. There is no bankruptcy proceeding by which a creditor may collect in
whole or in part sovereign debt on which an emerging market government has
defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Portfolio may invest involve great risk. As noted above, sovereign debt
obligations issued by emerging market governments generally are deemed to be the
equivalent in terms of quality to securities rated below investment grade by
Moody's and S&P. Such securities are regarded as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations and involve major risk exposure to
adverse conditions. Some of such securities, with respect to which the issuer
currently may not be paying interest or may be in payment default, may be
comparable to securities rated D by S&P or C by Moody's. The Portfolio may have
difficulty disposing of and valuing certain sovereign debt obligations because
there may be a limited trading market for such securities. Because there is no
liquid secondary market for many of these securities, the Portfolio anticipates
that such securities could be sold only to a limited number of dealers or
institutional investors.
LOWER QUALITY DEBT SECURITIES. Under normal market conditions the Portfolio may
invest up to 100% of the Portfolio's total assets in debt securities rated below
investment grade. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest quality debt that is not in default as to
principal or interest and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than higher quality securities with regard to a deterioration of general
economic conditions. These securities are the equivalent of high yield, high
risk bonds, commonly known as "junk bonds." As noted above, the Portfolio may
invest in debt securities rated below C, which are in default as to principal
and/or interest.
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit quality in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Appendix A" for a discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability
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AIM GLOBAL HIGH INCOME FUND
to service its debt obligations may also be adversely affected by specific
developments affecting the issuer, such as the issuer's inability to meet
specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Portfolio may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
In addition, the Portfolio may have difficulty disposing of lower quality
securities because there may be a thin trading market for such securities. There
may be no established retail secondary market for many of these securities, and
the Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market also may have an adverse impact on market prices of such instruments and
may make it more difficult for the Portfolio to obtain accurate market
quotations for purposes of valuing the securities in the Portfolio. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may also decrease the values and liquidity of lower quality
securities, especially in a thinly traded market. The Portfolio also may acquire
lower quality debt securities during an initial underwriting or may acquire
lower quality debt securities which are sold without registration under
applicable securities laws. Such securities involve special considerations and
risks.
Factors having an adverse effect on the market value of lower rated securities
or their equivalents purchased by the Portfolio will adversely impact net asset
value of the Fund. See "Risk Factors" in the Statement of Additional
Information. In addition to the foregoing, such factors may include: (i)
potential adverse publicity; (ii) heightened sensitivity to general economic or
political conditions; and (iii) the likely adverse impact of a major economic
recession. The Portfolio also may incur additional expenses to the extent it is
required to seek recovery upon a default in the payment of principal or interest
on its portfolio holdings, and the Portfolio may have limited legal recourse in
the event of a default. Debt securities issued by governments in emerging
markets can differ from debt obligations issued by private entities in that
remedies from defaults generally must be pursued in the courts of the defaulting
government, and legal recourse is therefore somewhat diminished. Political
conditions, in terms of a government's willingness to meet the terms of its debt
obligations, also are of considerable significance. There can be no assurance
that the holders of commercial bank debt may not contest payments to the holders
of debt securities issued by governments in emerging markets in the event of
default by the governments under commercial bank loan agreements.
As of October 31, 1997, the Portfolio had 86.59% of its total net assets in debt
securities that received a rating from Moody's and 10.29% of its total net
assets in debt securities that were not so rated. In addition, the Portfolio had
3.12%, of its total net assets in cash and net receivables. The Portfolio had
the following percentages of its total net assets invested in rated securities:
Aaa -- 7.99%, Aa -- 0.00%, A -- 0.00%, Baa -- 13.11%, Ba -- 48.56%, B -- 16.93%,
Caa -- 0.00%, Ca -- 0.00%, C -- 0.00%. Included under the unrated category are
securities held by the Portfolio's total net assets which have been determined
by the Sub-adviser to be of comparable quality to securities in the following
rating categories: Ba -- 3.22%; and B -- 7.07%. It should be noted that the
allocation of the investments of the Portfolio by rating on any given date will
vary and should not be considered representative of the future portfolio
composition of the Portfolio.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Portfolio is
authorized to enter into options, futures and forward currency transactions, the
Portfolio might not enter into any such transactions. In addition, issuers in
emerging markets typically are subject to a greater degree of change in earnings
and business prospects than issuers in developed countries. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed
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AIM GLOBAL HIGH INCOME FUND
to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which the Portfolio invests; (4) lack of assurance that a liquid secondary
market will exist for any particular option, futures contract or option thereon
at any particular time; (5) the possible loss of principal under certain
conditions; and (6) the possible inability of the Portfolio to purchase or sell
a portfolio security at a time when it would otherwise be favorable for it to do
so, or the possible need for the Portfolio to sell a security at a
disadvantageous time, due to the need for the Portfolio to maintain "cover" or
to set aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets, in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's and the Portfolio's Boards of Trustees have overall responsibility
for the operation of the Fund and the Portfolio, respectively. The Trust's and
Portfolio's Boards of Trustees have approved all significant agreements between
the Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administration agreement with AIM, the investment sub-advisory
and sub-administration agreement between AIM and the Sub-adviser, the agreements
with AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the objective and policies of the Fund and the
Portfolio and to the general supervision of the Boards. See "Trustees and
Executive Officers" in the Statement of Additional Information for information
on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Portfolio's investment managers and administrators include,
but are not limited to, determining the composition of the investment holdings
of the Portfolio and placing orders to buy, sell or hold particular securities.
In addition, AIM and the Sub-adviser provide the following administration
services to the Fund and the Portfolio: furnishing corporate officers and
clerical staff; providing office space, services and equipment; and supervising
all matters relating to the Portfolio's operation.
The Fund pays AIM administration fees at the annualized rate of 0.25% of the
Fund's average daily net assets. AIM has appointed the Sub-adviser as the Fund's
sub-administrator. In addition, the Fund bears its pro rata portion of the
investment management and administration fees paid by the Portfolio to AIM and
the Sub-adviser. The Portfolio pays AIM such fees, based on the average daily
net assets of the Portfolio at the annualized rate of .475% on the first $500
million, .45% on the next $1 billion, .425% on the next $1 billion and .40% on
amounts thereafter, plus 2% of the Portfolio's total investment income as stated
in the Portfolio's Statement of Operations, calculated in accordance with
generally accepted accounting principles, adjusted daily for currency
revaluations, on a marked to market basis, of the Portfolio's assets; provided,
however, that during any fiscal year this amount shall not exceed 2% of the
Portfolio's total investment income calculated in accordance with generally
accepted accounting principles. Out of its aggregate fees payable by the Fund
and the Portfolio, AIM pays the Sub-adviser sub-advisory and sub-administration
fees equal to 40% of the aggregate fees AIM receives from the Fund and the
Portfolio. The investment management and administration fees paid by the Fund
and the Portfolio are higher than those paid by most mutual funds. The Fund and
Portfolio pay all expenses not
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AIM GLOBAL HIGH INCOME FUND
assumed by AIM, the Sub-adviser, AIM Distributors or other agents. AIM has
undertaken to limit the expenses of the Advisor Class shares of the Fund (and
the Fund's pro-rata portion of the Portfolio's expenses) to the maximum annual
rate of 1.85% of the average daily net assets of the Fund's Advisor Class
shares.
The Sub-adviser also serves as the Fund's and the Portfolio's pricing and
accounting agent. For these services the Sub-adviser receives a fee consisting
of 0.03% of the first $5 billion of assets, and 0.02% of the assets in excess of
$5 billion, of the AIM Funds that are sub-advised by the Sub-adviser (other than
AIM Eastern Europe Fund). Each of these funds, including the Fund and the
Portfolio, pays an amount based upon its relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Portfolio pursuant to
an investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund and the Portfolio, the Sub-adviser employs a
team approach, taking advantage of its investment resources around the world.
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AIM GLOBAL HIGH INCOME FUND
The investment professionals primarily responsible for the portfolio management
of the Portfolio are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau Portfolio Manager since Chief Investment Officer for Global Fixed Income for the Sub-adviser
New York 1997 since October 1996. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from July
1995 to October 1996. Employed by Chancellor Capital Management,
Inc. ("Chancellor Capital"), a predecessor of the Sub-Adviser, from
1995 to October 1996. Senior Vice President and Senior Portfolio
Manager for Fiduciary Trust Company International from 1993 to
1995. Vice President at Bankers Trust Company from 1991 to 1993.
Craig Munro Portfolio Manager since Portfolio Manager for the Sub-adviser since August 1997. Vice
New York 1998 President and Senior Analyst in the Emerging Markets Group of the
Global Fixed Income Division of Merrill Lynch Asset Management from
1993 to August 1997.
</TABLE>
------------------------
In placing orders for the Portfolio's securities transactions, the Sub-adviser
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Sub-adviser may consider a broker/dealer's sale of
shares of the AIM Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions for the Portfolio may be
executed through affiliates of AIM or the Sub-adviser. High portfolio turnover
(over 100%) involves correspondingly greater brokerage commissions and other
transaction costs that the Fund or the Portfolio will bear directly and could
result in the realization of net capital gains which would be taxable when
distributed to shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
the Advisor Class shares of the Fund. Certain Trustees and officers of the Trust
are affiliated with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
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OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust.
From time to time, the Trust may establish other funds, each corresponding to a
distinct investment portfolio and a distinct series of the Trust's shares of
beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
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AIM GLOBAL HIGH INCOME FUND
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that Class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a Delaware business
trust. Under Delaware law, the Fund and other entities that invest in the
Portfolio enjoy the same limitations of liability extended to shareholders of
private, for-profit corporations. There is a remote possibility, however, that
under certain circumstances an investor in the Portfolio may be held liable for
the Portfolio's obligations. However, the Agreement and Declaration of Trust of
the Portfolio disclaims shareholder liability for acts or obligations of the
Portfolio and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Portfolio or
a trustee. The Agreement and Declaration of Trust also provides for
indemnification from the Portfolio property for all losses and expenses of any
shareholder held personally liable for the Portfolio's obligations. Thus the
risk of an investor incurring financial loss on account of such liability is
limited to circumstances in which the Portfolio itself would be unable to meet
its obligations and where the other party was held not to be bound by the
disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of Fund shareholders and will cast its vote as
instructed by Fund shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the Fund and
to the Portfolio.
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AIM GLOBAL HIGH INCOME FUND
APPENDIX A
DESCRIPTION OF DEBT RATINGS
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DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
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 edged." 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 risk appear somewhat
larger than the 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
some time 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.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are 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 which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
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AIM GLOBAL HIGH INCOME FUND
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
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AIM GLOBAL HIGH INCOME FUND
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
Prospectus Page 25
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
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AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
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AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
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AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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AIM INVESTOR'S GUIDE
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
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AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
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AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM GLOBAL HIGH INCOME FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL INFRASTRUCTURE FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Infrastructure Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a diversified portfolio which seeks long-term capital
growth by investing all of its investable assets in the Global Infrastructure
Portfolio ("Portfolio"), which, in turn, invests primarily in equity securities
of companies throughout the world that design, develop or provide products and
services significant to a country's infrastructure. The Portfolio's investment
objective is identical to that of the Fund. The investment experience of the
Fund will correspond directly with the investment experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at
http://www.sec.gov that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the Fund.
Additional information about the fund may also be obtained from
http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 5
Management................................................................................ 13
Other Information......................................................................... 15
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C>
The Fund and the Portfolio: The Fund is a diversified series of the Trust. The Portfolio is a diversified series of Global
Investment Portfolio.
Investment Objective: The Fund seeks long-term capital growth.
Principal Investments: The Fund invests all of its investable assets in the Portfolio, which, in turn, invests
primarily in equity securities of companies throughout the world that design, develop or
provide products and services significant to a country's infrastructure.
Investment Managers: The Portfolio is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and
sub-administered by INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their
worldwide asset management affiliates provide investment management and/or administrative
services to institutional, corporate and individual clients around the world. AIM and the
Sub-adviser are both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a significant presence in
the institutional and retail segment of the investment management industry in North America and
Europe, and a growing presence in Asia. AIM was organized in 1976 and, together with its
subsidiaries, currently advises approximately 90 investment company portfolios.
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at
least 1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial
planner, trust company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as compensation for
its advice and other services an annual fee of at least 0.50% on the assets in the account; (c)
any account with assets of a least $10,000 if (i) such account is established under a "wrap
fee" program, and (ii) the account holder pays the sponsor of such program an annual fee of at
least 0.50% on the assets in the account; (d) accounts
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
<TABLE>
<S> <C>
advised by the Sub-adviser or one of the companies formerly affiliated with the Asset
Management Division of Liechtenstein Global Trust AG, provided such accounts were invested in
Advisor Class shares of any of the other funds in The AIM Family of Funds that are sub-advised
by the Sub-adviser ("AIM Funds") on May 29, 1998; (e) any of the companies composing or
affiliated with AMVESCAP PLC; and (f) AIM Global Trends Fund. Pursuant to a separate
prospectus, the Fund also offers Class A and Class B shares, which represent interests in the
Fund. The Class A and Class B shares have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments
must be at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc.
("AIM Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM
Family of Funds"), Advisor Class shares of the Fund may be exchanged for Advisor Class shares
of certain Funds in the AIM Family of Funds in the manner and subject to the policies and
charges set forth herein. See "Exchange Privilege."
</TABLE>
<TABLE>
<S> <C>
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at the
Fund's net asset value on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis.
Dividends and distributions of the Fund may be reinvested at net asset value without payment of
a sales charge in the Fund's shares or may be invested in shares of the other funds in The AIM
Family of Funds. See "Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund or the Portfolio will achieve its investment objective. The
Fund's net asset value will fluctuate, reflecting fluctuations in the market value of the
Portfolio's portfolio holdings. The Portfolio's policy of concentrating its investments in
companies that design, develop or provide products and services significant to a country's
infrastructure may cause the Fund's net asset value to fluctuate more than if it invested in a
greater number of industries.
The Portfolio may invest in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the
regulations to which U.S. and foreign issuers are subject. Individual foreign economies also
may differ favorably or unfavorably from the U.S. economy. Changes in foreign currency ex-
change rates will affect the Fund's net asset value, earnings and gains and losses realized on
sales of securities. Securities of foreign companies may be less liquid and their prices more
volatile than those of securities of comparable U.S. companies.
The Portfolio may engage in certain foreign currency, options and futures transactions to
attempt to hedge against the overall level of investment and currency risk associated with its
present or planned investments. Such transactions involve certain risks and transaction costs.
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 3
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
<TABLE>
<S> <C>
The Portfolio may invest up to 20%, of its total assets in below investment grade debt
securities. Investments of this type are subject to a greater risk of loss of principal and
interest.
See "Investment Objective and Policies" and "Risk Factors."
</TABLE>
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following table (1):
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price)................................. None
Sales charges on reinvested distributions to shareholders.............................................. None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)................................................................................................. None
Redemption charges..................................................................................... None
Exchange fees.......................................................................................... None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......................................................... 0.98%
12b-1 distribution and service fees.................................................................... None
Other expenses (after reimbursements).................................................................. 0.52%
-------
Total Fund Operating Expenses.......................................................................... 1.50%
-------
-------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ---- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares............... $15 $48 $ 82 $180
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUNDS.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect AIM's undertaking to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 1.50% of the average daily net assets of each Fund's Advisor
Class shares. Without reimbursements, "Other Expenses" and "Total Fund
Operating Expenses" would have been 0.60% and 1.58%, respectively, for
Advisor Class shares of the Infrastructure Fund. "Other expenses" include
custody, transfer agency, legal, audit and other operating expenses. See
"Management" herein and the Statement of Additional Information for more
information. Investors purchasing Advisor Class shares through financial
planners, trust companies, bank trust departments or registered investment
advisers, or under a "wrap fee" program, will be subject to additional fees
charged by such entities or by the sponsors of such programs. Where any
account advised by one of the companies composing or affiliated with
AMVESCAP PLC invests in Advisor Class shares of the Fund, such account shall
not be subject to duplicative advisory fees.
The Board of Trustees of the Trust believes that the aggregate per share
expenses of the Infrastructure Fund and its corresponding Portfolio will be
approximately equal to the expenses the Fund would incur if its assets were
invested directly in the type of securities being held by its Portfolio.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S
DIRECT AND INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The
table and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's or
the Portfolio's projected or actual performance.
Prospectus Page 4
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM GLOBAL INFRASTRUCTURE FUND
(FORMERLY GT GLOBAL INFRASTRUCTURE FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 5
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INFRASTRUCTURE FUND
The Fund's investment objective is long-term capital growth. It seeks its
objective by investing all of its investable assets in the Portfolio, which, in
turn, invests primarily in equity securities of companies throughout the world
that design, develop or provide products and services significant to a country's
infrastructure. The Portfolio's investment objective is identical to that of the
Fund. There can be no assurance that the Fund or Portfolio will achieve its
investment objective.
At least 65% of the Portfolio's total assets normally will be invested in common
and preferred stocks and warrants to acquire such securities issued by
infrastructure companies. An "infrastructure" company is an entity in which (i)
at least 50% of either the revenues or earnings was derived from infrastructure
activities, or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the Portfolio's
assets may be invested in debt securities issued by infrastructure companies
and/or equity and debt securities of companies outside of the infrastructure
industries, which, in the opinion of the Sub-adviser, stand to benefit from
developments in the infrastructure industries.
GLOBAL INFRASTRUCTURE INDUSTRIES INVESTMENT. Examples of infrastructure
companies include those engaged in designing, developing or providing the
following products and services: electricity production; oil, gas, and coal
exploration, development, production and distribution; water supply, including
water treatment facilities; nuclear power and other alternative energy sources;
transportation, including the construction or operation of transportation
systems; steel, concrete, or similar types of products; communications equipment
and services (including equipment and services for both data and voice
transmission); mobile communications and cellular radio/paging; emerging
technologies combining telephone, television and/or computer systems; and other
products and services, which, in the Sub-adviser's judgment, constitute services
significant to the development of a country's infrastructure.
The Sub-adviser believes that a country's infrastructure is one key to the
long-term success of that country's economy. The Sub-adviser believes that
adequate energy, transportation, water, and communications systems are essential
elements for long-term economic growth. The Sub-adviser believes that many
developing nations, especially in Asia and Latin America, plan to make
significant expenditures to the development of their infrastructure in the
coming years, which is expected to facilitate increased levels of services and
manufactured goods.
In the developed countries of North America, Europe, Japan and the Pacific Rim,
the Sub-adviser expects that the replacement and upgrade of transportation and
communications systems should stimulate growth in the infrastructure industries
of those countries. In addition, in the Sub-adviser's view, deregulation of
telecommunications and electric and gas utilities in many countries is promoting
significant changes in these industries.
The Sub-adviser believes that strong economic growth in developing countries and
infrastructure replacement, upgrade, and deregulation in more developed
countries provide an environment for favorable investment opportunities in
infrastructure companies worldwide. In addition, the long-term growth rates of
certain foreign countries' economies may be substantially higher than the
long-term growth rate of the U.S. economy. An integral aspect of certain foreign
countries' economies may be the development or improvement of their
infrastructure.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. The Portfolio expects that, from
time to time, a significant portion of its assets may be invested in the
securities of domestic issuers. The industry represented in the Portfolio,
however, is a global industry with significant, growing markets outside of the
United States. A sizeable proportion of the companies which comprise the
infrastructure industries are headquartered outside of the United States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Portfolio. The Sub-adviser uses its financial
expertise in markets
Prospectus Page 6
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
located throughout the world and the substantial global resources of AMVESCAP
PLC in attempting to identify those countries and companies then providing the
greatest potential for long-term capital appreciation. In this fashion, the
Sub-adviser seeks to enable shareholders to capitalize on the substantial
investment opportunities and the potential for long-term growth of capital
presented by the global infrastructure industry represented in the Portfolio.
The Sub-adviser allocates the Portfolio's assets among securities of countries
and in currency denominations where opportunities for meeting the Portfolio's
investment objective are expected to be the most attractive. The Portfolio may
invest substantially in securities denominated in one or more currencies. Under
normal conditions, the Portfolio invests in the securities of issuers located in
at least three countries, including the United States; investments in securities
of issuers in any one country, other than the United States, will represent no
more than 50% of the Portfolio's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Portfolio may invest up to
100% of its total assets in cash (U.S. dollars, foreign currencies or
multinational currency units such as Euros) and/or high quality debt securities
or money market instruments of U.S. or foreign issuers. In addition, for
temporary defensive purposes, most or all of the Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Portfolio adopts a temporary defensive posture, it will not be invested so as to
achieve directly its investment objective. In addition, pending investment of
proceeds from new sales of Fund shares or to meet its ordinary daily cash needs,
the Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest in foreign or domestic high quality money market
instruments. For a full description of money market instruments, see "Money
Market Instruments" in the "Investment Objectives and Policies" section of the
Statement of Additional Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Portfolio in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Portfolio to participate in privatizations may be limited by local
law, or the terms on which the Portfolio may be permitted to participate may be
less advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Portfolio may invest up to 10% of
its total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Portfolio
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time, the Portfolio would
continue to pay its own management fees and other expenses. AIM and the
Sub-adviser will waive their advisory fees to the extent that the Portfolio
invests in an Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemptions of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of its shares than would be the case if the Portfolio did not
borrow.
Prospectus Page 7
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
A reverse repurchase agreement is a borrowing transaction in which the Portfolio
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Portfolio's sale of securities together with
its commitment (for which the Portfolio may receive a fee) to purchase similar,
but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolio to retain ownership of the securities loaned and, at the same
time, enhances the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other collateral as permitted by the Portfolio's investment program and
regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actually receiving or delivering the securities, as the
case may be. No income accrues on securities that have been purchased pursuant
to a forward commitment or on a when-issued basis prior to delivery to the
Portfolio. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to its portfolio positions. The Portfolio also may purchase and sell put
and call options on currencies, futures contracts on currencies and options on
such futures contracts to hedge against movements in exchange rates.
In addition, the Portfolio may purchase and sell put and call options on equity
and debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Portfolio or that the Sub-adviser intends to include in
the Portfolio's holdings. The Portfolio also may purchase and sell put and call
options on stock indexes to hedge against overall fluctuations in the securities
markets generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write
Prospectus Page 8
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
call options on such futures contracts to protect against a general stock market
decline or a decline in a specific market sector that could affect adversely the
Portfolio's holdings. The Portfolio also may purchase stock index futures
contracts and purchase call options or write put options on such contracts to
hedge against a general stock market or market sector advance and thereby
attempt to lessen the cost of future securities acquisitions. The Portfolio may
use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by the Trust's
Board of Trustees without shareholder approval. The Fund's policies regarding
concentration and lending, and the percentage of the Fund's assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval. The investment policies of the Fund are identical to the
investment policies of the Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is not
required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objective.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's or Portfolio's investment policies or
restrictions.
The Portfolio is authorized to engage in Short Sales, although it currently has
no intention of doing so, and may purchase American Depository Receipts,
American Depository Shares, Global Depository Receipts and European Depository
Receipts. See "Short Sales" and "Depository Receipts," respectively in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board of
Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or the shareholders of
the Fund could require the Fund to redeem its interest in the Portfolio. Any
such redemption could result in a distribution in kind of portfolio securities
(as opposed to a cash distribution) by the Portfolio. Should such a distribution
occur, the Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Fund and could
adversely affect its liquidity. Upon redemption, the Board would consider what
action might be taken, including the investment of all the investable assets of
the Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention by the Fund of its own
investment adviser to manage its assets in accordance with its investment
objective, policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as
Prospectus Page 9
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
the Fund and may charge different sales commissions. Therefore, investors in the
Fund may experience different returns than investors in another investment
company that invests exclusively in the Portfolio. As of the date of this
Prospectus, the Fund is the only institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors, if
any, in the Portfolio. For example, as with all open-end investment companies,
if a large investor were to redeem its interest in the Portfolio, (1) the
Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset values will fluctuate reflecting
fluctuations in the market value of the Portfolio's securities positions. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure, and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Portfolio will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. In addition,
the value of debt securities held by the Portfolio generally will fluctuate with
changes in the perceived creditworthiness of the issuers of such securities and
interest rates.
Because the Portfolio focuses its investments on the infrastructure industries,
an investment in it may be more volatile than that of other investment companies
that do not concentrate their investments in such a manner. Moreover, the value
of the shares of the Fund will be especially susceptible to factors affecting
the infrastructure industries. Accordingly, the Fund should be considered a
complete investment program.
INFRASTRUCTURE INDUSTRIES. Infrastructure industries may be subject to greater
political, environmental and other governmental regulation than many other
industries. The nature of such regulation continues to evolve in both the United
States and foreign countries, and changes in governmental policy and the need
for regulatory approvals may have a material effect on the products and services
offered by companies in the infrastructure industries. Electric, gas, water and
most telecommunications companies in the United States, for example, are subject
to both federal and state regulation affecting permitted rates of return and the
kinds of services that may be offered. Governmental regulation may also hamper
the development of new technologies.
In addition, many infrastructure companies have historically been subject to the
risks attendant to increases in fuel and other operating costs, high interest
costs on borrowed funds, costs associated with compliance with environmental and
other safety regulations and changes in the regulatory climate. Further,
competition is intense for many infrastructure companies. As a result, many of
these companies may be adversely affected in the future and such companies may
be subject to increased share price volatility. In addition, many companies have
diversified into oil and gas exploration and development, and therefore returns
may be more sensitive to energy prices. Other infrastructure companies, such as
water supply companies, are in a highly fragmented industry due to local
ownership. Generally these companies are mature and are experiencing little or
no growth. Changes in prevailing interest rates may also affect the
Infrastructure Fund's share values because prices of equity and debt securities
of infrastructure companies often tend to increase when interest rates decline
and decrease when interest rates rise.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less
Prospectus Page 10
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
In addition, certain costs attributable to foreign investing, such as custody
charges, are higher than those attributable to domestic investing. Securities of
some foreign companies are less liquid and their prices may be more volatile
than securities of comparable domestic companies. The Portfolio's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing the Portfolio's net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political or social instability, or diplomatic
developments which could affect the Portfolio's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Portfolio may invest in issuers domiciled in "emerging markets." Investing
in emerging market countries involves risks in addition to those risks involved
in foreign investing. Many emerging market countries have experienced high rates
of inflation for many years. In addition, emerging markets generally are
dependent heavily upon international trade and, accordingly, have been and
continue to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. The securities markets of
emerging market countries are substantially smaller, less developed, less liquid
and more volatile than the securities markets of the developed countries. In
addition, issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than issuers in developed
countries.
The Portfolio will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Portfolio and gains and losses realized by the Portfolio.
LOWER QUALITY DEBT SECURITIES. The Portfolio may invest up to 20%, of its total
assets in below investment grade debt securities, that is, rated below BBB by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa
by Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Portfolio will not invest in debt securities
that are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition,
Prospectus Page 11
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
lower quality debt securities tend to be more sensitive to economic conditions
and generally have more volatile prices than higher quality securities. Issuers
of lower quality securities are often highly leveraged and may not have
available to them more traditional methods of financing. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of lower quality securities may experience financial stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific developments affecting
the issuer, such as the issuer's inability to meet specific projected business
forecasts or the unavailability of additional financing. The risk of loss due to
default by the issuer is significantly greater for the holders of lower quality
securities because such securities are generally unsecured and may be
subordinated to the claims of other creditors of the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Portfolio may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
In addition, the Portfolio may have difficulty disposing of lower quality
securities because they may have a thin trading market. There may be no
established retail secondary market for many of these securities, and the
Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market also may have an adverse impact on market prices of such instruments and
may make it more difficult for the Portfolio to obtain accurate market
quotations for purposes of valuing its investments. The Portfolio may also
acquire lower quality debt securities during an initial underwriting or which
are sold without registration under applicable securities laws. Such securities
involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Portfolio may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Portfolio may also incur additional expenses to the
extent it is required to seek recovery upon a default in the payment of
principal or interest on portfolio holdings, and the Portfolio may have limited
legal recourse in the event of a default.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Portfolio to
achieve capital appreciation substantially exceeding the appreciation the
Portfolio would realize if it did not make such investments. However, in order
to attempt to limit investment risk, the Portfolio will invest no more than 5%
of its total assets in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Portfolio is
authorized to enter into options, futures and forward currency transactions, the
Portfolio might not enter into any such transactions. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the Portfolio to sell a security at a disadvantageous time, due to the need for
the Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
Prospectus Page 12
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
INVESTING IN SMALLER COMPANIES. While the Portfolio's holdings normally will
include securities of established suppliers of traditional products and
services, the Portfolio may invest in smaller companies which can benefit from
the development of new products and services. These smaller companies may
present greater opportunities for capital appreciation, but may also involve
greater risks than large, established issuers. Such smaller companies may have
limited product lines, markets or financial resources, and their securities may
trade less frequently and in more limited volume than the securities of larger,
more established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees and the Board of Trustees of the Portfolio have
overall responsibility for the operation of the Fund and the Portfolio,
respectively. The Boards have approved all significant agreements between the
Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administration agreement with AIM, the investment sub-advisory
and sub-administration agreement between AIM and the Sub-adviser, the agreements
with AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the investment objective and policies of the Fund
and the Portfolio and to the general supervision of the Boards. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the investment managers to the Fund and the Portfolio include,
but are not limited to, determining the composition of the investment portfolio
of the Portfolio and placing orders to buy, sell or hold particular securities.
In addition, AIM and the Sub-adviser provide the following administration
services to the Portfolio and the Fund: furnishing corporate officers and
clerical staff; providing office space, services and equipment; and supervising
all matters relating to the Portfolio's and the Fund's operation.
For administration services, the Fund pays AIM administration fees computed
daily and payable monthly at the annualized rate of 0.25% of the Fund's average
daily net assets. AIM has appointed the Sub-adviser as the Fund's
sub-administrator. In addition, the Fund bears its pro rata portion of the
investment management and administration fees paid by its corresponding
Portfolio to AIM and the Sub-adviser. The Portfolio pays AIM a fee, based on the
Portfolio's average daily net assets at the annualized rate of .725% on the
first $500 million, .70% on the next $500 million, .675% on the next $500
million and .65% on all amounts thereafter. Out of its aggregate fees payable by
the Fund and Portfolio, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund and Portfolio. The investment management and administration fees paid by
the Fund and the Portfolio are higher than those paid by most mutual funds. The
Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM Distributors or
other agents. AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 1.50% of the average daily net assets of the Fund's Advisor Class
shares.
The Sub-adviser also serves as the Fund's and the Portfolio's pricing and
accounting agent. For these services the Sub-adviser receives a fee consisting
of 0.03% to the first $5 billion of assets, and 0.02% to the assets in excess of
$5 billion, of the AIM Funds that are sub-advised by the Sub-adviser (other than
AIM Eastern Europe Fund). Each of these funds, including the Fund and the
Portfolio, pays an amount based upon its relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration services agreement,
Prospectus Page 13
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
dated as of May 29, 1998 (the "Advisory Agreement"). AIM was organized in 1976
and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives. The Sub-adviser, 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-adviser to the Portfolio pursuant to an investment
sub-advisory and sub-administration agreement dated as of May 29, 1998. Prior to
May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset Management, Inc.
On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the former indirect
parent organization of the Sub-adviser, consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included the Sub-adviser and certain other affiliates. As a
result of this transaction, the Sub-adviser is now an indirect wholly owned
subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and its worldwide
asset management affiliates provided investment management and/or administrative
services to institutional, corporate and individual clients around the world
since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Portfolio, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Portfolio is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Brian T. Nelson Portfolio Manager since Portfolio Manager for the Sub-adviser since September 1997. Senior
San Francisco 1997 Equity Research Analyst for the Sub-adviser from October 1996 to
September 1997. Employed by Chancellor Capital Management, Inc., a
predecessor of the Sub-adviser, from 1995 to October 1996. Equity
Research Analyst and Co-Portfolio Manager for Franklin Resources,
Inc. (San Mateo, CA) from 1988 to 1995.
</TABLE>
------------------------
In placing orders for the Portfolio's securities transactions, the Sub-adviser
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Sub-adviser may consider a broker/dealer's sale of
shares of the AIM Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Funds will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
the Advisor Class shares of the Fund. Certain Trustees and officers of the Trust
are affiliated with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
Prospectus Page 14
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Company acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series or
portfolios of the Trust. From time to time, the Company may establish other
funds, each corresponding to a distinct investment portfolio and a distinct
series of the Trust's shares of beneficial interest. Shares of each fund are
entitled to one vote per share (with proportional voting for fractional shares)
and are freely transferable. Shareholders have no preemptive rights. Other than
the automatic conversion of Class B shares to Class A shares, there are no
conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Company may
issue an unlimited number of shares of the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal in earnings, assets
and voting privileges except that each class normally has exclusive voting
rights with respect to its distribution plan and bears the expenses, if any,
related to the distribution of its shares. Shares of the Fund, when issued, are
fully paid and nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Global Investment Portfolio, a Delaware business trust. Under Delaware law, the
Fund and other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However, the
Agreement and Declaration of Trust of the Global Investment Portfolio disclaims
shareholder liability for acts or obligations of the Portfolio and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Portfolio or a trustee. The Agreement and
Declaration of Trust also provides for indemnification from the Portfolio
property for all losses and expenses of any shareholder held personally liable
for the Portfolio's obligations. Thus the risk of an investor incurring
financial loss on account of such liability is limited to circumstances in which
the Portfolio itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the Fund and
to the Portfolio.
Prospectus Page 15
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
A-1
<PAGE>
AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
A-2
<PAGE>
AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
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AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
A-10
<PAGE>
AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
A-11
<PAGE>
AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM GLOBAL INFRASTRUCTURE FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL RESOURCES FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Resource Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a diversified portfolio which seeks long-term capital
growth by investing all of its investable assets in the Global Resources
Portfolio ("Portfolio"), which, in turn, invests primarily in equity securities
of companies throughout the world that own, explore or develop natural resources
and other basic commodities or supply goods and services to such companies. The
Portfolio's investment objective is identical to that of the Fund. The
investment experience of the Fund will correspond directly with the investment
experience of the Portfolios.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL RESOURCES FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 3
Financial Highlights...................................................................... 6
Management................................................................................ 14
Other Information......................................................................... 16
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in the
summary are to headings in the body of this Prospectus.
<TABLE>
<S> <C> <C>
The Fund and the Portfolio: The Fund is a diversified series of the Trust. The Portfolio is a diversified series of the
Portfolio.
Investment Objective: The Fund seeks long-term capital growth.
Principle Investments: The Fund invests all of its investable assets in the Portfolio, which, in turn, invests primarily in
equity securities of companies throughout the world that own, explore or develop natural resources
and other basic commodities or supply goods and services to such companies.
Investment Managers: The Portfolio is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser").
AIM and the Sub-adviser and their worldwide asset management affiliates provide investment management
and/or administrative services to institutional, corporate and individual clients around the world.
AIM and the Sub-adviser are both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and
its subsidiaries are an independent investment management group that has a significant presence in
the institutional and retail segment of the investment management industry in North America and
Europe, and a growing presence in Asia. AIM was organized in 1976 and, together with its
subsidiaries, currently advises approximately 90 investment company portfolios.
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at least
1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment discretion over such
account, and (ii) the account holder pays such person as compensation for its advice and other
services an annual fee of at least 0.50% on the assets in the account; (c) any account with assets of
a least $10,000 if (i) such account is established under a "wrap fee"
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL RESOURCES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
program, and (ii) the account holder pays the sponsor of such program an annual fee of at least 0.50%
on the assets in the account; (d) accounts advised by the Sub-adviser or one of the companies
formerly affiliated with the Asset Management Division of Liechtenstein Global Trust AG, provided
such accounts were invested in Advisor Class shares of any of the funds in The AIM Family of Funds
that are sub-advised by the Sub-adviser ("AIM Funds") on May 29, 1998; (e) any of the companies
composing or affiliated with AMVESCAP PLC; and (f) AIM Global Trends Fund. Pursuant to a separate
prospectus, the Fund also offers Class A and Class B shares, which represent interests in the Fund.
The Class A and Class B shares have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments must be
at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Advisor Class shares of the Fund may be exchanged for Advisor Class shares of certain
funds in The AIM Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at the Fund's net
asset value on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund or the Portfolio will achieve its investment objective. The
Fund's net asset value will fluctuate, reflecting fluctuations in the market value of the Portfolio's
portfolio holdings. The Portfolio's policy of concentrating its investments in companies in the
natural resources industries may cause the Fund's net asset value to fluctuate more than if it
invested in a greater number of industries.
The Portfolio may invest in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL RESOURCES FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Portfolio may engage in certain foreign currency, options and futures transactions to attempt to
hedge against the overall level of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and transaction costs.
The Portfolio may invest up to 20%, of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL RESOURCES FUND
TABLE OF FEES AND EXPENSES The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Fund are reflected in the
following table (1):
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares
(as a % of offering price)....................................................................... None
Sales charges on reinvested distributions to shareholders......................................... None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)............................................................................................ None
Redemption charges................................................................................ None
Exchange fees..................................................................................... None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees..................................................... 0.98%
12b-1 distribution and service fees............................................................... None
Other expenses (after reimbursements)............................................................. 0.52%
-------
Total Fund Operating Expenses..................................................................... 1.50%
-------
-------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ---- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares............... $15 $48 $ 82 $180
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect AIM's undertaking to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 1.50% of the average daily net assets of the Fund's Advisor
Class shares. Without reimbursements, "Other Expenses" and "Total Fund
Operating Expenses" would have been 0.65% and 1.63%, respectively, for
Advisor Class Shares of the Fund. "Other expenses" include custody, transfer
agency, legal, audit and other operating expenses. See "Management" herein
and the Statement of Additional Information for more information. Investors
purchasing Advisor Class shares through financial planners, trust companies,
bank trust departments or registered investment advisers, or under a "wrap
fee" program, will be subject to additional fees charged by such entities or
by the sponsors of such programs. Where any account advised by one of the
companies composing or affiliated with AMVESCAP PLC invests in Advisor Class
shares of the Fund, such account shall not be subject to duplicative
advisory fees.
The Board of Trustees of the Trust believes that the aggregate per share
expenses of the Fund and its Portfolio will be approximately equal to the
expenses the Fund would incur if its assets were invested directly in the
type of securities being held by its Portfolio.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S
DIRECT AND INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The
table and the assumption in the Hypothetical Example of a 5% annual return
are required by regulation of the SEC applicable to all mutual funds. The 5%
annual return is not a prediction of and does not represent the Fund's or
the Portfolio's projected or actual performance.
Prospectus Page 5
<PAGE>
AIM GLOBAL RESOURCES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM GLOBAL RESOURCES FUND
(FORMERLY GT GLOBAL NATURAL RESOURCES FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 6
<PAGE>
AIM GLOBAL RESOURCES FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital growth. It seeks its
objective by investing all of its investable assets in the Portfolio, which, in
turn, invests primarily in equity securities of companies throughout the world
that own, explore or develop natural resources and other basic commodities or
supply goods and services to such companies. The Portfolio's investment
objective is identical to that of the Fund. There can be no assurance that the
Fund or Portfolio will achieve its investment objective.
At least 65% of the Portfolio's total assets will normally be invested in common
stock and preferred stock, and warrants to acquire such securities, issued by
natural resource companies. A "natural resource" company is an entity in which
(i) at least 50% of either the revenues or earnings was derived from natural
resource activities, or (ii) at least 50% of the assets was devoted to such
activities, based upon the company's most recent fiscal year. The remainder of
the Portfolio's assets may be invested in debt securities issued by natural
resource companies and/or equity and debt securities of companies outside of the
natural resource industries, which, in the opinion of the Sub-adviser, stand to
benefit from developments in the natural resource industries.
GLOBAL RESOURCE INDUSTRIES INVESTMENT. Examples of natural resource companies
include those which own, explore or develop: energy sources (such as oil, gas
and coal); ferrous and non-ferrous metals (such as iron, aluminum, copper,
nickel, zinc and lead), strategic metals (such as uranium and titanium) and
precious metals (such as gold, silver and platinum); chemicals; forest products
(such as timber, coated and uncoated tree sheet, pulp and newsprint); other
basic commodities (such as foodstuffs); refined products (such as chemicals and
steel) and service companies that sell to these producers and refiners; and
other products and services, which, in the Sub-adviser's opinion are significant
to the ownership and development of natural resources and other basic
commodities.
The Sub-adviser believes that the liberalization of formerly socialist economies
will bring about dramatic changes in both the supply and demand for natural
resources. In addition, rapid industrialization in developing countries of Asia
and Latin America is generating new demands for industrial materials that are
affecting world commodities markets. The Sub-adviser believes these changes are
likely to create investment opportunities that benefit from new sources of
supply and/or from changes in commodities prices.
The Sub-adviser also believes that investments in natural resource industries
offer an opportunity to protect wealth against the capital-eroding effects of
inflation. During periods of accelerating inflation or currency uncertainty,
worldwide investment demand for natural resources, particularly precious metals,
tends to increase, and during periods of disinflation or currency stability, it
tends to decrease. The Sub-adviser believes that rising commodity prices and
increasing worldwide industrial production may favorably affect share prices of
natural resource companies, and investments in such companies can offer
excellent opportunities to offset the effects of inflation.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. The Portfolio expects that, from
time to time, a significant portion of its assets may be invested in the
securities of domestic issuers. The industry represented in the Portfolio,
however, is a global industry with significant, growing markets outside of the
United States. A sizeable proportion of the companies which comprise the natural
resources industries are headquartered outside of the United States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Portfolio. The Sub-adviser uses its financial
expertise in markets located throughout the world and the substantial global
resources of AMVESCAP PLC in attempting to identify those countries and
companies then providing the greatest potential for long-term capital
appreciation. In this fashion, the Sub-adviser seeks to enable shareholders to
capitalize on the substantial investment opportunities and the potential for
long-term growth of capital presented by the global natural resources industries
represented in the Portfolio.
Prospectus Page 7
<PAGE>
AIM GLOBAL RESOURCES FUND
The Sub-adviser allocates the Portfolio's assets among securities of countries
and in currency denominations where opportunities for meeting the Portfolio's
investment objective are expected to be the most attractive. The Portfolio may
invest substantially in securities denominated in one or more currencies. Under
normal conditions, the Portfolio invests in the securities of issuers located in
at least three countries, including the United States; investments in securities
of issuers in any one country, other than the United States, will represent no
more than 50% of the Portfolio's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
In assessing companies for the Resources Portfolio, the Sub-adviser will also
evaluate, among other factors, their capabilities for expanded exploration and
production, superior exploration programs and production techniques and
facilities, current inventories, expected production and demand levels and the
potential to accumulate new resources.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Portfolio may invest up to
100% of its total assets in cash (U.S. dollars, foreign currencies or
multinational currency units such as Euros) and/or high quality debt securities
or money market instruments of U.S. or foreign issuers. In addition, for
temporary defensive purposes, most or all of the Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Portfolio adopts a temporary defensive posture, it will not be invested so as to
achieve directly its investment objective. In addition, pending investment of
proceeds from new sales of Fund shares or to meet its ordinary daily cash needs,
the Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest in foreign or domestic high quality money market
instruments. For a full description of money market instruments, see "Money
Market Instruments" in the "Investment Objectives and Policies" section of the
Statement of Additional Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Portfolio in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Portfolio to participate in privatizations may be limited by local
law, or the terms on which the Portfolio may be permitted to participate may be
less advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Portfolio may invest up to 10% of
its total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Portfolio
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time, the Portfolio would
continue to pay its own management fees and other expenses. AIM and the
Sub-adviser will waive their advisory fees to the extent that the Portfolio
invests in an Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemptions of
the Funds' shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Funds'
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of its shares than would be the case if the Portfolio did not
borrow.
Prospectus Page 8
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AIM GLOBAL RESOURCES FUND
A reverse repurchase agreement is a borrowing transaction in which the Portfolio
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Portfolio's sale of securities together with
its commitment (for which the Portfolio may receive a fee) to purchase similar,
but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolios to retain ownership of the securities loaned and, at the same
time, enhances the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other collateral as permitted by the Portfolio's investment program and
regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actually receiving or delivering the securities, as the
case may be. No income accrues on securities that have been purchased pursuant
to a forward commitment or on a when-issued basis prior to delivery to the
Portfolio. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to its portfolio positions. The Portfolio also may purchase and sell put
and call options on currencies, futures contracts on currencies and options on
such futures contracts to hedge against movements in exchange rates.
In addition, the Portfolio may purchase and sell put and call options on equity
and debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Portfolio or that the Sub-adviser intends to include in
the Portfolio's holdings. The Portfolio also may purchase and sell put and call
options on stock indexes to hedge against overall fluctuations in the securities
markets generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write
Prospectus Page 9
<PAGE>
AIM GLOBAL RESOURCES FUND
call options on such futures contracts to protect against a general stock market
decline or a decline in a specific market sector that could affect adversely the
Portfolio's holdings. The Portfolio also may purchase stock index futures
contracts and purchase call options or write put options on such contracts to
hedge against a general stock market or market sector advance and thereby
attempt to lessen the cost of future securities acquisitions. The Portfolio may
use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of that Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by the Trust's
Board of Trustees without shareholder approval. The Fund's policies regarding
concentration and lending, and the percentage of the Fund's assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval.
The approval of the Fund and of other investors in the Portfolio, if any, is not
required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objective.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's or Portfolio's investment policies or
restrictions.
The Portfolio is authorized to engage in Short Sales, although it currently has
no intention of doing so, and may purchase American Depository Receipts,
American Depository Shares, Global Depository Receipts and European Depository
Receipts. See "Short Sales" and "Depository Receipts," respectively, in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board of
Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or the shareholders of
the Fund could require the Fund to redeem its interest in the Portfolio. Any
such redemption could result in a distribution in kind of portfolio securities
(as opposed to a cash distribution) by the Portfolio. Should such a distribution
occur, the Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Fund and could
adversely affect its liquidity. Upon redemption, the Board would consider what
action might be taken, including the investment of all the investable assets of
the Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention by the Fund of its own
investment adviser to manage its assets in accordance with its investment
objective, policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may
Prospectus Page 10
<PAGE>
AIM GLOBAL RESOURCES FUND
experience different returns than investors in another investment company that
invests exclusively in the Portfolio. As of the date of this Prospectus, the
Fund is the only institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors, if
any, in the Portfolio. For example, as with all open-end investment companies,
if a large investor were to redeem its interest in the Portfolio, (1) the
Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset values will fluctuate reflecting
fluctuations in the market value of the Portfolio's securities. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure, and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Portfolio will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. In addition,
the value of debt securities held by the Portfolio generally will fluctuate with
changes in the perceived creditworthiness of the issuers of such securities and
interest rates.
Because the Portfolio focuses its investments on the natural resources
industries, an investment in it may be more volatile than that of other
investment companies that do not concentrate their investments in such a manner.
Moreover, the value of the shares of the Fund will be especially susceptible to
factors affecting the natural resources industries in which it focuses.
Accordingly, the Fund should not be considered a complete investment program.
NATURAL RESOURCES INDUSTRIES. Natural resource industries may be subject to
greater political, environmental and other governmental regulation than many
other industries. The nature of such regulation continues to evolve in both the
United States and foreign countries, and changes in governmental policies and
the need for regulatory approvals may have a material effect on the products and
services offered by companies in the natural resource industries. For example,
the exploration, development and distribution of coal, oil and gas in the United
States are subject to significant federal and state regulation, which may affect
rates of return on such investments and the kinds of services that may be
offered. Governmental regulation may also hamper the development of new
technologies.
In addition, many natural resource companies historically have been subject to
significant costs associated with compliance with environmental and other safety
regulations. Further, competition is intense for many natural resource
companies. As a result, many of these companies may be adversely affected in the
future and the value of the securities issued by such companies may be subject
to increased share price volatility. Such companies may also be subject to
irregular fluctuations in earnings due to changes in the availability of money,
the level of interest rates, and other factors.
The value of securities of natural resource companies will fluctuate in response
to market conditions for the particular natural resources with which the issuers
are involved. The price of natural resources will fluctuate due to changes in
worldwide levels of inventory, and changes, perceived or actual, in production
and consumption. With respect to precious metals, such price fluctuations may be
substantial over short periods of time. In addition, the value of natural
resources may fluctuate directly with respect to various stages of the
inflationary cycle and perceived inflationary trends and are subject to numerous
factors, including national and international politics.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
Prospectus Page 11
<PAGE>
AIM GLOBAL RESOURCES FUND
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Portfolio's interest and dividends from foreign issuers may be
subject to non-U.S. withholding taxes, thereby reducing the Portfolio's net
investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political or social instability, or diplomatic
developments which could affect the Portfolio's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Portfolio may invest in issuers domiciled in "emerging markets." Investing
in emerging market countries involves risks in addition to those risks involved
in foreign investing. Many emerging market countries have experienced high rates
of inflation for many years. In addition, emerging markets generally are
dependent heavily upon international trade and, accordingly, have been and
continue to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. The securities markets of
emerging market countries are substantially smaller, less developed, less liquid
and more volatile than the securities markets of the developed countries. In
addition, issuers in emerging markets typically are subject to a greater degree
of change in earnings and business prospects than issuers in developed
countries.
The Portfolio will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Portfolio and gains and losses realized by the Portfolio.
LOWER QUALITY DEBT SECURITIES. The Portfolio may invest up to 20%, of its total
assets in below investment grade debt securities, that is, rated below BBB by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa
by Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Portfolio will not invest in debt securities
that are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
Prospectus Page 12
<PAGE>
AIM GLOBAL RESOURCES FUND
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Portfolio. If an issuer exercises these provisions in a
declining interest rate market, the Portfolio may have to replace the security
with a lower yielding security, resulting in a decreased return for investors.
In addition, the Portfolio may have difficulty disposing of lower quality
securities because they may have a thin trading market. There may be no
established retail secondary market for many of these securities, and the
Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market also may have an adverse impact on market prices of such instruments and
may make it more difficult for the Portfolio to obtain accurate market
quotations for purposes of valuing its investments. The Portfolio may also
acquire lower quality debt securities during an initial underwriting or which
are sold without registration under applicable securities laws. Such securities
involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Portfolio may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Portfolio may also incur additional expenses to the
extent it is required to seek recovery upon a default in the payment of
principal or interest on portfolio holdings, and the Portfolio may have limited
legal recourse in the event of a default.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Portfolio to
achieve capital appreciation substantially exceeding the appreciation the
Portfolio would realize if they did not make such investments. However, in order
to attempt to limit investment risk, the Portfolio will invest no more than 5%
of its total assets in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Portfolio is
authorized to enter into options, futures and forward currency transactions, the
Portfolio might not enter into any such transactions. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the
Prospectus Page 13
<PAGE>
AIM GLOBAL RESOURCES FUND
Portfolio to sell a security at a disadvantageous time, due to the need for the
Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
INVESTING IN SMALLER COMPANIES. While the Portfolio's holdings normally will
include securities of established suppliers of traditional products and
services, the Portfolio may invest in smaller companies which can benefit from
the development of new products and services. These smaller companies may
present greater opportunities for capital appreciation, but may also involve
greater risks than large, established issuers. Such smaller companies may have
limited product lines, markets or financial resources, and their securities may
trade less frequently and in more limited volume than the securities of larger,
more established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
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MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees and the Board of Trustees of the Portfolio have
overall responsibility for the operation of the Fund and the Portfolio,
respectively. The Boards have approved all significant agreements between the
Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administrative services agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-adviser,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and the transfer agency agreement. The day-to-day
operations of the Fund and the Portfolio are delegated to the officers of the
Trust and the Portfolio, subject always to the investment objective and policies
of the Fund and the Portfolio and to the general supervision of the Boards. See
"Trustees and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the investment managers to the Fund and the Portfolio include,
but are not limited to, determining the composition of the investment portfolio
of the Portfolio and placing orders to buy, sell or hold particular securities.
In addition, AIM and the Sub-adviser provide the following administration
services to the Portfolio and the Fund: furnishing corporate officers and
clerical staff; providing office space, services and equipment; and supervising
all matters relating to the Portfolio's and the Fund's operation.
For administration services, the Fund pays AIM administration fees computed
daily and payable monthly at the annualized rate of 0.25% of the Fund's average
daily net assets. AIM has appointed the Sub-adviser as the Fund's
sub-administrator. In addition, the Fund bears its pro rata portion of the
investment management and administration fees paid by its corresponding
Portfolio to AIM and the Sub-adviser. The Portfolio pays AIM a fee, based on the
Portfolio's average daily net assets at the annualized rate of .725% on the
first $500 million, .70% on the next $500 million, .675% on the next $500
million and .65% on all amounts thereafter. Out of its aggregate fees payable by
the Fund and the Portfolio, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund and the Portfolio. The investment management and administration fees paid
by the Fund and the Portfolio are higher than those paid by most mutual funds.
The Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM Distributors
or other agents. AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 1.50% of the average daily net assets of the Fund's Advisor Class
shares.
The Sub-adviser also serves as the Fund's and the Portfolio's pricing and
accounting agent. For these services the Sub-adviser receives a fee consisting
of 0.03% of the first $5 billion of assets, and 0.02% of the assets in excess of
$5 billion, of the AIM Funds that are sub-advised by the Sub-adviser (other than
AIM Eastern Europe Fund). Each of these funds, including the Fund and the
Prospectus Page 14
<PAGE>
AIM GLOBAL RESOURCES FUND
Portfolio, pays an amount based upon its relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administrative services agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Portfolio pursuant to
an investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Portfolio, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Portfolio is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio Manager since Head of the Theme Funds for the Sub-adviser since 1997. Portfolio
San Francisco Portfolio inception in Manager for the Sub-adviser since 1994. Analyst for the Sub-adviser
1994 from 1992 to 1994.
</TABLE>
------------------------
In placing orders for the Portfolio's securities transactions, the Sub-adviser
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Sub-adviser may consider a broker/dealer's sale of
shares of the AIM Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Funds will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
the Advisor Class shares of the Fund. Certain Trustees and officers of the Trust
are affiliated with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
Prospectus Page 15
<PAGE>
AIM GLOBAL RESOURCES FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Company acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive rights. Other than the automatic
conversion of Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Company's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund when issued are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Global Investment Portfolio, a Delaware business trust. Under Delaware law, the
Fund and other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However, the
Agreement and Declaration of Trust of Global Investment Portfolio disclaims
shareholder liability for acts or obligations of the Portfolio and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Portfolio or a trustee. The Agreement and
Declaration of Trust also provides for indemnification from the Portfolio
property for all losses and expenses of any shareholder held personally liable
for the Portfolio's obligations. Thus the risk of an investor incurring
financial loss on account of such liability is limited to circumstances in which
the Portfolio itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the Fund and
to the Portfolio.
Prospectus Page 16
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
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AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
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AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
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AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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<PAGE>
AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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AIM INVESTOR'S GUIDE
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
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<PAGE>
AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
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AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM GLOBAL RESOURCES FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM GLOBAL TELECOMMUNICATIONS FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Global Telecommunications Fund
(the "Fund"), which is one of several series investment portfolios comprising
AIM Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a diversified portfolio which seeks long-term growth of
capital by investing primarily in equity securities of companies throughout the
world engaged in the development, manufacture or sale of telecommunications
services or equipment.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 5
Investment Objective and Policies......................................................... 6
Risk Factors.............................................................................. 9
Management................................................................................ 12
Other Information......................................................................... 13
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a diversified series of the Trust.
Investment Objective: The Fund seeks long-term growth of capital.
Principal Investments: The Fund invests primarily in equity securities of companies throughout the world engaged in the
development, manufacture or sale of telecommunications services or equipment.
Investment Managers: The Portfolio is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at least
1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment discretion over such
account, and (ii) the account holder pays such person as compensation for its advice and other
services an annual fee of at least 0.50% on the assets in the account; (c) any account with assets of
at least $10,000 if (i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the assets in the account;
(d) accounts
</TABLE>
Prospectus Page 2
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
advised by the Sub-adviser or one of the companies formerly affiliated with the Asset Management
Division of Liechtenstein Global Trust AG, provided such accounts were invested in Advisor Class
shares of any of the funds in The AIM Family of Funds that are sub-advised by the Sub-adviser ("AIM
Funds") on May 29, 1998; (e) any of the companies composing or affiliated with AMVESCAP PLC; and (f)
AIM Global Trends Fund. Pursuant to a separate prospectus, the Fund also offers Class A and Class B
shares, which represent interests in the Fund. The Class A and Class B shares have different
distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments must be
at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Advisor Class shares of the Fund may be exchanged for Advisor Class shares of certain
Funds in The AIM Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at the Fund's net
asset value on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund will achieve its investment objective. The Fund's net asset value
will fluctuate, reflecting fluctuations in the market value of its portfolio holdings. The Fund's
policy of concentrating its investments in companies in its particular industries may cause the
Fund's net asset value to fluctuate more than if it invested in a greater number of industries.
The Fund may invest in foreign securities. Investments in foreign securities involve risks relating
to political and economic developments abroad and the differences between the regulations to which
U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and
</TABLE>
Prospectus Page 3
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
currency risk associated with its present or planned investments. Such transactions involve certain
risks and transaction costs.
The Fund may invest up to 5% of its total assets in below investment grade debt securities.
Investments of this type are subject to a greater risk of loss of principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</TABLE>
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following table (1):
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price)................................... None
Sales charges on reinvested distributions to shareholders................................................ None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale,
whichever is less)...................................................................................... None
Redemption charges....................................................................................... None
Exchange fees............................................................................................ None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees............................................................ 0.94%
12b-1 distribution and service fees...................................................................... None
Other expenses (after reimbursements).................................................................... 0.40%
-----------
Total Fund Operating Expenses............................................................................ 1.34%
-----------
-----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares............... $14 $ 43 $ 74 $162
</TABLE>
- --------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997 restated
to reflect AIM's undertaking to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 1.50% of the average daily net assets of each Fund's Advisor
Class shares. "Other expenses" include custody, transfer agency, legal,
audit and other operating expenses. See "Management" herein and the
Statement of Additional Information for more information. Investors
purchasing Advisor Class shares through financial planners, trust companies,
bank trust departments or registered investment advisers, or under a "wrap
fee" program, will be subject to additional fees charged by such entities or
by the sponsors of such programs. Where any account advised by one of the
companies composing or affiliated with AMVESCAP PLC invests in Advisor Class
shares of a Fund, such account shall not be subject to duplicative advisory
fees.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the Hypothetical Example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM GLOBAL TELECOMMUNICATIONS FUND
(FORMERLY GT GLOBAL TELECOMMUNICATIONS FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 5
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term growth of capital. It seeks its
objective by investing primarily in equity securities of companies throughout
the world engaged in the development, manufacture or sale of telecommunications
services or equipment. There can be no assurance that the Fund will achieve its
investment objective.
At least 65% of the Fund's total assets normally will be invested in common and
preferred stocks and warrants to acquire such securities issued by
telecommunications companies. A "telecommunications" company is an entity in
which (i) at least 50% of either its revenues or earnings was derived from
telecommunications activities, or (ii) at least 50% of its assets was devoted to
telecommunications activities, based on the company's most recent fiscal year.
The remainder of the assets of the Fund may be invested in debt securities
issued by telecommunications companies and/or equity and debt securities of
companies outside of the telecommunications industry which, in the opinion of
the Sub-adviser, stand to benefit from developments in the telecommunications
industries.
GLOBAL TELECOMMUNICATIONS INDUSTRIES INVESTMENT. Telecommunications companies
cover a variety of sectors, ranging from companies concentrating on established
technologies to those primarily engaged in emerging or developing technologies.
The characteristics of companies focusing on the same technology will vary among
countries depending upon the extent to which the technology is established in
the particular country. The Sub-adviser will allocate the Fund's investments
among these sectors depending upon its assessment of their relative long-term
growth potential.
Examples of telecommunications companies include those engaged in designing,
developing or providing the following products and services: communications
equipment and services (including equipment and services for both data and voice
transmission); electronic components and equipment; broadcasting (including
television and radio, satellite, microwave and cable television and
narrowcasting); computer equipment, mobile communications and cellular
radio/paging; electronic mail; local and wide area networking and linkage of
word and data processing systems; publishing and information systems; videotext
and teletext; and emerging technologies combining telephone, television and/or
computer systems.
The Sub-adviser believes that there are opportunities for continued growth in
demand for components, products, media and systems to collect, store, retrieve,
transmit, process, distribute, record, reproduce and use information. The
pervasive societal impact of communications and information technologies has
been accelerated by the lower costs and higher efficiencies that result from the
blending of computers with telecommunications systems. Accordingly, companies
engaged in the production of methods for using electronic and, potentially,
video technology to communicate information are expected to be important in the
Fund's portfolio. Older technologies, such as photography and print also may be
represented, however.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. The Fund expects that, from time
to time, a significant portion of its assets may be invested in the securities
of domestic issuers. The industry represented in the Fund, however, is a global
industry with significant, growing markets outside of the United States. A
sizeable proportion of the companies which comprise the telecommunications
industry are headquartered outside of the United States.
For these reasons, the Sub-adviser believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential for return
from an investment by the Fund. The Sub-adviser uses its financial expertise in
markets located throughout the world and the substantial global resources of
AMVESCAP PLC in attempting to identify those countries and companies then
providing the greatest potential for long-term capital appreciation. In this
fashion, the Sub-adviser seeks to enable shareholders to capitalize on the
substantial investment opportunities and the potential for long-term growth of
capital presented by the global industry represented in the Fund.
Prospectus Page 6
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
The Sub-adviser allocates the Fund's assets among securities of countries and in
currency denominations where opportunities for meeting the Fund's investment
objective are expected to be the most attractive. The Fund may invest
substantially in securities denominated in one or more currencies. Under normal
conditions, the Fund invests in the securities of issuers located in at least
three countries, including the United States; investments in securities of
issuers in any one country, other than the United States, will represent no more
than 40% of the Fund's total assets.
In analyzing specific companies for possible investment, the Sub-adviser
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics that will
enable the companies to compete successfully in their respective markets.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, the Fund may invest up to 100%
of its total assets in cash (U.S. dollars, foreign currencies or multinational
currency units such as Euros) and/or high quality debt securities or money
market instruments of U.S. or foreign issuers. In addition, for temporary
defensive purposes, most or all of the Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Fund adopts a
temporary defensive posture, it will not be invested so as to achieve directly
its investment objective. In addition, pending investment of proceeds from new
sales of Fund shares or to meet its ordinary daily cash needs, the Fund may hold
cash (U.S. dollars, foreign currencies or multinational currency units) and may
invest in foreign or domestic high quality money market instruments. For a full
description of money market instruments, see "Money Market Instruments" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain foreign countries, the ability of foreign entities
such as the Fund to participate in privatizations may be limited by local law,
or the terms on which the Fund may be permitted to participate may be less
advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Fund may invest up to 10% of its
total assets in other investment companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). As a shareholder in an investment company, the Fund would
bear its ratable share of that investment company's expenses, including its
advisory and administration fees. At the same time, the Fund would continue to
pay its own management fees and other expenses. AIM and the Sub-adviser will
waive their advisory fees to the extent that the Fund invests in an Affiliated
Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemptions of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
Prospectus Page 7
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. The Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. While a loan is outstanding, the borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to at least the value of the
borrowed securities, plus any accrued interest or such other collateral as
permitted by the Fund's investment program and regulatory agencies, and as
approved by the Board. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, the Fund will
segregate cash or liquid securities equal to the value of the when-issued or
forward commitment securities with its custodian and will mark to market daily
such assets. There is a risk that the securities may not be delivered and that
the Fund may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the portfolio. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Fund may enter into such
instruments up to the full value of its portfolio assets. See "Risk Factors --
Options, Futures and Forward Currency Transactions" herein and "Options, Futures
and Currency Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on such futures
contracts to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-adviser intends to include in the
Fund's portfolio. The Fund also may purchase and sell put and call options on
stock indexes to hedge against overall fluctuations in the securities markets
generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
affect adversely the Fund's holdings. The Fund also may purchase stock index
futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The Fund
may use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
Prospectus Page 8
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by the Trust's
Board of Trustees without shareholder approval. The Fund's policies regarding
concentration and lending, and the percentage of the Fund's assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securties
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate reflecting fluctuations in
the market value of the Fund's positions. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure, and entitle holders to an interest in the assets of an issuer, if
any, remaining after all more senior claims have been satisfied. The value of
equity securities held by the Fund will fluctuate in response to general market
and economic developments, as well as developments affecting the particular
issuers of such securities. In addition, the value of debt securities held by
the Fund generally will fluctuate with changes in the perceived creditworthiness
of the issuers of such securities and interest rates.
Because the Fund focuses its investments on particular industries, an investment
in the Fund may be more volatile than that of other investment companies that do
not concentrate their investments in such a manner. Moreover, the value of the
shares of the Fund will be especially susceptible to factors affecting the
industries in which it focuses. Accordingly, the Fund should not be considered a
complete investment program.
TELECOMMUNICATIONS INDUSTRIES. Telecommunications industries may be subject to
greater governmental regulation than many other industries and changes in
governmental policy and the need for regulatory approvals may have a material
effect on the products and services offered by companies in the
telecommunications industries. Telephone operating companies in the United
States, for example, are subject to both federal and state regulation affecting
permitted rates of return and the kinds of services that may be offered. Certain
types of companies in the telecommunications industries are engaged in fierce
competition for market share that could result in increased share price
volatility.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs
Prospectus Page 9
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
attributable to foreign investing, such as custody charges, are higher than
those attributable to domestic investing. Securities of some foreign companies
are less liquid and their prices may be more volatile than securities of
comparable domestic companies. The Fund's interest and dividends from foreign
issuers may be subject to non-U.S. withholding taxes, thereby reducing the
Fund's net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic
developments which could affect the Fund's investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
The Fund may invest in issuers domiciled in "emerging markets." Investing in
emerging market countries involves risks in addition to those risks involved in
foreign investing. Many emerging market countries have experienced high rates of
inflation for many years. In addition, emerging markets generally are dependent
heavily upon international trade and, accordingly, have been and continue to be
affected adversely by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. The securities markets of emerging
market countries are substantially smaller, less developed, less liquid and more
volatile than the securities markets of the developed countries. In addition,
issuers in emerging markets typically are subject to a greater degree of change
in earnings and business prospects than issuers in developed countries.
The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund.
LOWER QUALITY DEBT SECURITIES. The Fund may invest up to 5% of its total assets
in below investment grade debt securities, that is, rated below BBB by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa by
Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of
equivalent quality in the judgment of the Sub-adviser. Such investments involve
a high degree of risk. However, the Fund will not invest in debt securities that
are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest rated debt that is not in default as to
principal or interest, and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than securities with higher ratings with regard to a deterioration of
general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained
Prospectus Page 10
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
period of rising interest rates, highly leveraged issuers of lower quality
securities may experience financial stress. During such periods, such issuers
may not have sufficient revenues to meet their interest payment obligations. The
issuer's ability to service its debt obligations may also be adversely affected
by specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Fund. If an issuer exercises these provisions in a declining
interest rate market, the Fund may have to replace the security with a lower
yielding security, resulting in a decreased return for investors. In addition,
the Fund may have difficulty disposing of lower quality securities because they
may have a thin trading market. There may be no established retail secondary
market for many of these securities, and the Fund anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market also may have an adverse impact
on market prices of such instruments and may make it more difficult for the Fund
to obtain accurate market quotations for purposes of valuing the Fund's
portfolio investments. The Fund may also acquire lower quality debt securities
during an initial underwriting or which are sold without registration under
applicable securities laws. Such securities involve special considerations and
risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Fund may also incur additional expenses to the extent it
is required to seek recovery upon a default in the payment of principal or
interest on portfolio holdings, and the Fund may have limited legal recourse in
the event of a default.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." The Sub-adviser believes that carefully selected investments in
joint ventures, cooperatives, partnerships and state enterprises which are
illiquid (collectively, "Special Situations") could enable the Fund to achieve
capital appreciation substantially exceeding the appreciation the Fund would
realize if it did not make such investments. However, in order to attempt to
limit investment risk, the Fund will invest no more than 5% of its total assets
in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; (4) lack of assurance
that a liquid secondary market will exist for any particular option, futures
contract or option thereon at any particular time; (5) the possible loss of
principal under certain conditions; and (6) the possible inability of the Fund
to purchase or sell a portfolio security at a time when it would otherwise be
favorable for it to do so, or the possible need for the Fund to sell a security
at a disadvantageous time, due to the need for the Fund to maintain "cover" or
to set aside securities in connection with hedging transactions.
INVESTING IN SMALLER COMPANIES. While the Fund's portfolio normally will include
securities of established suppliers of traditional products and
Prospectus Page 11
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
services, the Fund may invest in smaller companies which can benefit from the
development of new products and services. These smaller companies may present
greater opportunities for capital appreciation, but may also involve greater
risks than large, established issuers. Such smaller companies may have limited
product lines, markets or financial resources, and their securities may trade
less frequently and in more limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such smaller
companies may fluctuate to a greater degree than the prices of the securities of
other issuers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust and persons or companies furnishing services to the Fund on
the other, including the investment management and administration agreement with
AIM, the investment sub-advisory and sub-administration agreement between AIM
and the Sub-adviser, the agreements with AIM Distributors regarding distribution
of the Fund's shares, the custody agreement and the transfer agency agreement.
The day-to-day operations of the Fund are delegated to the officers of the
Trust, subject always to the investment objective and policies of the Fund and
to the general supervision of the Trust's Board of Trustees. See "Trustees and
Executive Officers" in the Statement of Additional Information for information
on the Trust's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers include, but are not limited to,
determining the composition of the investment portfolio of the Fund and placing
orders to buy, sell or hold particular securities. In addition, AIM and the
Sub-adviser provide the following administration services to the Fund:
furnishing corporate officers and clerical staff; providing office space,
services and equipment; and supervising all matters relating to the Fund's
operation.
For investment management and administration services provided to the Fund, the
Fund pays AIM a fee computed daily and paid monthly based on the Fund's average
daily net assets at the annualized rate of .975% on the first $500 million, .95%
on the next $500 million, .925% on the next $500 million and .90% on amounts
thereafter. Out of the aggregate fees payable by the Fund, AIM pays the
Sub-adviser sub-advisory and sub-administration fees equal to 40% of the
aggregate fees AIM receives from the Fund.
The Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM Distributors
or other agents. AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 1.50% of the average daily net assets of the Fund's Advisor Class
shares.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administrative services agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-adviser, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
Prospectus Page 12
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Michael Mahoney Portfolio Manager since Portfolio Manager for the Sub-adviser since 1993. Investment Analyst
San Francisco 1993 for the Sub-adviser from 1991 to 1993.
</TABLE>
------------------------
In placing orders for the Fund's securities transactions, the Sub-adviser seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-adviser may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions may be executed through affiliates of
AIM or the Sub-adviser. High portfolio turnover (over 100%) involves
correspondingly greater brokerage commissions and other transaction costs that
the Funds will bear directly and could result in the realization of net capital
gains which would be taxable when distributed to shareholders. See "Dividends,
Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
the Advisor Class shares of the Fund. Certain Trustees and officers of the Trust
are affiliated with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Company. From time to time, the Company has established and may continue
to establish other funds, each corresponding to a distinct investment portfolio
and a distinct series of the Trust's shares of beneficial interest. Shares of
each fund are entitled to one vote per share (with proportional voting for
fractional shares) and are freely transferable. Shareholders
Prospectus Page 13
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
have no preemptive rights. Other than the automatic conversion of Class B shares
to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges, except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 14
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
A-1
<PAGE>
AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
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<PAGE>
AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
A-3
<PAGE>
AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
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HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
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DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
A-11
<PAGE>
AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM GLOBAL TELECOMMUNICATIONS FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM LATIN AMERICAN GROWTH FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Latin American Growth Fund (The
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a non-diversified portfolio which seeks capital
appreciation by investing primarily in equity and debt securities of a broad
range of Latin American issuers.
The Fund is designed for long term investors and not as a trading vehicle. The
Fund does not represent a complete investment program, nor is it suitable for
all investors. The Fund may invest significantly in lower quality and unrated
foreign government bonds whose credit quality is generally considered the
equivalent of U.S. corporate debt securities commonly known as "junk bonds."
Investments of this type are subject to a greater risk of loss of principal and
interest. An investment in the Fund should be considered speculative and subject
to special risk factors, related primarily to the Fund's investments in Latin
America. Purchasers should carefully assess the risks associated with an
investment in the Fund.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information dated
September 8, 1998 has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 3
Financial Highlights...................................................................... 5
Investment Objectives and Policies........................................................ 6
Risk Factors.............................................................................. 9
Management................................................................................ 13
Other Information......................................................................... 14
</TABLE>
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of the Trust.
Investment Objective: The Fund seeks capital appreciation.
Principal Investment: The Fund normally invests at least 65% of its total assets in equity and debt securities issued by
Latin American companies and governments.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment man-
agement group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at least
1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment discretion over such
account, and (ii) the account holder pays such person as compensation for its advice and other
services an annual fee of at least 0.50% on the assets in the account; (c) any account with assets of
a least $10,000 if (i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the assets in the account;
(d) accounts advised by the Sub-adviser or one of the companies formerly affiliated with the Asset
Management Division of Liechtenstein Global Trust AG, provided such accounts were invested in Advisor
Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and (e) any of the
companies affiliated with AMVESCAP PLC.
</TABLE>
Prospectus Page 2
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Pursuant to a separate prospectus, the Fund also offers Class A and Class B shares, which represent
interests in the Fund. The Class A and Class B shares have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments must be
at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Advisor Class shares of the Fund may be exchanged for Advisor Class shares of certain
funds in The AIM Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at net asset value
on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on an annual
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund will achieve its investment objective. The Fund's net asset
values will fluctuate, reflecting fluctuations in the market value of the portfolio holdings.
The Fund will invest primarily in foreign securities. Investments in foreign securities involve risks
relating to political and economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
There is no limitation on the percentage of the Fund's total assets that may be invested in below
investment grade debt securities. Investments of this type are subject to a greater risk of loss of
principal and interest.
See "Investment Objective and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 3
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following table (1):
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price)...................................... None
Sales charges on reinvested distributions to shareholders................................................... None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is less).... None
Redemption charges.......................................................................................... None
Exchange fees:
-- On first four exchanges each year...................................................................... None
-- On each additional exchange............................................................................ $7.50
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees............................................................... 0.98%
12b-1 distribution and service fees......................................................................... None
Other expenses (after reimbursements)....................................................................... 0.52%
-----------
Total Fund Operating Expenses............................................................................... 1.50%
-----------
-----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares..................................................................... $15 $ 48 $ 82 $180
</TABLE>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) EXPENSES ARE BASED ON THE FUND'S FISCAL YEAR ENDED OCTOBER 31, 1997 RESTATED
TO REFLECT AIM'S UNDERTAKING TO LIMIT THE FUND'S EXPENSES (EXCLUSIVE OF
BROKERAGE COMMISSIONS, TAXES, INTEREST AND EXTRAORDINARY EXPENSES) TO THE
ANNUAL RATE OF 1.50% OF THE AVERAGE DAILY NET ASSETS OF THE FUND'S ADVISOR
CLASS SHARES. "OTHER EXPENSES" INCLUDE CUSTODY, TRANSFER AGENT, LEGAL, AUDIT
AND OTHER OPERATING EXPENSES. WITHOUT REIMBURSEMENTS, "OTHER EXPENSES" AND
"TOTAL FUND OPERATING EXPENSES" WOULD HAVE BEEN 0.58% AND 1.56%,
RESPECTIVELY, FOR ADVISOR CLASS SHARES OF THE FUND. SEE "MANAGEMENT" HEREIN
AND THE STATEMENT OF ADDITIONAL INFORMATION FOR MORE INFORMATION. INVESTORS
PURCHASING ADVISOR CLASS SHARES THROUGH FINANCIAL PLANNERS, TRUST COMPANIES,
BANK TRUST DEPARTMENTS OR REGISTERED INVESTMENT ADVISERS, OR UNDER A "WRAP
FEE" PROGRAM, WILL BE SUBJECT TO ADDITIONAL FEES CHARGED BY SUCH ENTITIES OR
BY THE SPONSORS OF SUCH PROGRAMS. WHERE ANY ACCOUNT ADVISED BY ONE OF THE
COMPANIES AFFILIATED WITH AMVESCAP PLC INVESTS IN ADVISOR CLASS SHARES OF
THE FUND, SUCH ACCOUNT SHALL NOT BE SUBJECT TO DUPLICATIVE ADVISORY FEES.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
The table and the assumption in the Hypothetical Example of a 5% annual
return are required by regulation of the SEC applicable to all mutual funds.
The 5% annual return is not a prediction of and does not represent the
Fund's projected or actual performance.
Prospectus Page 4
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information.
AIM LATIN AMERICAN GROWTH FUND
(FORMERLY GT GLOBAL LATIN AMERICA GROWTH FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
Prospectus Page 5
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is capital appreciation. The Fund normally
invests at least 65% of its total assets in the securities of a broad range of
Latin American issuers. The Fund may invest in common stock, preferred stock,
rights, warrants and securities convertible into common stock, and other
substantially similar forms of equity securities with comparable risk
characteristics, as well as bonds, notes, debentures or other forms of
indebtedness that may be developed in the future. Normally, the Fund will invest
a majority of its assets in equity securities. The Fund may also invest up to
35% of its total assets in a combination of equity and debt securities of U.S.
issuers. There can be no assurance that the Fund will meet its investment
objective.
For purposes of this Prospectus, unless otherwise indicated, the Fund defines
Latin America to include the following countries: Argentina, the Bahamas,
Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican
Republic, Ecuador, El Salvador, French Guiana, Guatemala, Guyana, Haiti,
Honduras, Jamaica, Mexico, the Netherlands Antilles, Nicaragua, Panama,
Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela. Under
current market conditions, the Fund expects to invest primarily in securities
issued by companies and governments in Mexico, Chile, Brazil and Argentina. The
Fund may invest more than 25% of its total assets in any of these four countries
but does not expect to invest more than 60% of its total assets in any one
country.
The Fund defines securities of Latin American issuers to include: (a) securities
of companies organized under the laws of, or having a principal office located
in, a Latin American country; (b) securities of companies that derive 50% or
more of their total revenues from business in Latin America, provided that, in
the Sub-adviser's view, the value of such issuers' securities reflect Latin
American developments to a greater extent than developments elsewhere; (c)
securities issued or guaranteed by the government of a country in Latin America,
its agencies or instrumentalities, or municipalities, or the central bank of
such country; (d) U.S. dollar-denominated securities or securities denominated
in a Latin American currency issued by companies to finance operations in Latin
America; and (e) securities of Latin American issuers, as defined herein, in the
form of depositary shares. For purposes of the foregoing definition, the Fund's
purchases of securities issued by companies outside of Latin America to finance
their Latin American operations will be limited to securities the performance of
which is materially related to such company's Latin American activities.
In allocating investments among the various Latin American countries, the
Sub-adviser looks principally at the stage of industrialization, potential for
productivity gains through economic deregulation, the impact of financial
liberalization and monetary conditions and the political outlook in each
country. In allocating assets between equity and debt securities, the
Sub-adviser will consider, among other factors: the level and anticipated
direction of interest rates; expected rates of economic growth and corporate
profits growth; changes in Latin American government policy including regulation
governing industry, trade, financial markets, and foreign and domestic
investment; substance and likely development of government finances; and the
condition of the balance of payments and changes in the terms of trade. In
evaluating investments in securities of U.S. issuers, the Sub-adviser will
consider, among other factors, the issuer's Latin American business activities
and the impact that development in Latin America may have on the issuer's
operations and financial condition.
Certain sectors of the economies of certain Latin American countries are closed
to equity investments by foreigners. Further, due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities in certain Latin American countries, the Fund may
be able to invest in such countries solely or primarily through governmentally
approved investment vehicles or companies. In addition, the portion of the
Fund's assets invested directly in Chile may be less than the portion invested
in other Latin American countries because, at present, capital directly invested
in Chile normally cannot be repatriated for at least one year. As a result, the
Fund currently intends to limit
Prospectus Page 6
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
most of its Chilean investments to indirect investments through American
Depositary Receipts ("ADRs") and established Chilean investment companies, the
shares of which are not subject to repatriation restrictions.
INVESTMENTS IN DEBT SECURITIES. Under normal circumstances, the Fund may invest
up to 50% of its total assets in debt securities. There is no limitation on the
percentage of its assets that may be invested in debt securities that are rated
below investment grade. Investment in below investment grade debt securities
involves a high degree of risk and can be speculative. These debt securities are
the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Most debt securities in which the Fund will invest are not rated; if rated, it
is expected that such ratings would be below investment grade. However, the Fund
will not invest in debt securities that are in default in payment as to
principal or interest. See "Risk Factors -- Risks Associated with Debt
Securities."
The Fund may invest in "Brady Bonds," which are debt restructurings that provide
for the exchange of cash and loans for newly issued bonds. Brady Bonds have been
issued by the countries of Albania, Argentina, Brazil, Bulgaria, Costa Rica,
Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Panama, Peru,
Philippines, Poland, Uruguay, Venezuela and Vietnam, and are expected to be
issued by other emerging market countries. As of the date of this Prospectus,
the Fund is not aware of the occurrence of any payment defaults on Brady Bonds.
Investors should recognize, however, that Brady Bonds do not have a long payment
history. In addition, Brady Bonds are often rated below investment grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time of issuance and is adjusted at
regular intervals thereafter.
Capital appreciation in debt securities may arise as a result of a favorable
change in relative foreign exchange rates, in relative interest rate levels and/
or in the creditworthiness of issuers. The receipt of income from debt
securities owned by the Fund is incidental to its objective of capital
appreciation.
TEMPORARY DEFENSIVE STRATEGIES. The Fund may invest up to 100% of its assets in
cash (U.S. dollars, foreign currencies, multinational units such as Euros)
and/or high quality debt securities or money market instruments to generate
income to defray its expenses, for temporary defensive purposes and pending
investment in accordance with its investment objective and policies. In
addition, the Fund may be primarily invested in U.S. securities for temporary
defensive purposes or pending investment of the proceeds of sales of new Fund
shares. The Fund may assume a temporary defensive position when, due to
political, market or other factors broadly affecting Latin American markets, the
Sub-adviser determines that opportunities for capital appreciation in those
markets would be significantly limited over an extended period or that investing
in those markets presents undue risk of loss. For a full description of money
market instruments, see "Temporary Defensive Strategies" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
ADDITIONAL INVESTMENT POLICIES
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Fund may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies, some of which may be investment
vehicles or companies that are advised by the Sub-adviser or its affiliates
("Affiliated Funds"). Pursuant to the Investment Company Act of 1940 (the "1940
Act"), the Fund generally may invest up to 10% of its total assets in the
aggregate in shares of other investment companies and up to 5% of its total
assets in any one investment company, as long as each investment does not
represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities and
is subject to limitations under the 1940 Act and market availability. The Fund
does not intend to invest in such investment companies unless, in the judgment
of the Sub-adviser, the potential benefits of such investment justify the
payment of any applicable premium or sales charge. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time the
Prospectus Page 7
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
Fund would continue to pay its own management fees and other expenses. AIM and
the Sub-adviser will waive their advisory fees to the extent that the Fund
invests in an Affiliated Fund.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows a Fund to retain
ownership of the securities loaned and, at the same time, enhances the Fund's
total return. At all times a loan is outstanding, the Fund's borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S.
government securities or certain irrevocable letters of credit equal to the
value of the borrowed securities plus any accrued interest or such other
collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. The risks in lending portfolio securities, as
with other extensions of secured credit, consist of possible delays in receiving
additional collateral or in recovery of the loaned securities and possible loss
of rights in the collateral should the borrower fail financially.
PRIVATIZATIONS. The governments in some Latin American countries have been
engaged in programs of selling part or all of their stakes in government owned
or controlled enterprises ("privatizations"). The Sub-adviser believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain Latin American countries, the ability of foreign
entities such as the Fund to participate in privatizations may be limited by
local law, or the terms on which the Fund may be permitted to participate may be
less advantageous than those afforded local investors. There can be no assurance
that Latin American governments and governments in emerging markets will
continue to sell companies currently owned or controlled by them or that
privatization programs will be successful.
BORROWING. It is a fundamental policy of the Fund that it may borrow an amount
up to 33 1/3% of its total assets in order to meet redemption requests.
Borrowing may cause greater fluctuation in the value of the Fund's shares than
would be the case if the Fund did not borrow, but also may enable the Fund to
retain favorable securities positions rather than liquidating such positions to
meet redemptions. It is a nonfundamental policy of the Fund, that the Fund will
not purchase securities during times when outstanding borrowings represent 5% or
more of each Fund's total assets.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities and forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery to the Fund. If the Fund
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Fund enters into a transaction on a
when-issued or forward commitment basis, the Fund will segregate cash or liquid
securities equal to the value of the when-issued or forward commitment
securities with its custodian bank and will mark to market daily such assets.
There is a risk that the securities may not be delivered and that the Fund may
incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment risk normally associated with the
portfolio. These instruments are often referred to as "derivatives," which may
be defined as financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security, currency or an
index of securities). The Fund may enter into such instruments up to the full
value of its portfolio assets. See "Risk Factors -- Options, Futures and Foreign
Currency Transactions" herein and "Options, Futures and Currency Strategies" in
the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the
Prospectus Page 8
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
U.S. dollar or may involve two foreign currencies. The Fund may enter into
forward currency contracts either with respect to specific transactions or with
respect to its portfolio positions. The Fund also may purchase and sell put and
call options on currencies, futures contracts on currencies and options on such
futures contracts to hedge against movements in exchange rates.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most Latin American markets, to
securities denominated in such currencies or to securities of issuers domiciled
or principally engaged in business in such emerging markets. To the extent that
such a market does not exist, the Sub-adviser may not be able to effectively
hedge its investment in such markets.
The Fund may purchase and sell put and call options on securities to hedge
against the risk of fluctuations in the prices of securities held by the Fund or
that the Sub-adviser intends to include in the Fund's portfolio. The Fund also
may purchase and sell put and call options on indices to hedge against overall
fluctuations in the securities markets generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
adversely affect the Fund's portfolio. The Fund also may purchase stock index
futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The Fund
may use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolios against changes in the general level of interest
rates.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations as
fundamental policies which also may not be changed without shareholder approval.
A complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information may be changed by the Trust's Board of Trustees without shareholder
approval. If a percentage restriction on investment or utilization of assets in
an investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
The Fund is authorized to engage in Short Sales, although it currently has no
intention of doing so, and may purchase American Depository Receipts, American
Depository Shares, Global Depository Receipts and European Depository Receipts.
See "Short Sales" and "Depository Receipts," respectively, in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objective. Investing in the Fund entails a substantial degree of risk and an
investment in the Fund should be considered speculative. Investors are strongly
advised to consider carefully the special risks involved in Latin America, which
are in addition to the usual risks of investing in developed markets around the
world.
The Fund's net asset value will fluctuate, reflecting fluctuations in the market
value of its portfolio positions and its net currency exposure. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. The value of equity securities held by the Fund will
Prospectus Page 9
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities.
The Fund is classified under the 1940 Act as a "non-diversified" fund. As a
result, the Fund will be able to invest in a fewer number of issuers than if it
were classified under the 1940 Act as a "diversified" fund. To the extent that
the Fund invests in a smaller number of issuers, the value of its shares may
fluctuate more widely and it may be subject to greater investment and credit
risk with respect to its portfolio.
Investing in securities of Latin American issuers involves risks relating to
potential political and economic instability of certain Latin American countries
and the risks of expropriation, nationalization, confiscation of assets and
property or the imposition of restrictions on foreign investment and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation, the Fund could lose its entire investment
in any such country.
The securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the United States. Disclosure and regulatory standards are in many respects
less stringent than U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited.
The limited size of many Latin American securities markets and limited trading
volume in issuers compared to volume of trading in U.S. securities could cause
prices to be erratic for reasons apart from factors that affect the quality of
the securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets.
Further, there is a risk that an emergency situation may arise in one or more
Latin American markets as a result of which prices for portfolio securities in
such markets may not be readily available. Section 22(e) of the 1940 Act permits
a registered investment company, such as the Fund, to suspend redemption of its
shares for any period during which an emergency exists, as determined by the
SEC. Accordingly, when the Fund believes that circumstances dictate, it will
promptly apply to the SEC for a determination that such an emergency exists
within the meaning of Section 22(e) of the 1940 Act. During the period
commencing from the Fund's identification of such conditions until the date of
any SEC action, the Fund's portfolio securities in the affected markets will be
valued at fair value determined in good faith by or under the direction of the
Trust's Board of Trustees.
The economies of individual Latin American countries may differ favorably or
unfavorably from the U.S. economy in such respects as the rate of growth of
gross domestic product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. Most Latin American countries
have experienced substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates
have had and may continue to have very negative effects on the economies and
securities markets of certain Latin American countries. Furthermore, certain
Latin American countries may impose withholding taxes on dividends payable to
the Fund at a higher rate than those imposed by other foreign countries. This
may reduce the Fund's investment income available for distribution to
shareholders.
Companies in Latin America are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. There is substantially less publicly available
information about Latin American companies and the governments of Latin American
countries than there is about U.S. companies and the U.S. Government.
Certain Latin American countries are among the largest debtors to commercial
banks and foreign governments. At times certain Latin American countries have
declared moratoria on the payment of principal and/or interest on external debt.
The Fund may invest in debt securities, including Brady Bonds, issued as part of
debt restructurings and such debt is to be considered speculative. There is a
history of defaults with respect to commercial bank loans by public and private
entities issuing Brady Bonds.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Fund generally will vary inversely with market interest rates. If interest
rates in a market fall, the Fund's debt securities issued by governments or
companies in that market ordinarily will increase in value. If market interest
rates increase, however, the debt securities owned by the Fund in that market
will likely decrease in value.
Prospectus Page 10
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
The Fund may invest up to 50% of its total assets in debt securities of any
rating. Such investments involve a high degree of risk.
Debt rated Baa by Moody's Investors Service, Inc. ("Moody's") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), and
debt rated Ba, B, Caa, Ca or C by Moody's is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated C by Moody's or S&P is the lowest rated debt that is not
in default as to principal or interest and such issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing. Lower quality debt securities are also generally considered to be
subject to greater risk than securities with higher ratings with regard to a
deterioration of general economic conditions. These foreign debt securities are
the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. Similarly, certain Latin American governments that issue lower
quality debt securities are among the largest debtors to commercial banks,
foreign governments and supranational organizations such as the World Bank, and
may not be able or willing to make principal and/ or interest repayments as they
come due. The risk of loss due to default by the issuer is significantly greater
for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from the Fund. In
addition, the Fund may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and the Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing the Fund's portfolio. The Fund may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession.
The Fund may also incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and the Fund may have limited legal recourse in the event of a
default. Debt securities issued by governments in Latin American markets can
differ from debt obligations issued by private entities in that remedies from
defaults generally must be pursued in the courts of the defaulting government,
and legal recourse is therefore somewhat diminished. Political conditions, in
terms of a government's willingness to meet the terms of its debt obligations,
also are of considerable significance. There can be no assurance that the
Prospectus Page 11
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
holders of commercial bank debt may not contest payments to the holders of debt
securities issued by governments in Latin American markets in the event of
default by the governments under commercial bank loan agreements.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets in
securities for which no readily available market exists, so-called "Illiquid
Securities." The Fund may invest in joint ventures, cooperatives, partnerships
and state enterprises and other similar vehicles which are illiquid
(collectively, "Special Situations"). The Sub-adviser believes that carefully
selected investments in Special Situations could enable the Fund to achieve
capital appreciation substantially exceeding the appreciation the Fund would
realize if it did not make such investments. However, in order to limit
investment risk, the Fund will invest no more than 5% of its total assets in
Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid securities often sell at a price
lower than similar securities that are liquid.
CURRENCY RISK. Because the Fund may invest substantially in securities
denominated in currencies other than the U.S. dollar, and since the Fund may
hold foreign currencies, the Fund will be affected favorably or unfavorably by
exchange control regulations or changes in the exchange rates between such
currencies and the U.S. dollar. Changes in currency exchange rates will
influence the value of the Fund's shares, and also may affect the value of
dividends and interest earned by the Fund and gains and losses realized by the
Fund. Currencies generally are evaluated on the basis of fundamental economic
criteria (e.g., relative inflation and interest rate levels and trends, growth
rate forecasts, balance of payments status and economic policies) as well as
technical and political data. Exchange rates are determined by the forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in dollars.
Many of the currencies of Latin American countries have experienced steady
devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Any devaluations in the currencies
in which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.
Some countries also may have fixed currencies whose values against the U.S.
dollar are not independently determined. In addition, there is a risk that
certain countries may restrict the free conversion of their currencies into
other currencies. Further, certain currencies may not be internationally traded.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-adviser's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of forward contracts, options,
futures contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which the Fund invests; (4) lack of assurance that a liquid secondary market
will exist for any particular option, futures contract or option thereon at any
particular time; (5) the possible loss of principal under certain conditions;
and (6) the possible inability of a Fund to purchase or sell a portfolio
security at a time when it would otherwise be favorable for it to do so, or the
possible need for the Fund to sell a security at a disadvantageous time, due to
the need for the Fund to maintain "cover" or to set aside securities in
connection with hedging transactions.
Prospectus Page 12
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust on the one side and persons or companies furnishing services
to the Fund on the other, including the investment management and administration
agreement with AIM, the investment sub-advisory and sub-administration agreement
between AIM and the Sub-adviser, the agreements with AIM Distributors regarding
distribution of the Fund's shares, the custody agreement and the transfer agency
agreement. The day to day operations of the Fund are delegated to the officers
of the Trust, subject always to the objective and policies of the Fund and to
the general supervision of the Trust's Board of Trustees. See "Trustees and
Executive Officers" in the Statement of Additional Information for information
on the Trust's Board of Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the Fund's portfolio and
placing orders to buy, sell or hold particular securities; furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
the Fund pays AIM investment management and administration fees, computed daily
and paid monthly, based on its average daily net assets, at the annualized rate
of .975% on the first $500 million, .95% on the next $500 million, .925% on the
next $500 million, and .90% on amounts thereafter. Out of the aggregate fees
payable by the Fund, AIM pays the Sub-adviser sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-adviser, AIM Distributors or other agents. AIM has
undertaken to limit the Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the annual rate of 1.50% of the
average daily net assets of the Fund's Advisor Class shares.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser, 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the Americas, New
York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly-owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that
Prospectus Page 13
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing
presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville,
Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo
and Toronto. In managing the Fund, the Sub-adviser employs a team approach,
taking advantage of its investment resources around the world.
The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- --------------------------- ---------------------- ------------------------------------------------------------------
<S> <C> <C>
Francesco Bertoni Portfolio Manager Portfolio Manager for the Sub-adviser since June 1998. Investment
London since 1998 Director of INVESCO Asset Management Ltd. (London) ("INVESCO
London"), an affiliate of the Sub-adviser, since 1994. Portfolio
Manager for INVESCO London from 1990 to 1994.
David Manuel Portfolio Manager Portfolio Manager for the Sub-adviser and INVESCO GT Asset
London since 1997 Management PLC (London), an affiliate of the Sub-adviser, since
November 1997. Investment Analyst and Portfolio Manager for Abbey
Life Investment Services Ltd. (Bournemouth) from 1987 to 1997,
and Head of Latin American Equities from 1994 to 1997.
</TABLE>
------------------------
In placing securities orders for the Fund's portfolio transactions, the
Sub-adviser seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-adviser may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions may be executed
through affiliates of AIM or the Sub-adviser. High portfolio turnover (over
100%) involves correspondingly greater brokerage commissions and other
transaction costs that the Fund will bear directly and could result in the
realization of net capital gains which would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
the Adviser Class shares of the Fund. Certain Trustees and officers of the Trust
are affiliated with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland Corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust. From time to time, the Trust may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Trust's shares of beneficial interest. Shares of each fund are entitled to one
vote per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders
Prospectus Page 14
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
have no preemptive rights. Other than the automatic conversion of Class B shares
to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue
an unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other shares of the fund and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each share of the Fund is equal in earnings, assets and voting
privileges except that each class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 15
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
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AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
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AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
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AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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<PAGE>
AIM INVESTOR'S GUIDE
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
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<PAGE>
AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
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AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM LATIN AMERICAN GROWTH FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
[LOGO]
AIM STRATEGIC INCOME FUND:
ADVISOR CLASS
PROSPECTUS -- SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
This Prospectus contains information about AIM Strategic Income Fund (the
"Fund"), which is one of several series investment portfolios comprising AIM
Investment Funds (the "Trust"), an open-end, series, management investment
company. The Fund is a non-diversified portfolio which primarily seeks high
current income and secondarily seeks capital appreciation. The Fund allocates
its assets among debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets.
The Fund is designed for long-term investors and not as a trading vehicle, does
not represent a complete investment program and is not suitable for all
investors. An investment in the Fund involves risk factors that should be
reviewed carefully by potential investors. The Fund is authorized to borrow
money for investment purposes, which would increase the volatility of its
performance and involves additional risks. See "Investment Objectives and
Policies" and "Risk Factors."
THE STRATEGIC INCOME FUND INVESTS UP TO 50% OF ITS TOTAL ASSETS IN LOWER QUALITY
AND UNRATED FOREIGN GOVERNMENT BONDS WHOSE CREDIT QUALITY IS GENERALLY
CONSIDERED THE EQUIVALENT OF U.S. CORPORATE DEBT SECURITIES COMMONLY KNOWN AS
"JUNK BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF
PRINCIPAL AND INTEREST. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THE FUND. SEE "INVESTMENT OBJECTIVES AND POLICIES" AND
"RISK FACTORS."
This Prospectus sets forth concisely information about the Fund that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information, dated September 8,
1998, has been filed with the Securities and Exchange Commission ("SEC") and is
incorporated herein by reference. The Statement of Additional Information is
available without charge upon written request to the Trust at 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173, or by calling (800) 347-4246. The SEC
maintains a Web site at http://www.sec.gov that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Fund. Additional information about the Fund may also
be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
AIM STRATEGIC INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Summary................................................................................... 2
Financial Highlights...................................................................... 6
Investment Objectives and Policies........................................................ 7
Risk Factors.............................................................................. 14
Management................................................................................ 19
Other Information......................................................................... 21
Appendix A -- Description of Debt Ratings................................................. 22
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY
- ------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of the Trust.
Investment Objectives: The Fund primarily seeks high current income and secondarily seeks capital appreciation.
Principal Investments: The Fund allocates its assets among debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets, and selects particular securities in each
sector based on their relative investment merit.
Investment Managers: The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and sub-administered by
INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the Sub-adviser and their worldwide asset management
affiliates provide investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both indirect wholly owned
subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment man-
agement group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. AIM was
organized in 1976 and, together with its subsidiaries, currently advises approximately 90 investment
company portfolios.
Purchasing Shares: Advisor Class shares are offered through this Prospectus to (a) trustees or other fiduciaries
purchasing shares for employee benefit plans which are sponsored by organizations which have at least
1,000 employees; (b) any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment discretion over such
account, and (ii) the account holder pays such person as compensation for its advice and other
services an annual fee of at least 0.50% on the assets in the account; (c) any account with assets
</TABLE>
Prospectus Page 2
<PAGE>
AIM STRATEGIC INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
of a least $10,000 if (i) such account is established under a "wrap fee" program, and (ii) the
account holder pays the sponsor of such program an annual fee of at least 0.50% on the assets in the
account; (d) accounts advised by the Sub-adviser or one of the companies formerly affiliated with the
Asset Management Division of Liechtenstein Global Trust AG, provided such accounts were invested in
Advisor Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and (e) any of
the companies composing or affiliated with AMVESCAP PLC. Pursuant to a separate prospectus, the Fund
also offers Class A and Class B shares, which represent interests in the Fund. The Class A and Class
B shares have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional investments must be
at least $50. The distributor of the Advisor Class shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
Exchange Privilege: The Fund is among those mutual funds distributed by AIM Distributors (collectively, "The AIM Family
of Funds"). Advisor Class shares of the Fund may be exchanged for Advisor Class shares of certain
Funds in the AIM Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
Redeeming Shares: Advisor Class shareholders of the Fund may redeem all or a portion of their shares at net asset value
on any business day. See "How to Redeem Shares."
Distributions: The Fund currently declares and pays dividends from net investment income, if any, on a monthly
basis. The Fund makes distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without payment of a sales charge
in the Fund's shares or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
Risk Factors: There is no assurance that the Fund will achieve its investment objectives. The Fund's net asset
value will fluctuate, reflecting fluctuations in the market value of its portfolio holdings. The
value of debt securities held by the Fund generally fluctuates inversely with interest rate
movements.
The Fund will invest in foreign securities. Investments in foreign securities involve risks relating
to political and economic developments abroad and the differences between the regulations to which
U.S. and foreign issuers are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates will affect the Fund's
net asset value, earnings and gains and losses realized on sales of securities. Securities of foreign
companies may be less liquid and their prices more volatile than those of securities of comparable
U.S. companies. The Fund may invest in debt securities of issuers in emerging markets. Such
investments entail greater risks than investing in securities of issuers in developed markets.
</TABLE>
Prospectus Page 3
<PAGE>
AIM STRATEGIC INCOME FUND
SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Fund may engage in certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its present or planned
investments. Such transactions involve certain risks and transaction costs.
The Fund may invest up to 50% of its total assets in debt securities rated below investment grade or,
if not rated, determined by the Sub-adviser to be of comparable quality. Investments of this type are
subject to greater risk of loss of principal and interest.
See "Investment Objectives and Policies" and "Risk Factors."
</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 AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
Prospectus Page 4
<PAGE>
AIM STRATEGIC INCOME FUND
TABLE OF FEES AND EXPENSES. The expenses and maximum transaction costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following table (1):
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION COSTS:
<S> <C>
Maximum sales charge on purchases of shares (as a % of offering price)................................. None
Sales charges on reinvested distributions to shareholders.............................................. None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)................................................................................................. None
Redemption charges..................................................................................... None
Exchange fees.......................................................................................... None
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......................................................... 0.73%
12b-1 distribution and service fees.................................................................... None
Other expenses......................................................................................... 0.36%
------
Total Fund Operating Expenses.......................................................................... 1.09%
------
------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES (3):
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
----- ------ ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares...................................... $ 11 $ 35 $ 60 $ 133
</TABLE>
- ------------------
(1) THIS TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1997. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. Investors purchasing Advisor Class shares
through financial planners, trust companies, bank trust departments or
registered investment advisers, or under a "wrap fee" program, will be
subject to additional fees charged by such entities or by the sponsors of
such programs. Where any account advised by one of the companies composing
or affiliated with AMVESCAP PLC invests in Advisor Class shares of the Fund,
such account shall not be subject to duplicative advisory fees.
(3) THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the assumption
in the Hypothetical Example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds; the 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
Prospectus Page 5
<PAGE>
AIM STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. For the period March
29, 1988 (commencement of operations) to October 22, 1992, the Strategic Income
Fund was named G.T. Global Bond Fund and operated under different investment
objectives, policies and limitations. This information is supplemented by the
financial statements and accompanying notes appearing in the Statement of
Additional Information.
AIM STRATEGIC INCOME FUND
(FORMERLY GT GLOBAL STRATEGIC INCOME FUND)
[TO BE ADDED]
------------------------
PERFORMANCE. All advertisements of the Fund will disclose the maximum sales
charge (including deferred sales charges) imposed on purchases of the Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula
for computation of annualized total return.
The Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield reflects investment
income net of expenses over the relevant period attributable to a Fund share,
expressed as an annualized percentage of the net asset value per share for
Advisor Class shares.
Yield is a function of the type and quality of the Fund's investments, the
maturity of the securities held in the Fund's portfolio and the operating
expense ratio of the Fund. A shareholder's investment in the Fund is not insured
or guaranteed. These factors should be carefully considered by the investor
before making an investment in the Fund.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of any Fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results.
Prospectus Page 6
<PAGE>
AIM STRATEGIC INCOME FUND
The Fund's performance is a function of its portfolio management in selecting
the type and quality of portfolio securities and is affected by operating
expenses of the Fund as well as by general market conditions.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
The Fund primarily seeks high current income and secondarily seeks capital
appreciation. There can be no assurance that the fund will achieve its
investment objective.
The Fund invests in debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets. The Fund selects debt
securities from those issued by governments, their agencies and
instrumentalities; central banks; and commercial banks and other corporate
entities. Debt securities in which the Fund may invest include bonds, notes,
debentures, and other similar instruments including mortgage-backed and
asset-backed securities of foreign issuers as well as domestic issuers. The Fund
normally invests at least 50% of its net assets in U.S. and foreign debt and
other fixed income securities that, at the time of purchase, are rated at least
investment grade by Moody's or S&P or, if not rated, determined by the
Sub-adviser to be of comparable quality. No more than 50% of the Fund's total
assets may be invested in securities rated below investment grade. Such
securities involve a high degree of risk and are predominantly speculative. They
are the equivalent of high yield, high risk bonds, commonly known as "junk
bonds." The Fund may also invest in securities that are in default as to payment
of principal and/or interest.
The Fund's investments in emerging market securities may consist substantially
of Brady Bonds (see "General Policies -- Brady Bonds," below) and other
sovereign debt securities issued by emerging market governments that are traded
in the markets of developed countries or groups of developed countries. The
Sub-adviser may invest in debt securities of emerging market issuers that it
determines to be suitable investments for the Fund without regard to ratings.
Currently, the substantial majority of emerging market debt securities are
considered to have a credit quality below investment grade. The Fund also may
invest in below-investment grade debt securities of corporate issuers in the
United States and in developed foreign countries, subject to the overall 50%
limitation.
GENERAL POLICIES
ASSET ALLOCATION. The Fund invests in debt obligations allocated among diverse
markets and denominated in various currencies, including U.S. dollars, or in
multinational currency units such as Euros. The Fund is designed for investors
who wish to accept the risks entailed in such investments, which are different
from those associated with a portfolio consisting entirely of securities of U.S.
issuers denominated in U.S. dollars. The Fund may purchase securities that are
issued by the government or a company or financial institution of one country
but denominated in the currency of another country (or a multinational currency
unit).
The Sub-adviser allocates the assets of the Fund in securities of issuers in
countries and in currency denominations where the combination of fixed income
market returns, the price appreciation potential of fixed income securities and
currency exchange rate movements will present opportunities primarily for high
current income and secondarily for capital appreciation. In so doing, the Sub-
adviser intends to take full advantage of the different yield, risk and return
characteristics that investment in the fixed income markets of different
countries can provide for U.S. investors. Fundamental economic strength, credit
quality and currency and interest rate trends are the principal determinants of
the emphasis given to various country, geographic and industry sectors within
the Fund. Securities held by the Fund may be invested in without limitation as
to maturity.
The Sub-adviser selects securities of particular issuers on the basis of its
views as to the best values then currently available in the marketplace. Such
values are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the local and world
economies, movements in the general level and term of interest rates, currency
values, political
Prospectus Page 7
<PAGE>
AIM STRATEGIC INCOME FUND
developments and variations in the supply of funds available for investment in
the world bond market relative to the demands placed upon it.
The Sub-adviser generally evaluates currencies on the basis of fundamental
economic criteria (e.g., relative inflation, interest rate levels and trends,
growth rate forecasts, balance of payments status and economic policies) as well
as technical and political data. The Sub-adviser may seek to protect the Fund
against such negative currency movements through the use of sophisticated
investment techniques. See "Options, Futures and Forward Currency Transactions"
and "Swaps, Caps, Floors and Collars."
According to the Sub-adviser, as of the date of this Prospectus, more than 50%
of the value of all outstanding government debt obligations throughout the world
is represented by obligations denominated in currencies other than the U.S.
dollar. Moreover, from time to time, the debt securities of issuers located
outside the United States have substantially outperformed the debt obligations
of U.S. issuers. Accordingly, the Sub-adviser believes that the Fund's policy of
investing in debt securities throughout the world may enable the achievement of
results superior to those produced by mutual funds with similar objectives to
those of the Fund that invest solely in debt securities of U.S. issuers.
The Fund is designed for investors who wish to accept the risks entailed in such
investments, which are different from those associated with a portfolio
consisting entirely of securities of U.S. issuers denominated in U.S. dollars.
TEMPORARY DEFENSIVE STRATEGIES. The Sub-adviser may employ a temporary defensive
investment strategy if it determines such a strategy to be warranted due to
market, economic or political conditions. Pursuant to such a defensive strategy,
the Fund temporarily may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and/or invest up to 100% of its assets in high
quality debt securities or money market instruments of U.S. or foreign issuers.
In addition, for temporary defensive purposes, most or all of the Fund's
investments may be made in the United States and denominated in U.S. dollars. To
the extent the Fund employs a temporary defensive strategy, it will not be
invested so as to achieve directly its investment objectives. In addition,
pending investment of proceeds from new sales of Fund shares or to meet ordinary
daily cash needs, the Fund may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and may invest in high quality foreign or domestic
money market instruments. For a full description of money market instruments,
see "Selection of Debt Investments" in the "Investment Objectives and Policies"
section of the Statement of Additional Information.
EMERGING MARKET SECURITIES. The Fund considers "emerging markets" to consist of
all countries determined by the Sub-adviser to have developing or emerging
economies and markets. These countries generally include every country in the
world except the United States, Canada, Japan, Australia, New Zealand and most
countries located in Western Europe. The Fund will consider investment in the
following emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
The Fund will not be invested in all such markets at all times. Moreover,
investing in some of those markets currently may not be desirable or feasible,
due to the lack of adequate custody arrangements, overly burdensome repatriation
requirements and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or for other reasons.
As used in this Prospectus and the Statement of Additional Information, an
issuer in an emerging market is an entity: (i) for which the principal
securities trading market is an emerging market, as defined above; (ii) that
(alone or on a consolidated basis) derives 50% or more of its total revenue from
either goods produced, sales made or services performed in emerging markets; or
(iii) organized
Prospectus Page 8
<PAGE>
AIM STRATEGIC INCOME FUND
under the laws of, or with a principal office in, an emerging market.
BRADY BONDS. The Fund may invest in "Brady Bonds," which are debt restructurings
that provide for the exchange of cash and loans for newly issued bonds. Brady
Bonds have been issued by the countries of Albania, Argentina, Brazil, Bulgaria,
Costa Rica, Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria,
Panama, Peru, Philippines, Poland, Uruguay, Venezuela and Vietnam and are
expected to be issued by other emerging market countries. As of the date of this
Prospectus, the Fund is not aware of the occurrence of any payment defaults on
Brady Bonds. Investors should recognize, however, that Brady Bonds do not have a
long payment history. In addition, Brady Bonds are often rated below investment
grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time of issuance and is adjusted at
regular intervals thereafter.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The Fund may invest in
mortgage-backed and asset-backed securities of U.S. and foreign issuers,
including privately issued mortgage-backed and asset-backed securities.
Mortgage-backed securities represent direct or indirect interests in pools of
underlying mortgage loans that are secured by real property. Investors typically
receive payments out of the interest on and principal of the underlying
mortgages. Asset-backed securities are similar to mortgage-backed securities,
except that the underlying assets are other financial assets or financial
receivables, such as motor vehicle installment sales contracts, home equity
loans, leases of various types of real and personal property, and receivables
from credit cards. Any mortgage-backed and asset-backed securities purchased by
the Fund will be subject to the same rating requirements that apply to its other
investments.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may invest in fixed and floating
rate loans ("Loans") arranged through private negotiations between a foreign
entity and one or more financial institutions ("Lenders"). The majority of the
Fund's investments in Loans in emerging markets is expected to be in the form of
participations in Loans ("Participations") and assignments of portions of Loans
from third parties ("Assignments"). Participations typically will result in the
Fund having a contractual relationship only with the Lender, not with the
borrower government. The Fund will have the right to receive payments of
principal, interest and any fees to which it is entitled only from the Lender
selling the Participation and only upon receipt by the Lender of the payments
from the borrower. In connection with purchasing Participations, the Fund
generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the loan ("Loan Agreement"), nor any
rights of set-off against the borrower, and the Fund may not directly benefit
from any collateral supporting the Loan in which it has purchased the
Participation. As a result, the Fund will assume the credit risk of both the
borrower and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund
may be treated as a general creditor of the Lender and may not benefit from any
set-off between the Lender and the borrower. The Fund will acquire
Participations only if the Lender interpositioned between the Fund and the
borrower is determined by the Sub-adviser to be creditworthy. When the Fund
purchases Assignments from Lenders, the Fund will acquire direct rights against
the borrower on the Loan. However, since Assignments are arranged through
private negotiations between potential assignees and assignors, the rights and
obligations acquired by the Fund as the purchaser of an Assignment may differ
from, and be more limited than, those held by the assigning Lender.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities and forward commitments only with the intention
of
Prospectus Page 9
<PAGE>
AIM STRATEGIC INCOME FUND
actually receiving or delivering the securities, as the case may be. No income
accrues on securities that have been purchased pursuant to a forward commitment
or on a when-issued basis prior to delivery of the securities. If the Fund
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Fund enters into a transaction on a
when-issued or forward commitment basis, the Fund will segregate cash or liquid
securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
The Fund may also sell securities on a "when, as and if issued" basis for
hedging purposes. Under such a transaction, the Fund is required to deliver at a
future date a security it does not presently hold, but which it has a right to
receive if the security is issued. Issuance of the security may not occur, in
which case the Fund would have no obligation to the other party, and would not
receive payment for the sale. Selling securities on a "when, as and if issued"
basis may reduce risk of loss to the extent that such a sale wholly or partially
offsets unfavorable price movements on the investments being hedged. However,
such sales also limit the amount the Fund can receive if the "when, as and if
issued" security is in fact issued.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund is
authorized to borrow money from banks in an amount up to 33 1/3% of its total
assets (including the amount borrowed), less all liabilities and indebtedness
other than the borrowings and may use the proceeds of such borrowings for
investment purposes. The Fund will borrow for investment purposes only when the
Sub-adviser believes that such borrowings will benefit the Fund after taking
into account considerations such as the costs of the borrowing and the likely
investment returns on the securities purchased with the borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Fund creates the opportunity for increased net
income and appreciation but, at the same time, involves special risk
considerations. For example, leveraging might exaggerate changes in the net
asset value of Fund shares and in the yield realized by the Fund. Although the
principal amount of such borrowings will be fixed, the Fund's assets may change
in value during the time the borrowing is outstanding. By leveraging the Fund,
changes in net asset values, higher or lower, may be greater in degree than if
leverage was not employed. To the extent the income derived from the assets
obtained with borrowed funds exceeds the interest and other expenses that the
Fund will have to pay, the Fund's net income will be greater than if borrowing
was not used. Conversely, if the income from the assets obtained with borrowed
funds is not sufficient to cover the cost of borrowing, the net income of the
Fund will be less than if borrowing were not used, and therefore the amount
available for distribution to shareholders as dividends will be reduced. The
Fund expects that some of its borrowings may be made on a secured basis.
In addition to the foregoing borrowings, the Fund may borrow money for temporary
or emergency purposes or payments in an amount not exceeding 5% of the value of
its total assets (not including the amount borrowed) provided that the total
amount borrowed by the Fund for any purpose does not exceed 33 1/3% of its total
assets.
The Fund may also enter into reverse repurchase agreements with a bank or
recognized securities dealer, although the Fund currently has no intention of
doing so with respect to more than 5% of its total assets. Under a reverse
repurchase agreement, the Fund would sell securities and agree to repurchase
them at a particular price at a future date. At the time the Fund enters into a
reverse repurchase agreement, it will establish and maintain a segregated
account with an approved custodian containing cash or liquid securities having a
value not less than the repurchase price, including accrued interest. Reverse
repurchase agreements involve the risk that the market value of the securities
retained in lieu of sale by the Fund may decline below the price of the
securities the Fund has sold but is obligated to repurchase. In the event the
buyer of securities under a reverse repurchase agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or receiver may receive an
extension of time to determine whether to enforce the Fund's obligation to
repurchase the securities, and the Fund's use of the proceeds of the reverse
repurchase agreement may effectively be restricted pending such decision.
The Fund also may enter into "dollar rolls," in which the Fund sells fixed
income securities for delivery in the current month and simultaneously contracts
to repurchase substantially similar (same type, coupon and maturity) securities
on a specified future date. During the roll period, the Fund would
Prospectus Page 10
<PAGE>
AIM STRATEGIC INCOME FUND
forego principal and interest paid on such securities. The Fund would be
compensated by the difference between the current sales price and the forward
price for the future purchase, as well as by the interest earned on the cash
proceeds of the initial sale. See "Investment Objectives and Policies" in the
Statement of Additional Information.
Reverse repurchase agreements and dollar rolls will be treated as borrowings and
will be deducted from the Fund's assets for purposes of calculating compliance
with the Fund's borrowing limitation. See "Investment Limitations" in the
Statement of Additional Information.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. At all times a loan is outstanding, the Fund requires the
borrower to maintain with the Fund's custodian, collateral consisting of cash,
U.S. government securities, or certain irrevocable letters of credit equal to at
least the value of the borrowed securities, plus any accrued interest or such
other collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. The risks in lending portfolio securities, as
with other extensions of secured credit, consist of possible delays in receiving
additional collateral or in recovery of the loaned securities and possible loss
of rights in the collateral should the borrower fail financially.
ZERO COUPON SECURITIES. The Fund may invest in certain zero coupon securities
that are "stripped" U.S. Treasury notes and bonds. It also may invest in zero
coupon and other deep discount securities issued by foreign governments and
domestic and foreign corporations, including certain Brady Bonds and other
foreign debt and in payment-in-kind securities. Zero coupon securities pay no
interest to holders prior to maturity, and payment-in-kind securities pay
interest in the form of additional securities. However, a portion of the
original issue discount on zero coupon securities and the "interest" on
payment-in-kind securities will be included in the Fund's income. Accordingly,
for the Fund to continue to qualify for tax treatment as a regulated investment
company and to avoid a certain excise tax (see "Taxes" in the Statement of
Additional Information), it may be required to distribute an amount that is
greater than the total amount of cash it actually receives. These distributions
must be made from the Fund's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund will not be able to purchase additional
income-producing securities with cash used to make such distributions, and its
current income ultimately may be reduced as a result. Zero coupon and
payment-in-kind securities usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS. The Fund may utilize combinations of futures on
bonds and forward currency contracts to create investment positions that have
substantially the same characteristics as bonds of the same type as those on
which the futures contracts are written. Investment positions of this type are
generally referred to as "synthetic securities."
For example, in order to establish a synthetic security position for the Fund
that is comparable to owning a Japanese government bond, the Sub-adviser might
purchase futures contracts on Japanese government bonds in the desired principal
amount and purchase forward currency contracts for Japanese Yen in an amount
equal to the then current purchase price for such bonds in the Japanese cash
market, with each contract having approximately the same delivery date.
The Sub-adviser might roll over the futures and forward currency contract
positions before taking delivery in order to continue the Fund's investment
position, or the Sub-adviser might close out those positions, thus effectively
selling the synthetic security. Further, the amount of each contract might be
adjusted in response to market conditions and the forward currency contract
might be changed in amount or eliminated in order to hedge against currency
fluctuations.
The Sub-adviser would create synthetic security positions for the Fund when it
believes that it can obtain a better yield or achieve cost savings in comparison
to purchasing actual bonds or when comparable bonds are not readily available in
the market. Synthetic security positions are subject to the risk that changes in
the value of purchased futures contracts may differ from changes in the value of
the bonds that might otherwise have been purchased in the cash market. Also,
while the Sub-adviser believes that the cost of creating synthetic security
positions generally will be materially lower
Prospectus Page 11
<PAGE>
AIM STRATEGIC INCOME FUND
than the cost of acquiring comparable bonds in the cash market, the Fund will
incur transaction costs in connection with each purchase of a futures or forward
currency contract. The use of futures contracts and forward currency contracts
to create synthetic security positions also is subject to substantially the same
risks as those that exist when these instruments are used in connection with
hedging strategies. See "Options, Futures and Forward Currency Transactions"
below and "Options, Futures and Currency Strategies" in the Statement of
Additional Information.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies, and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally
associated with the Fund's investment. The Fund also may enter into interest
rate, currency and index swaps and purchase or sell related caps, floors and
collars and other similar instruments. See "Swaps, Caps, Floors and Collars"
below. These instruments are often referred to as "derivatives," which may be
defined as financial instruments whose performance is derived, at least in part,
from the performance of another asset (such as a security, currency or an index
of securities). The Fund may enter into such instruments up to the full value of
its portfolio assets. See "Risk Factors -- Options, Futures and Currency
Transactions" herein and "Options, Futures and Currency Strategies" in the
Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. The Fund also may purchase and sell put and call
options on currencies, futures contracts on currencies and options on such
futures contracts to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on securities
to hedge against the risk of fluctuations in the prices of securities held by
the Fund or that the Sub-adviser intends to include in the Fund's portfolio. The
Fund also may purchase and sell put and call options on indices to hedge against
overall fluctuations in the securities markets generally or in a specific market
sector.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or market sector decline that could adversely affect the Fund's
portfolio. The Fund also may purchase index futures contracts and purchase call
options or write put options on such contracts to hedge against a general market
or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. The Fund may use interest rate futures contracts and
options thereon to hedge its portfolio against changes in the general level of
interest rates.
SWAPS, CAPS, FLOORS AND COLLARS. The Fund may enter into interest rate, currency
and index swaps, and purchase or sell related caps, floors and collars and other
derivative instruments. The Fund expects to enter into these transactions
primarily to preserve a return or spread on a particular investment or portion
of its portfolio, to protect against currency fluctuations, as a technique for
managing the portfolio's duration (I.E., the price sensitivity to changes in
interest rates) or to protect against any increase in the price of securities
the Fund anticipates purchasing at a later date. The Fund intends to use these
transactions as hedges, and will not sell interest rate caps or floors if it
does not own securities or other instruments providing an income stream roughly
equivalent to what the Fund may be obligated to pay.
Interest rate swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest (for example, an exchange of
floating rate payments for fixed rate payments) with respect to a notional
amount of principal. A currency swap is an agreement to exchange cash flows on a
notional amount based on changes in the values of the reference indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a combination of a
cap and a floor that preserves a certain return within a predetermined range of
interest rates or values.
Prospectus Page 12
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AIM STRATEGIC INCOME FUND
INDEXED COMMERCIAL PAPER. The Fund may invest without limitation in commercial
paper which is indexed to certain specific foreign currency exchange rates. The
terms of such commercial paper provide that its principal amount is adjusted
upwards or downwards (but not below zero) at maturity to reflect changes in the
exchange rate between two currencies while the obligation is outstanding. The
Fund will purchase such commercial paper with the currency in which it is
denominated and, at maturity, will receive interest and principal payments
thereon in that currency, but the amount of principal payable by the issuer at
maturity will change in proportion to the change (if any) in the exchange rate
between the two specified currencies between the date the instrument is issued
and the date the instrument matures. While such commercial paper entails the
risk of loss of principal, the potential for realizing gains as a result of
changes in foreign currency exchange rates enables the Fund to hedge against a
decline in the U.S. dollar value of investments denominated in foreign
currencies while seeking to provide an attractive money market rate of return.
The Fund will not purchase such commercial paper for speculation.
OTHER INDEXED SECURITIES. The Fund may invest in certain other indexed
securities, which are securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals or other
commodities, or other financial indicators. Indexed securities typically, but
not always, are debt securities or deposits whose value at maturity or coupon
rate is determined by reference to a specific instrument or statistic. The
performance of indexed securities depends to a great extent on the performance
of the security, currency, or other instrument to which they are indexed, and
may also be influenced by interest rate changes in the United States and abroad.
At the same time, indexed securities are subject to the credit risks associated
with the issuer of the security, and their values may decline substantially if
the issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments. New forms of indexed securities
continue to be developed. The Fund may invest in such securities to the extent
consistent with its investment objectives.
OTHER INFORMATION. The Fund's investment objectives may not be changed without
the approval of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. The
Fund's other investment policies described herein and in the Statement of
Additional Information may be changed by the Trust Board of Trustees without
shareholder approval.
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. See "Investment Objectives and Policies -- Short
Sales" in the Statement of Additional Information.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
Prospectus Page 13
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AIM STRATEGIC INCOME FUND
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that the Fund will achieve its investment
objectives. The Fund's net asset value will fluctuate, reflecting fluctuations
in the market value of its portfolio positions and its net currency exposure.
The value of fixed income securities held by the Fund generally fluctuates
inversely with interest rate movements. Longer term bonds held by the Fund are
subject to greater interest rate risk.
NON-DIVERSIFIED CLASSIFICATION. The Fund is classified under the Investment
Company Act of 1940 (the "1940 Act") as a "non-diversified" fund. As a result,
the Fund will be able to invest in a fewer number of issuers than if it were
classified under the 1940 Act as a "diversified" fund. To the extent that the
Fund invests in a smaller number of issuers, the value of the Fund's shares may
fluctuate more widely and the Fund may be subject to greater investment and
credit risk with respect to its portfolios.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally are not registered with the SEC, nor
are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. In addition, certain costs
attributable to foreign investing, such as custody charges, are higher than
those attributable to domestic investing. Securities of some foreign companies
are less liquid and their prices may be more volatile than securities of
comparable domestic companies. The Fund's interest and dividends from foreign
issuers may be subject to non-U.S. withholding taxes, thereby reducing their net
investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic
developments which could affect the investments of the Fund in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, resource self-sufficiency
and balance of payments positions.
CURRENCY RISK. Since the Fund normally invests substantially in securities
denominated in currencies other than the U.S. dollar, and because they may hold
foreign currencies, they will be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rates between such currencies and
the U.S. dollar. Changes in currency exchange rates will influence the value of
the Fund's shares, and also may affect the value of dividends and interest
earned by the Fund and gains and losses realized by the Fund. Currencies
generally are evaluated on the basis of fundamental economic criteria (e.g.,
relative inflation and interest rate levels and trends, growth rate forecasts,
balance of payments status and economic policies) as well as technical and
political data. The exchange rates between the U.S. dollar and other currencies
are determined by supply and demand in the currency exchange markets, the
international balance of payments, governmental intervention, speculation and
other economic and political conditions. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, a decline in the exchange rate of the
currency would adversely affect the value of the security expressed in U.S.
dollars.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed foreign markets around the world.
Prospectus Page 14
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AIM STRATEGIC INCOME FUND
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Fund could lose its entire investment in that market.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause the Fund to forego attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Fund believes that appropriate circumstances warrant, it will promptly apply
to the SEC for a determination that an emergency exists within the meaning of
Section 22(e) of the 1940 Act. During the period commencing from the Fund's
identification of such conditions until the date of SEC action, the portfolio
securities of the Fund in the affected markets will be valued at fair value as
determined in good faith by or under the direction of the Trust's Board of
Trustees.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The yield characteristics of
mortgage-backed and asset-backed securities differ from those of traditional
bonds. Among the major differences are that interest and principal payments are
made more frequently (usually monthly) and that principal may be prepaid at any
time because the underlying mortgage loans or other assets generally may be
prepaid at any time. Generally, prepayments on fixed-rate mortgage loans will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. Mortgage-backed and asset-backed securities may also
decrease in value as a result of increasing market interest rates and, because
of prepayments, may benefit less than other bonds from declining interest rates.
Reinvestments of prepayments may occur at lower interest rates than the original
investment, thus adversely affecting the yield of the Fund. Actual prepayment
experience may cause the yield of a mortgage-backed security to differ from what
was assumed when the Fund purchased the security. The market for privately
issued mortgage-backed and asset-backed securities is smaller and less liquid
than the market for U.S. government mortgage-backed securities.
Foreign mortgage-backed securities markets are substantially smaller than U.S.
markets, but have been established in several countries, including Germany,
Denmark, Sweden, Canada and Australia,
Prospectus Page 15
<PAGE>
AIM STRATEGIC INCOME FUND
and may be developed elsewhere. Foreign mortgage-backed securities generally are
structured similar to domestic mortgage-backed securities, and they normally
present substantially similar investment risks as well as the other risks
normally associated with foreign securities.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may have difficulty disposing of
Assignments and Participations. The liquidity of such securities is limited and,
the Fund anticipates that such securities could be sold only to a limited number
of institutional investors. The lack of a liquid secondary market could have an
adverse impact on the value of such securities and on the Fund's ability to
dispose of particular Assignments or Participations when necessary to meet the
Fund's liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for the Fund to assign a value to those securities for purposes of
valuing the Fund's portfolio and calculating its net asset value.
SOVEREIGN DEBT. The Fund may invest in sovereign debt securities of emerging
market governments, including Brady Bonds. Investments in such securities
involve special risks. The issuer of the debt or the governmental authorities
that control the repayment of the debt may be unable or unwilling to repay
principal or interest when due in accordance with the terms of such debt.
Periods of economic uncertainty may result in the volatility of market prices of
sovereign debt obligations and in turn the Fund's net asset value, to a greater
extent than the volatility inherent in domestic fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's investments.
Emerging markets are faced with social and political issues and some of them
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs, and may have other adverse
social, political and economic consequences. Political changes or a
deterioration of a country's domestic economy or balance of trade may affect the
willingness of countries to service their sovereign debt. Although the
Sub-adviser intends to manage the Fund in a manner that will minimize the
exposure to such risks, there can be no assurance that adverse political changes
will not cause the Fund to suffer a loss of interest or principal on any of its
holdings.
In recent years, some of the emerging market countries in which the Fund expects
to invest have encountered difficulties in servicing their sovereign debt
obligations. Some of these countries have withheld payments of interest and/or
principal of sovereign debt. These difficulties have also led to agreements to
restructure external debt obligations -- in particular, commercial bank loans,
typically by rescheduling principal payments, reducing interest rates and
extending new credits to finance interest payments on existing debt. In the
future, holders of emerging market sovereign debt securities may be requested to
participate in similar rescheduling of such debt. Certain emerging market
countries are among the largest debtors to commercial banks and foreign
governments. Currently, Brazil, Mexico and Argentina are the largest debtors
among developing countries. At times certain emerging market countries have
declared moratoria on the payment of principal and interest on external debt;
such a moratorium is currently in effect in certain emerging market countries.
There is no bankruptcy proceeding by
Prospectus Page 16
<PAGE>
AIM STRATEGIC INCOME FUND
which a creditor may collect in whole or in part sovereign debt on which an
emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Fund may invest involve great risk. As noted above, sovereign debt
obligations issued by emerging market governments generally are deemed to be the
equivalent in terms of quality to securities rated below investment grade by
Moody's and S&P. Such securities are regarded as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations and involve major risk exposure to
adverse conditions. Some of such securities, with respect to which the issuer
currently may not be paying interest or may be in payment default, may be
comparable to securities rated D by S&P or C by Moody's. The Fund may have
difficulty disposing of and valuing certain sovereign debt obligations because
there may be a limited trading market for such securities. Because there is no
liquid secondary market for many of these securities, the Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors.
LOWER QUALITY DEBT SECURITIES. Under normal market conditions the Fund may
invest up to 50% of its total assets in debt securities rated below investment
grade. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest quality debt that is not in default as to
principal or interest and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than higher quality securities with regard to a deterioration of general
economic conditions. These securities are the equivalent of high yield, high
risk bonds, commonly known as "junk bonds." As noted above, the Fund may invest
in debt securities rated below C, which are in default as to principal and/or
interest.
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit quality in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Appendix A" for a discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Prospectus Page 17
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AIM STRATEGIC INCOME FUND
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Fund. If an issuer exercises these provisions in a declining
interest rate market, the Fund may have to replace the security with a lower
yielding security, resulting in a decreased return for investors. In addition,
the Fund may have difficulty disposing of lower quality securities because there
may be a thin trading market for such securities. There may be no established
retail secondary market for many of these securities, and the Fund anticipates
that such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing the securities in the portfolios of the Fund. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower quality securities, especially in a
thinly traded market. The Fund also may acquire lower quality debt securities
during an initial underwriting or may acquire lower quality debt securities
which are sold without registration under applicable securities laws. Such
securities involve special considerations and risks.
Factors having an adverse effect on the market value of lower rated securities
or their equivalents purchased by the Fund will adversely impact net asset value
of the Fund. See "Risk Factors" in the Statement of Additional Information. In
addition to the foregoing, such factors may include: (i) potential adverse
publicity; (ii) heightened sensitivity to general economic or political
conditions; and (iii) the likely adverse impact of a major economic recession.
The Fund also may incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and the Fund may have limited legal recourse in the event of a
default. Debt securities issued by governments in emerging markets can differ
from debt obligations issued by private entities in that remedies from defaults
generally must be pursued in the courts of the defaulting government, and legal
recourse is therefore somewhat diminished. Political conditions, in terms of a
government's willingness to meet the terms of its debt obligations, also are of
considerable significance. There can be no assurance that the holders of
commercial bank debt may not contest payments to the holders of debt securities
issued by governments in emerging markets in the event of default by the
governments under commercial bank loan agreements.
As of October 31, 1997, the Fund had 89.27% of its total net assets in debt
securities that received a rating from Moody's and 4.00% of its total net assets
in debt securities that were not so rated. In addition, the Fund had 6.73% of
its total net assets in cash and net receivables. The Fund had the following
percentages of its total net assets invested in rated securities: Aaa -- 41.23%,
Aa -- 12.68%, A -- 1.31%, Baa -- 3.75%, Ba -- 24.30%, B -- 6.00%, Caa -- 0.00%,
Ca -- 0.00%, C -- 0.00%. Included under the unrated category are securities held
by the Fund which, while unrated, have been determined by the Sub-adviser to be
of comparable quality to securities in the following rating categories: Ba --
1.03%; and B -- 2.97%. It should be noted that the allocation of the investments
of the Fund by rating on any given date will vary and should not be considered
representative of the future portfolio composition of the Fund.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. In addition, issuers in
emerging markets typically are subject to a greater degree of change in earnings
and business prospects than issuers in developed countries. Options, futures and
foreign currency transactions involve certain risks, which include: (1)
dependence on the Sub-adviser's ability to predict movements in the prices of
individual securities, fluctuations in the general securities markets or in the
appropriate market sector and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of options, forward contracts, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which the Fund invests; (4) lack of
assurance that a liquid secondary market will exist for any particular option,
futures contract or option thereon at any particular time; (5) the possible loss
of principal under certain conditions; and (6) the possible inability of the
Fund to purchase or sell a portfolio security at a time when it would otherwise
be favorable for it to do so, or the possible need for the Fund to sell a
security at a disadvantageous
Prospectus Page 18
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AIM STRATEGIC INCOME FUND
time, due to the need for the Fund or Portfolio to maintain "cover" or to set
aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets, in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
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MANAGEMENT
- --------------------------------------------------------------------------------
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Trust's Board of Trustees has approved all significant agreements
between the Trust and persons or companies furnishing services to the Fund
including the investment management and administration agreement with AIM, the
investment sub-advisory and sub-administration agreement between AIM and the
Sub-adviser, the agreements with AIM Distributors regarding distribution of the
Fund's shares, the custody agreement and the transfer agency agreement. The
day-to-day operations of the Fund are delegated to the officers of the Trust,
subject always to the investment objectives and policies of the Fund and to the
general supervision of the Trust's Board of Trustees. See "Trustees and
Executive Officers" in the Statement of Additional Information for information
on the Trustees of the Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as the Fund's investment managers and administrators include, but
are not limited to, determining the composition of the investment portfolio of
the Fund and placing orders to buy, sell or hold particular securities. In
addition, AIM and the Sub-adviser provide the following administration services
to the Fund: furnishing corporate officers and clerical staff; providing office
space, services and equipment; and supervising all matters relating to the
Fund's operation.
The Fund pays AIM investment management and administration fees computed daily
and payable monthly, based on the average daily net assets, for such services at
the annualized rate of .725% on the first $500 million, .70% on the next $1
billion, .675% on the next $1 billion, and .65% on amounts thereafter. Out of
the aggregate fees payable by the Fund, AIM pays the Sub-adviser sub-advisory
and sub-administration fees equal to 40% of the aggregate fees AIM receives from
the Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-adviser, AIM Distributors or any other agents. AIM has
undertaken to limit the expenses of the Advisor Class shares of the Fund
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 1.50% of the average daily net assets of the
Fund's Advisor Class shares.
The Sub-adviser also serves as the Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-adviser (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-adviser, 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the Americas, New
York, New York 10036, serves as the sub-adviser to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
Prospectus Page 19
<PAGE>
AIM STRATEGIC INCOME FUND
former indirect parent organization of the Sub-adviser, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-adviser and certain other
affiliates. As a result of this transaction, the Sub-adviser is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices, including investment offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong,
London, Singapore, Sydney, Tokyo and Toronto. In managing the Fund, the
Sub-adviser employs a team approach, taking advantage of its investment
resources around the world.
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau Portfolio Manager since Chief Investment Officer for Global Fixed Income for the Sub-adviser
New York 1996 since October 1996. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from July
1995 to October 1996. Employed by Chancellor Capital Management,
Inc. ("Chancellor Capital"), a predecessor of the Sub-Adviser, from
1995 to October 1996. Senior Vice President and Senior Portfolio
Manager for Fiduciary Trust Company International from 1993 to
1995. Vice President at Bankers Trust Company from 1991 to 1993.
David B. Hughes Portfolio Manager since Head of Global Fixed Income, North America, for the Sub- Adviser
New York 1998 since January 1998. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-Adviser from July
1995 to December 1997. Employed by Chancellor Capital from July
1995 to October 1996. Assistant Vice President of Fiduciary Trust
Company International from 1994 to 1995. Assistant Treasurer at the
Bankers Trust Company from 1991 to 1994.
Craig Munro Portfolio Manager since Portfolio Manager for the Sub-adviser since August 1997. Vice
New York 1998 President and Senior Analyst in the Emerging Markets Group of the
Global Fixed Income Division of Merrill Lynch Asset Management from
1993 to August 1997.
</TABLE>
------------------------
In placing orders for the Fund's securities transactions, the Sub-adviser seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-adviser may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions for the Fund may be executed through
affiliates of AIM or the Sub-adviser. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains which would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
Prospectus Page 20
<PAGE>
AIM STRATEGIC INCOME FUND
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
the Advisor Class shares of the Fund. Certain Trustees and officers of the Trust
are affiliated with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right to
distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business trust
on May 7, 1998. On September 4, 1998, the Trust acquired the assets of and
assumed the liabilities of AIM Investment Funds, Inc., a Maryland corporation.
The Fund constitutes one of the thirteen separate and distinct series portfolios
of the Trust.
From time to time, the Trust may establish other funds, each corresponding to a
distinct investment portfolio and a distinct series of the Trust's shares.
Shares of each fund are entitled to one vote per share (with proportional voting
for fractional shares) and are freely transferable. Shareholders have no
preemptive rights. Other than the automatic conversion of Class B shares to
Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that Class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Shares of the Fund and the Trust's other series do
not have cumulative voting rights, which means that the holders of a majority of
the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may also
issue an unlimited number of shares of the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal in earnings, assets
and voting privileges except that each class normally has exclusive voting
rights with respect to its distribution plan and bears the expenses, if any,
related to the distribution of its shares. Shares of the Fund, when issued, are
fully paid and nonassessable.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and to the Fund.
Prospectus Page 21
<PAGE>
AIM STRATEGIC INCOME FUND
APPENDIX A
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
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 edged." 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 risk appear somewhat
larger than the 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
some time 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.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are 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 which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Prospectus Page 22
<PAGE>
AIM STRATEGIC INCOME FUND
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
Prospectus Page 23
<PAGE>
AIM STRATEGIC INCOME FUND
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
Prospectus Page 24
<PAGE>
AIM INVESTOR'S GUIDE
The toll-free number for access to routine account information and to
shareholder assistance is
(800) 959-4246 (7:30 a.m. to 6:00 p.m. Central Time).
INVESTOR'S GUIDE TO
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several
of which offer Advisor Class shares. Only Advisor Class shares are offered
through this Prospectus. Advisor Class shares are available from the following
funds (collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM AMERICA VALUE FUND AIM GLOBAL RESOURCES FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM DOLLAR FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND AIM LATIN AMERICAN GROWTH FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM MID CAP GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL HEALTH CARE FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through
Financial Advisers (as defined herein) who have entered into agreements with
A I M Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor
Class shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the
Account Application for applicable IRS penalties. The minimum initial investment
for Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of
this Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered
A-1
<PAGE>
AIM INVESTOR'S GUIDE
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the
Fund being purchased. The remittance slip from a confirmation statement should
be used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the
following funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL
ESTATE FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED
FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM
CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
SELECT GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE
GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with
the Advisor Class Funds, the "Multiple Class Funds." For information on
purchasing any of the AIM Funds and to receive a prospectus, please call (800)
347-4246. Net asset value is determined in the manner described under the
caption "Determination of Net Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee"
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares.
A-2
<PAGE>
AIM INVESTOR'S GUIDE
Investors in wrap fee programs and advisory accounts may only purchase Advisor
Class shares through Financial Advisers who have entered into agreements with
AIM Distributors. Investors may be charged a fee by their agents or brokers for
effecting transactions in Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration
or incentive to dealers who sell a minimum dollar amount of the shares of the
AIM Funds during a specified period of time. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell significant
amounts of shares. At the option of the dealer, such incentives may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the
full number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND
uses the amortized cost method of valuing the securities it holds and rounds its
per share net asset value to the nearest whole cent, it is anticipated that the
net asset value of the shares of that fund will remain constant at $1.00 per
share. However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00
net asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued
upon written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in
effect for at least one year and the shareholder has not made an additional
purchase in that account within the preceding six calendar months and (2) the
value of such account drops below $500 for three consecutive months as a result
of
A-3
<PAGE>
AIM INVESTOR'S GUIDE
redemptions or exchanges, the fund has the right to redeem the account, after
giving the shareholder 60 days' prior written notice, unless the shareholder
makes additional investments within the notice period to bring the account value
up to $500. If a fund determines that a shareholder has provided incorrect
information in opening an account with a fund or in the course of conducting
subsequent transactions with the fund related to such account, the fund may, in
its discretion, redeem the account and distribute the proceeds of such
redemption to the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS
AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE
ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
[SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of Advisor Class Funds. The Program automatically
rebalances holdings of Advisor Class Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, Advisor Class Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of
shares of one or more Advisor Class Funds in the shareholder's Personal
Portfolio for shares of the same class(es) of one or more other Advisor Class
Funds in the shareholder's Personal Portfolio. See "Exchange Privilege." If
shares of the Advisor Class Fund(s) in a shareholder's Personal Portfolio have
appreciated during a rebalancing period, the Program will result in shares of
Advisor Class Fund(s) that have appreciated most during the period being
exchanged for shares of Advisor Class Fund(s) that have appreciated least. SUCH
EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR
LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions." Participation in
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AIM INVESTOR'S GUIDE
the Program does not assure that a shareholder will profit from purchases under
the Program nor does it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal
Portfolio on the 28th day of the last month of the period chosen (or the
immediately preceding business day if the 28th is not a business day), subject
to any limitations below. The Program will not execute an exchange if the
variance in a shareholder's Personal Portfolio for a particular Advisor Class
Fund would be 2% or less. In predesignating percentages, shareholders must use
whole percentages and totals must equal 100%. Shareholders participating in the
Program may not request issuance of physical certificates representing an
Advisor Class Fund's shares. The AIM Funds and AIM Distributors reserve the
right to modify, suspend, or terminate the Program at any time on 60 days' prior
written notice to shareholders. A request to participate in the Program must be
received in good order at least five business days prior to the next rebalancing
date. Once a shareholder establishes the Program for his or her Personal
Portfolio, a shareholder cannot cancel or change which rebalancing frequency,
which Advisor Class Funds or what allocation percentages are assigned to the
Program, unless canceled or changed in writing and received by the Transfer
Agent in good order at least five business days prior to the rebalancing date.
Certain dealers/financial institutions may charge a fee for establishing
accounts relating to the Program. Investors should contact their
dealers/financial institutions or AIM Distributors for more information.]
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the
Advisor Class Funds may participate in an exchange privilege as described below.
AIM Distributors acts as distributor for the Advisor Class Funds which represent
a range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor Class Fund acquired through exchange
must be qualified for sale in the state in which the shareholder resides; (c)
the exchange must be made between accounts having identical registrations and
addresses; (d) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund; (e) the account from
which shares have been exchanged must be coded as having a certified taxpayer
identification number on file or, in the alternative, an appropriate IRS Form
W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must
have been received by the fund; (f) newly acquired shares (through either an
initial or subsequent investment) are held in an account for at least ten
business days, and all other shares are held in an account for at least one day,
prior to the exchange; and (g) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the Advisor
Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
determined on the date that such request is received, but
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AIM INVESTOR'S GUIDE
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that an Advisor Class Fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into an Advisor Class Fund that declares daily
dividends ("Dividends, Distributions and Tax Matters -- Dividends and
Distributions," below), and the release of the exchange proceeds is delayed for
the foregoing five-day period, such shareholder will not begin to accrue
dividends until the sixth business day after the exchange. Advisor Class shares
purchased by check may not be exchanged until it is determined that the check
has cleared, which may take up to ten business days from the date that the check
is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of
Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the
right to reject any exchange request, if, in the judgment of AIM Distributors,
the number of requests or the total value of the shares that are the subject of
the exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an
exchange by telephone. A shareholder may give exchange information to his
Financial Adviser. If a shareholder does not wish to allow telephone exchanges
by any person in his account, he should decline that option on the account
application. AIM Distributors has made arrangements with certain dealers and
investment advisory firms to accept telephone instructions to exchange shares
between any of the Advisor Class Funds. AIM Distributors reserves the right to
impose conditions on dealers or investment advisors who make telephone exchanges
of shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/ financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/ financial institutions may charge service fees for handling
repurchase transactions.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
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AIM INVESTOR'S GUIDE
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by
telephone. If a shareholder does not wish to allow telephone redemptions by any
person in his account, he should decline that option on the account application.
The telephone redemption feature can be used only if: (a) the redemption
proceeds are to be mailed to the address of record or transferred electronically
or wired to the pre-authorized bank account; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information, and (e) the proceeds
of the redemption do not exceed $50,000. AIM Distributors has made arrangements
with certain dealers and investment advisors to accept telephone instructions
for the redemption of shares. AIM Distributors reserves the right to impose
conditions on these dealers and investment advisors, including the condition
that they enter into agreements (which contain additional conditions with
respect to the redemption of shares) with AIM Distributors. The Transfer Agent
and AIM Distributors will not be liable for any loss, expense or cost arising
out of any telephone redemption request effected in accordance with the
authorization set forth in the appropriate form if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's taxpayer identification
number and current address, and mailings of confirmations promptly after the
transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the
Advisor Class Funds are redeemed at their net asset value next computed after a
request for redemption in proper form (including signature guarantees and other
required documentation for written redemptions) is received by the Transfer
Agent or certain financial institutions (or their designees) who are authorized
to accept redemption orders on behalf of the AIM Funds, provided that such
orders are transmitted to the Transfer Agent prior to the time set for receipt
of such orders. Orders for the redemption of Advisor Class shares received on
any business day of an AIM Fund will be confirmed at the price determined as of
the close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the
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AIM INVESTOR'S GUIDE
proceeds are to be sent to the address of record. These requirements may be
waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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AIM INVESTOR'S GUIDE
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each Advisor Class Fund's policy regarding the payment of dividends and
distributions is set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- -------------------------------------------------- ---------------------------- ----------------- -------------
<S> <C> <C> <C>
AIM AMERICA VALUE FUND............................ declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND....................... declared and paid annually annually annually
AIM DOLLAR FUND................................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND......................... declared and paid annually annually annually
AIM EUROPE GROWTH FUND............................ declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND.... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND................ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND................... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND....................... declared and paid annually annually annually
AIM GLOBAL HIGH INCOME FUND....................... declared and paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND.................... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND......................... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND................ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............................ declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND..................... declared and paid annually annually annually
AIM JAPAN GROWTH FUND............................. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND.................... declared and paid annually annually annually
AIM MID CAP GROWTH FUND........................... declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND....................... declared and paid annually annually annually
AIM SMALL CAP EQUITY FUND......................... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND......................... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested
on the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to
be higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of 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, as
discussed below.
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TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM
Fund intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid imposition of the Excise Tax.
Nevertheless, shareholders normally are subject to federal income tax, and any
applicable state and local income taxes, on the dividends and distributions
received by them from a fund whether in the form of cash or additional fund
shares. With respect to tax-exempt shareholders, dividends and distributions
from the AIM Funds are not subject to federal income taxation to the extent
permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a non-
corporate taxpayer's net capital gain depending on the taxpayer's holding period
and marginal rate of federal income tax -- generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. An AIM Fund may divide each net
capital gain distribution into a 28% rate gain distribution and a 20% rate gain
distribution (in accordance with its holding periods for the securities it sold
that generated the distributed gain), in which event its shareholders must treat
those portions accordingly; thus, the relevant holding period is determined by
how long the fund has held the securities on which the gain was realized, not by
how long a shareholder has held fund shares.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31%
ON TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A
FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE
NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
A-10
<PAGE>
AIM INVESTOR'S GUIDE
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM AMERICA VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND,
AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM MID CAP GROWTH
FUND, AIM SMALL CAP EQUITY FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL TAX
INFORMATION. Certain states exempt from income taxes dividends paid by mutual
funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a 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, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each Advisor Class Fund's transfer
agent and dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts
should be directed to an A I M Fund Services, Inc. Client Services
Representative by calling (800) 959-4246. The Transfer Agent may impose certain
copying charges for requests for copies of shareholder account statements and
other historical account information older than the current year and the
immediately preceding year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties (the "Software"). Many
software systems in use today are unable to distinguish between the year 2000
from the year 1900. This defect if not cured will likely adversely affect the
services that AIM Management, its subsidiaries and other service providers to
the AIM Funds provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the fund(s) named on the cover page prior to
investing. Recipients of this Prospectus will be provided with a copy of the
annual report of the fund(s) to which this Prospectus relates, upon request and
without charge. If
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<PAGE>
AIM INVESTOR'S GUIDE
several members of a household own shares of the same fund, only one annual or
semi-annual report will be mailed to that address. To receive additional copies,
please call (800) 347-4246, or write to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. A Statement of Additional Information has been filed
with the SEC and is available upon request and without charge, by writing or
calling AIM Distributors. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund. This Prospectus omits
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from this
Prospectus, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
A-12
<PAGE>
AIM STRATEGIC INCOME FUND
[LOGO]
INVESTMENT MANAGER
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
SUB-ADVISER
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
PRINCIPAL UNDERWRITER
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
[ ]
[ ]
[ ]
For more complete information about any other fund in The AIM Family of
Funds-Registered Trademark-, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
CLASS A AND CLASS B SHARES OF
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
(SERIES PORTFOLIOS OF AIM INVESTMENT FUNDS)
11 Greenway Plaza
Suite 100
Houston, TX 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 FREE OF CHARGE 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 SEPTEMBER 8, 1998 RELATING TO THE AIM
DEVELOPING MARKETS FUND PROSPECTUS, THE AIM EMERGING MARKETS FUND PROSPECTUS AND
THE AIM LATIN AMERICAN GROWTH FUND PROSPECTUS EACH DATED SEPTEMBER 8, 1998
Statement of Additional Information Page 1
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Introduction............................................................................................................. 3
Investment Objectives and Policies....................................................................................... 4
Options, Futures and Currency Strategies................................................................................. 11
Risk Factors............................................................................................................. 19
Investment Limitations................................................................................................... 26
Execution of Portfolio Transactions...................................................................................... 30
Trustees and Executive Officers.......................................................................................... 32
Control Persons and Principal Holders of Securities...................................................................... 34
Management............................................................................................................... 36
Valuation of Fund Shares................................................................................................. 41
How to Purchase and Redeem Shares........................................................................................ 41
Taxes.................................................................................................................... 44
Additional Information................................................................................................... 47
Investment Results....................................................................................................... 48
Description of Debt Ratings.............................................................................................. 52
Financial Statements..................................................................................................... 54
</TABLE>
[LOGO]
Statement of Additional Information Page 2
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
INTRODUCTION
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of AIM Developing Markets Fund ("Developing Markets Fund"), AIM Emerging
Markets Fund ("Emerging Markets Fund"), and AIM Latin American Growth Fund
("Latin American Fund") (each, a "Fund," and collectively, the "Funds").
Developing Markets Fund and Latin American Fund each is a non-diversified, and
Emerging Markets Fund is a diversified series of AIM Investment Funds (the
"Trust"), a registered open-end management investment company organized as a
Delaware business trust. On October 31, 1997, the Developing Markets Fund, which
had no prior operating history, acquired the assets and assumed the liabilities
of G.T. Global Developing Markets Fund, Inc. (the "Predecessor Fund"), a
closed-end investment company.
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and INVESCO (NY), Inc. (the "Sub-adviser") serves as the
investment sub-adviser and sub-administrator for the Funds.
The Trust is a series mutual fund. The rules and regulations of the United
States Securities and Exchange Commission (the "SEC") require all mutual funds
to furnish prospective investors certain information concerning the activities
of the fund being considered for investment. This information for Developing
Markets Fund is included in a Prospectus dated September 8, 1998, for Emerging
Markets Fund is included in a separate Prospectus dated September 8, 1998 and
for Latin American Fund is included in a separate Prospectus dated September 8,
1998. Additional copies of the Prospectuses and this Statement of Additional
Information may be obtained without charge by writing the principal distributor
of the Funds' shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box
4739, Houston, TX 77210-4739 or by calling (800) 347-4246. Investors must
receive a Prospectus before they invest.
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
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 FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name G.T. Investment Funds, Inc., which
was organized as a Maryland corporation on October 29, 1987. The Trust was
reorganized on September 4, 1998 as a Delaware business trust, and is registered
with the SEC as a diversified open-end series management investment company. The
Trust currently consists of thirteen separate portfolios: AIM Global Financial
Services Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund, AIM
Global Consumer Products and Services Fund, AIM Global Healthcare Fund, AIM
Global Telecommunications Fund, AIM Global Government Income Fund, AIM Global
High Income Fund, AIM Strategic Income Fund, AIM Global Growth and Income Fund,
AIM Emerging Markets Fund, AIM Developing Markets Fund, and AIM Latin American
Growth Fund. Each of these funds has three separate classes: Class A, Class B
and Advisor Class shares. All historical financial and other information
contained in this Statement of Additional Information for periods prior to
September 4, 1998, is that of the series of G.T. Investment Funds, Inc. (renamed
AIM Investment Funds, Inc.)
This Statement of Additional Information relates solely to the Class A and B
shares of the Fund.
The term "majority of the outstanding shares" of the Trust, of a particular Fund
or of a particular class of a Fund means, respectively, the vote of the lesser
of (a) 67% or more of the shares of the Trust, such Fund or such class present
at a meeting of the Trust's shareholders, if the holders of more than 50% of the
outstanding shares of the Trust, such Fund or such class are present or
represented by proxy, or (b) more than 50% of the outstanding shares of the
Trust, such Fund or such class.
Statement of Additional Information Page 3
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Class A, Class B and Advisor Class shares of each Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees 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 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 Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
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
Trustees of the Trust. In such event, the remaining holders cannot elect any
trustees of the Trust.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND
POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
DEVELOPING MARKETS FUND. The primary investment objective of Developing
Markets Fund is long-term capital appreciation. Its secondary investment
objective is income, to the extent consistent with seeking capital appreciation.
The Fund normally invests substantially all of its assets in issuers in the
developing (or "emerging") markets of Asia, Europe, Latin America and elsewhere.
The Fund does not consider the following countries to be emerging markets:
Australia, Austria, Belgium, Canada, Denmark, England, Finland, France, Germany,
Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden,
Switzerland and the United States.
EMERGING MARKETS FUND. The investment objective of Emerging Markets Fund is
long-term growth of capital. The Fund seeks this objective by investing, under
normal circumstances, at least 65% of its total assets in equity securities of
companies in emerging markets. The Fund does not consider the following
countries to be emerging markets: Australia, Austria, Belgium, Canada, Denmark,
England, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New
Zealand, Norway, Spain, Sweden, Switzerland and United States. The Fund normally
may invest up to 35% of its assets in a combination of (i) debt securities of
government or corporate issuers in emerging markets; (ii) equity and debt
securities of issuers in developed countries, including the United States; (iii)
securities of issuers in emerging markets not included in the list of emerging
markets set forth in the Fund's current Prospectus, if investing therein becomes
feasible and desirable subsequent to the date of the Fund's current Prospectus;
and (iv) cash and money market instruments.
In determining what countries constitute emerging markets with respect to
Developing Market Fund and Emerging Markets Fund, the Sub-adviser will consider,
among other things, data, analysis, and classification of countries published or
disseminated by the International Bank for Reconstruction and Development
(commonly known as the World Bank) and the International Finance Corporation
("IFC").
LATIN AMERICAN FUND. The investment objective of Latin American Fund is
capital appreciation. The Fund will normally invest at least 65% of its total
assets in securities of a broad range of Latin American issuers. Under current
market conditions, the Fund expects to invest primarily in equity and debt
securities issued by companies and governments in Mexico, Chile, Brazil and
Argentina. Though the Fund can normally invest up to 35% of its total assets in
U.S. securities, the Fund reserves the right to be primarily invested in U.S.
securities for temporary defensive purposes or pending investment of the
proceeds of the offering made hereby.
SELECTION OF EQUITY INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Funds, the Sub-adviser ordinarily
considers the following factors: prospects for relative economic growth among
the different countries in which a Fund may invest; expected levels of
inflation; government policies influencing business conditions; the outlook for
currency relationships; and the range of the individual investment opportunities
available to international investors.
Statement of Additional Information Page 4
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
In analyzing companies for investment by each Fund, the Sub-adviser ordinarily
looks for one or more of the following characteristics: an above-average
earnings growth per share; high return on invested capital; healthy balance
sheet; sound financial and accounting policies and overall financial strength;
strong competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strength of management; and
general operating characteristics which will enable the companies to compete
successfully in their respective marketplaces. In certain countries,
governmental restrictions and other limitations on investment may affect the
maximum percentage of equity ownership in any one company by the Funds. In
addition, in some instances only special classes of securities may be purchased
by foreigners and the market prices, liquidity and rights with respect to those
securities may vary from shares owned by nationals.
Although the Funds value their assets daily in terms of U.S. dollars, the Funds
do not intend to convert their holdings of foreign currencies into U.S. dollars
on a daily basis. The Funds will do so from time to time, and investors should
be aware of the costs of currency conversion. Although foreign exchange dealers
do not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Funds at one rate, while offering a lesser rate of exchange should a Fund desire
to sell that currency to the dealer.
There may be times when, in the opinion of the Sub-adviser, prevailing market,
economic or political conditions warrant reducing the proportion of each Fund's
assets invested in equity securities and increasing the proportion held in cash
or short-term obligations denominated in U.S. dollars or other currencies. A
portion of each Fund's assets may be held in U.S. dollars or short-term
interest-bearing dollar-denominated securities to provide for ongoing expenses
and redemptions.
The Funds may be prohibited under the Investment Company Act of 1940, as amended
("1940 Act"), from purchasing the securities of any foreign company that, in its
most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
countries, including those in Latin America, commercial banks act as securities
broker/dealers, investment advisers and underwriters or otherwise engage in
securities-related activities, which may limit the Fund's ability to hold
securities issued by such banks. The Fund has obtained an exemption from the
Securities and Exchange Commission ("SEC") to permit it to invest in certain of
these securities subject to certain restrictions.
For investment purposes, an issuer is typically considered as located in a
particular country if it (a) is incorporated under the laws of or has its
principal office in that country, or (b) it normally derives 50% or more of its
total revenue from business in that country. However, these are not absolute
requirements, and certain companies incorporated in a particular country and
considered by the Sub-adviser to be located in that country may have substantial
off-shore operations or subsidiaries and/or export sales exceeding in size the
assets or sales in that country.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Funds may invest in the securities of investment companies (including
investment vehicles or companies advised by the Sub-adviser or its affiliates
("Affiliated Funds")) within the limits of the 1940 Act. These limitations
currently provide that, in general, each Fund may purchase shares of a
closed-end investment company unless (a) such a purchase would cause the Fund to
own in the aggregate more than 3 percent of the total outstanding voting stock
of the investment company or (b) such a purchase would cause the Fund to have
more than 5 percent of its total assets invested in the investment company or
more than 10 percent of its total assets invested in an aggregate of all such
investment companies. Investment in such investment companies may also involve
the payment of substantial premiums above the value of such companies' portfolio
securities. The Funds do not intend to invest in such investment companies
unless, in the judgment of the Sub-adviser, the potential benefits of such
investments justify the payment of any applicable premiums. The return on such
securities will be reduced by operating expenses of such companies including
payments to the investment managers of those investment companies. With respect
to investments in Affiliated Funds, the Sub-adviser waives its advisory fee to
the extent that such fees are based on assets of the Fund invested in Affiliated
Funds.
Certain countries in which the Funds invest presently may be made only by
acquiring shares of other investment companies with local governmental approval
to invest in those countries. At such time as direct investment in those
countries is allowed, the Funds anticipate investing directly in those markets.
Statement of Additional Information Page 5
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
DEPOSITORY RECEIPTS
Each Fund may hold equity securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs"), Global
Depository Receipts ("GDRs") and European Depository Receipts ("EDRs"), or other
securities convertible into securities of eligible issuers. These securities may
not necessarily be denominated in the same currency as the securities for which
they may be exchanged. ADRs and ADSs typically are issued by an American bank or
trust company and evidence ownership of underlying securities issued by a
foreign corporation. EDRs, which are sometimes referred to as Continental
Depository Receipts ("CDRs"), are issued in Europe typically by foreign banks
and trust companies and evidence ownership of either foreign or domestic
securities. GDRs are similar to EDRs and are designed for use in several
international financial markets. Generally, ADRs and ADSs in registered form are
designed for use in United States securities markets and EDRs in bearer form are
designed for use in European securities markets. For purposes of each Fund's
investment policies, a Fund's investments in ADRs, ADSs, GDRs and EDRs will be
deemed to be investments in the equity securities representing securities of
foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by each Fund in connection with other
securities or separately and provide a Fund with the right to purchase at a
later date other securities of the issuer. Warrants are securities permitting,
but not obligating, their holder to subscribe for other securities or
commodities. Warrants do not carry with them the right to dividends or voting
rights with respect to the securities that they entitle their holder to
purchase, and they do not represent any rights in the assets of the issuer. As a
result, warrants may be considered more speculative than certain other types of
investments. In addition, the value of a warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have value
if it is not exercised prior to its expiration date.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Funds may make secured loans
of portfolio securities amounting to not more than 30% (in the case of
Developing Markets Fund and Emerging Markets Fund) or 25% (in the case of Latin
American Fund) of its total assets. Securities loans are made to broker/dealers
or institutional investors pursuant to agreements requiring that the loans
continuously be secured by collateral at least equal at all times to the value
of the securities lent plus any accrued interest, "marked to market" on a daily
basis. The Funds may pay reasonable administrative and custodial fees in
connection with loans of its securities. While the securities loan is
outstanding with respect to a Fund, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities within
the stated settlement period. The Fund will not have the right to vote equity
securities while they are lent, but it may call in a loan in anticipation of any
important vote. Loans will be made only to firms deemed by the Sub-adviser to be
of good standing and will not be made unless, in the judgment of the
Sub-adviser, the consideration to be earned from such loans would justify the
risk.
Statement of Additional Information Page 6
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject a Fund to investment risks that are
different in some respects from those of investments in obligations of domestic
issuers. Although a Fund typically will acquire obligations issued and supported
by the credit of U.S. or foreign banks having total assets at the time of
purchase in excess of $1 billion, this $1 billion figure is not an investment
policy or restriction of any Fund. For the purposes of calculation with respect
to the $1 billion figure, the assets of a bank will be deemed to include the
assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to a Fund if the other party
to the repurchase agreement becomes bankrupt, the Funds intend to enter into
repurchase agreements only with banks and dealers believed by the Sub-adviser to
present minimum credit risks in accordance with guidelines established by the
Trust's Board of Trustees. The Sub-adviser will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
The Funds will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, a Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on a Fund's ability to
sell the collateral and the Fund could suffer a loss. However, with respect to
financial institutions whose bankruptcy or liquidation proceedings are subject
to the U.S. Bankruptcy Code, each Fund intends to comply with provisions under
the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of a Fund's assets that may be
subject to repurchase agreements at any given time. The Funds will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 15% (for Emerging Markets Fund and Developing Markets Fund) or
10% (for Latin American Fund) of the value of its net assets would be invested
in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
No Fund's borrowings will exceed 33 1/3% of the Fund's total assets, i.e., each
Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of a Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Fund also may borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. Any borrowing by a Fund may cause greater fluctuation in the value
of its shares than would be the case if the Fund did not borrow.
The Funds' fundamental investment limitations permit them to borrow money for
leveraging purposes. Developing Market Fund, however, currently is prohibited,
pursuant to a non-fundamental investment policy, from borrowing money in order
to purchase securities. In addition, Emerging Markets Fund and Latin American
Fund currently are prohibited, pursuant to a non-fundamental investment policy,
from purchasing securities during times when outstanding borrowings represent
more than 5% of its assets. Nevertheless, this policy may be changed in the
future by a vote of a majority of the Trust's Board of Trustees. If a Fund
employs leverage in the future, it would be subject to certain additional risks.
Use of leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the Fund's net asset value. When the
income and gains on securities purchased with the proceeds of borrowings exceed
the costs of such borrowings, the Fund's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, the Fund's earnings or net asset value would
decline faster than would otherwise be the case.
Statement of Additional Information Page 7
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Each Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which a Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. Emerging Markets Fund also may engage in
"roll" borrowing transactions which involve the Fund's sale of Government
National Mortgage Association certificates or other securities together with a
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date. Each Fund will segregate with a
custodian, cash or liquid securities in an amount sufficient to cover its
obligations under "roll" transactions (for Emerging Markets Fund) and reverse
repurchase agreements with broker/dealers. No segregation is required for
reverse repurchase agreements with banks.
SHORT SALES
The Fund may make short sales of securities, although it has no current
intention of doing so. A short sale is a transaction in which the Fund sells a
security in anticipation that the market price of that security will decline.
The Fund may make short sales (i) as a form of hedging to offset potential
declines in long positions in securities it owns, or anticipates acquiring, and
(ii) in order to maintain portfolio flexibility.
When a Fund makes a short sale of a security it does not own, it must borrow the
security sold short and deliver it to the broker-dealer or other intermediary
through which it made the short sale. The Fund may have to pay a fee to borrow
particular securities and will often be obligated to pay over any payments
received on such borrowed securities.
A Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral deposited with the intermediary.
The Fund will also be required to deposit collateral with its custodian to the
extent, if any, necessary so that the value of both collateral deposits in the
aggregate is at all times equal to at least 100% of the current market value of
the security sold short. Depending on arrangements made with the intermediary
from which it borrowed the security regarding payment of any amounts received by
the Fund on such security, the Fund may not receive any payments (including
interest) on its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss is theoretically unlimited.
Neither Emerging Markets Fund nor Latin American Fund will make a short sale if,
after giving effect to such sale, the market value of the securities sold short
exceeds 25% of the value of its total assets or the Fund's aggregate short sales
of the securities of any one issuer exceed the lesser of 2% of the Fund's net
assets or 2% of the securities of any class of the issuer. Moreover, these Funds
may engage in short sales only with respect to securities listed on a national
securities exchange. These Funds may make short sales "against the box" without
respect to such limitations. In this type of short sale, at the time of the sale
the Fund owns the security it has sold short or has the immediate and
unconditional right to acquire at no additional cost the identical security.
Developing Markets Fund may only make short sales "against the box." The Fund
might make a short sale "against the box" in order to hedge against market risks
when the Sub-adviser believes that the price of a security may decline, causing
a decline in the value of a security owned by the Fund or a security convertible
into or exchangeable for such security. In such case, any future losses in the
Fund's long position should be reduced by a gain in the short position.
Conversely, any gain in the long position should be reduced by a loss in the
short position. The extent to which such gains or losses in the long position
are reduced will depend upon the amount of the securities sold short relative to
the amount of the securities the Fund owns, either directly or indirectly, and,
in the case where the Fund owns convertible securities, changes in the
investment values or conversion premiums of such securities. There will be
certain additional transaction costs associated with short sales "against the
box," but the Fund will endeavor to offset these costs with income from the
investment of the cash proceeds of short sales.
TEMPORARY DEFENSIVE STRATEGIES
The Funds may invest in the following types of money market instruments (i.e.,
debt instruments with less than 12 months remaining until maturity) denominated
in U.S. dollars or other currencies (in the case of Latin American Fund, the
currency of any Latin American country): (a) obligations issued or guaranteed by
the U.S. or foreign governments (in the case of Latin American Fund, the
government of any Latin American country), their agencies, instrumentalities or
municipalities; (b) obligations of international organizations designed or
supported by multiple foreign governmental
Statement of Additional Information Page 8
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
entities to promote economic reconstruction or development; (c) finance company
obligations, corporate commercial paper and other short-term commercial
obligations; (d) bank obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances); (e) repurchase agreements
with respect to the foregoing; and (f) other substantially similar short-term
debt securities with comparable characteristics.
The Funds may invest in commercial paper rated as low as A-3 by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or P-3 by Moody's
Investors Service, Inc. ("Moody's") or, if not rated, determined by the Manager
to be of comparable quality. Obligations rated A-3 and P-3 are considered by S&P
and Moody's, respectively, to have an acceptable capacity for timely repayment.
However, these securities may be more vulnerable to adverse effects of changes
in circumstances than obligations carrying higher designations.
SAMURAI AND YANKEE BONDS
Subject to its fundamental investment restrictions, Developing Markets Fund and
Emerging Markets Fund may invest in yen-denominated bonds sold in Japan by
non-Japanese issuers ("Samurai bonds"), and may invest in dollar-denominated
bonds sold in the United States by non-U.S. issuers ("Yankee bonds"). As
compared with bonds issued in their countries of domicile, such bond issues
normally carry a higher interest rate but are less actively traded. It is the
policy of each of these Funds to invest in Samurai or Yankee bond issues only
after taking into account considerations of quality and liquidity, as well as
yield. In the case of Emerging Markets Fund, these bonds would be issued by
governments which are members of the Organization for Economic Cooperation and
Development or have AAA ratings.
DEBT CONVERSIONS
Several Latin American countries have adopted debt conversion programs, pursuant
to which investors may use external debt of a country, directly or indirectly,
to make investments in local companies. The terms of the various programs vary
from country to country, although each program includes significant restrictions
on the application of the proceeds received in the conversion and on the
remittance of profits on the investment and of the invested capital. Latin
American Fund intends to acquire Sovereign Debt, as defined in the Prospectus,
to hold and trade in appropriate circumstances as described in the Prospectus,
as well as to participate in Latin American debt conversion programs. The
Sub-adviser will evaluate opportunities to enter into debt conversion
transactions as they arise but does not currently intend to invest more than 5%
of the Fund's assets in such programs.
PREMIUM SECURITIES
Developing Markets Fund may invest in income securities bearing coupon rates
higher than prevailing market rates. Such "premium" securities are typically
purchased at prices greater than the principal amounts payable on maturity. The
Fund will not amortize the premium paid for such securities in calculating its
net investment income. As a result, in such cases the purchase of such
securities provides the Fund a higher level of investment income distributable
to shareholders on a current basis than if the Fund purchased securities bearing
current market rates of interest. If securities purchased by the Fund at a
premium are called or sold prior to maturity, the Fund will realize a loss to
the extent the call or sale price is less than the purchase price. Additionally,
the Fund will realize a loss if it holds such securities to maturity.
INDEXED DEBT SECURITIES
Developing Markets Fund may invest in debt securities issued by banks and other
business entities not located in developing market countries that are indexed to
certain specific foreign currency exchange rates, interest rates or other
reference rates. The terms of such securities provide that their principal
amount is adjusted upwards or downwards (but ordinarily not below zero) at
maturity to reflect changes in the exchange rate between two currencies (or
other rates) while the obligations are outstanding. While such securities offer
the potential for an attractive rate of return, they also entail the risk of
loss of principal. New forms of such securities continue to be developed. The
Fund may invest in such securities to the extent consistent with its investment
objectives.
STRUCTURED INVESTMENTS
Developing Markets Fund may invest a portion of its assets in interests in
entities organized and operated solely for the purpose of restructuring the
investment characteristics of Sovereign Debt. This type of restructuring
involves the deposit with or purchase by an entity, such as a corporation or
trust, of specified instruments (such as commercial bank loans or Brady Bonds)
and the issuance by that entity of one or more classes of securities
("Structured Investments") backed by, or representing interests in, the
underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued Structured Investments to create securities
with different investment characteristics such as varying maturities, payment
priorities and interest rate provisions, and the extent of the payments made
with respect to Structured Investments is dependent on the extent of the cash
flow on the underlying instruments. Because Structured
Statement of Additional Information Page 9
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Investments of the type in which the Fund anticipates it will invest typically
involve no credit enhancement, their credit risk generally will be equivalent to
that of the underlying instruments.
Developing Markets Fund is permitted to invest in a class of Structured
Investments that is either subordinated or not subordinated to the right of
payment of another class. Subordinated Structured Investments typically have
higher yields and present greater risks than unsubordinated Structured
Investments.
Certain issuers of Structured Investments may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, Developing Markets Fund's
investment in these Structured Investments may be limited by the restrictions
contained in the 1940 Act described above under "Investment Objectives and
Policies -- Investments in Other Investment Companies." Structured Investments
are typically sold in private placement transactions, and there currently is no
active trading market for Structured Investments.
STRIPPED INCOME SECURITIES
Developing Markets Fund may invest a portion of its assets in stripped income
securities, which are obligations representing an interest in all or a portion
of the income or principal components of an underlying or related security, a
pool of securities or other assets. In the most extreme case, one class will
receive all of the interest (the interest only or "IO" class), while the other
class will receive all of the principal (the principal-only or "PO" class). The
market values of stripped income securities tend to be more volatile in response
to changes in interest rates than are conventional income securities.
FLOATING AND VARIABLE RATE INCOME SECURITIES
Developing Markets Fund may invest a portion of its assets in floating or
variable rate income securities. Income securities may provide for floating or
variable rate interest or dividend payments. The floating or variable rate may
be determined by reference to a known lending rate, such as a bank's prime rate,
a certificate of deposit rate or the London Inter Bank Offered Rate (LIBOR).
Alternatively, the rate may be determined through an auction or remarketing
process. The rate also may be indexed to changes in the values of interest rate
or securities indexes, currency exchange rates or other commodities. The amount
by which the rate paid on an income security may increase or decrease may be
subject to periodic or lifetime caps. Floating and variable rate income
securities include securities whose rates vary inversely with changes in market
rates of interest. Such securities may also pay a rate of interest determined by
applying a multiple to the variable rate. The extent of increases and decreases
in the value of securities whose rates vary inversely with changes in market
rates of interest generally will be larger than comparable changes in the value
of an equal principal amount of a fixed rate security having similar credit
quality, redemption provisions and maturity.
SWAPS, CAPS, FLOORS AND COLLARS
Developing Markets Fund may enter into interest rate, currency and index swaps
and may purchase or sell related caps, floors and collars and other derivative
instruments. The Fund expects to enter into these transactions primarily to
preserve a return or spread on a particular investment or portion of its
portfolio, to protect against currency fluctuations, as a technique for managing
the portfolio's duration (I.E., the price sensitivity to changes in interest
rates) or to protect against any increase in the price of securities the Fund
anticipates purchasing at a later date. The Fund intends to use these
transactions as hedges and will not sell interest rate caps, floors or collars
if it does not own securities or other instruments providing an income stream
roughly equivalent to what the Fund may be obligated to pay.
Interest rate swaps involve the exchange by Developing Markets Fund with another
party of their respective commitments to pay or receive interest (for example,
an exchange of floating rate payments for fixed rate payments) with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount based on changes in the values of the reference
indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a combination of a
cap and a floor that preserves a certain return within a predetermined range of
interest rates or values.
Statement of Additional Information Page 10
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Sub-adviser's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While the Sub-adviser is experienced in
the use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a
short hedge because the Sub-adviser projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might by wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (i.e.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. A Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Funds.
WRITING CALL OPTIONS
Each Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of the Sub-adviser are not expected to make any major price moves in the
near future but that, over the long term, are deemed to be attractive
investments for a Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Statement of Additional Information Page 11
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Fund's investment objective. When writing a call option, a Fund, in return for
the premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, a Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that a Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Funds do not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Funds' policies that limit the pledging or mortgaging of their
assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund will be obligated to
sell the security or currency at less than its market value.
The premium that a Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium a Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, the Sub-adviser will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit a Fund to write another
call option on the underlying security or currency with either a different
exercise price, expiration date or both.
Each Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, a Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase transaction if the
cost of the transaction is less or more, respectively, than the premium received
from writing the option. Because increases in the market price of a call option
generally will reflect increases in the market price of the underlying security
or currency, any loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the underlying security or
currency owned by the Fund.
WRITING PUT OPTIONS
Each Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is identical substantially to that of call options.
A Fund generally would write put options in circumstances where the Sub-adviser
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
Statement of Additional Information Page 12
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to sell the security or currency at more than its market value.
PURCHASING PUT OPTIONS
Each Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, a Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
A Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. The premium paid for the put option and any
transaction costs would reduce any profit otherwise available for distribution
when the security or currency is eventually sold.
A Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Fund may purchase call options on securities, indices and currencies. As
the holder of a call option, a Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. A Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by a Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to a Fund in purchasing a large block of securities
that would be more difficult to acquire by direct market purchases. So long as
it holds such a call option, rather than the underlying security or currency
itself, the Fund is partially protected from any unexpected decline in the
market price of the underlying security or currency and, in such event, could
allow the call option to expire, incurring a loss only to the extent of the
premium paid for the option.
A Fund also may purchase call options on underlying securities or currencies it
owns to avoid realizing losses that would result in a reduction of its current
return. For example, where a Fund has written a call option on an underlying
security or currency having a current market value below the price at which it
purchased the security or currency, an increase in the market price could result
in the exercise of the call option written by the Fund and the realization of a
loss on the underlying security or currency. Accordingly, the Fund could
purchase a call option on the same underlying security or currency, which could
be exercised to fulfill the Fund's delivery obligations under its written call
(if it is exercised). This strategy could allow the Fund to avoid selling the
portfolio security or currency at a time when it has an unrealized loss;
however, the Fund would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of a Fund's
total assets at the time of purchase.
Each Fund may attempt to accomplish objectives similar to those involved in its
use of Forward Contracts by purchasing put or call options on currencies. A put
option gives a Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives a Fund as
purchaser the right (but not the obligation) to purchase a specified amount of
currency at the exercise price at any time until (American style) or on
(European style) the expiration date. A Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or
Statement of Additional Information Page 13
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
anticipates holding securities. If the currency's value should decline against
the dollar, the loss in currency value should be offset, in whole or in part, by
an increase in the value of the put. If the value of the currency instead should
rise against the dollar, any gain to the Fund would be reduced by the premium it
had paid for the put option. A currency call option might be purchased, for
example, in anticipation of, or to protect against, a rise in the value against
the dollar of a currency in which a Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation), and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
A Fund may also sell OTC options and, in connection therewith, segregate assets
or cover its obligations with respect to OTC options written by the Fund. The
assets used as cover for OTC options written by the Fund will be considered
illiquid unless the OTC options are sold to qualified dealers who agree that the
Fund may repurchase any OTC option it writes at a maximum price to be calculated
by a formula set forth in the option agreement. The cover for an OTC option
written subject to this procedure would be considered illiquid only to the
extent that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.
A Fund's ability to establish and close out positions in exchange-listed options
depends on the existence of a liquid market. Each Fund intends to purchase or
write only those exchange-traded options for which there appears to be a liquid
secondary market. However, there can be no assurance that such a market will
exist at any particular time. Closing transactions can be made for OTC options
only by negotiating directly with the contra party or by a transaction in the
secondary market if any such market exists. Although each Fund will enter into
OTC options only with contra parties that are expected to be capable of entering
into closing transactions with the Fund, there is no assurance that the Funds
will in fact be able to close out an OTC option position at a favorable price
prior to expiration. In the event of insolvency of the contra party, a Fund
might be unable to close out an OTC option position at any time prior to its
expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When a Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When a Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When a Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, a Fund
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AIM LATIN AMERICAN GROWTH FUND
cannot, as a practical matter, acquire and hold a portfolio containing exactly
the same securities as underlie the index and, as a result, bears a risk that
the value of the securities held will vary from the value of the index.
Even if a Fund could assemble a securities portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, a Fund, as the call writer, will not know that it has
been assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If a Fund purchases an index option and exercises it before the closing index
value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES
Each Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively, "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. A Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
A Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, a Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, a Fund realizes a gain; if it is
more, a Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, a Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that a Fund will be able to
enter into an offsetting
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AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
transaction with respect to a particular Futures Contract at a particular time.
If a Fund is not able to enter into an offsetting transaction, the Fund will
continue to be required to maintain the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
Each Fund's Futures transactions will be entered into for hedging purposes only;
that is, Futures Contracts will be sold to protect against a decline in the
price of securities or currencies that the Fund owns, or Futures Contracts will
be purchased to protect the Fund against an increase in the price of securities
or currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure a
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which a Fund entered into the Futures Contract will
be made on a daily basis as the price of the underlying security, currency or
index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Fund's portfolio being
hedged. The degree of imperfection of correlation depends upon circumstances
such as: variations in speculative market demand for Futures and for securities
or currencies, including technical influences in Futures trading; and
differences between the financial instruments being hedged and the instruments
underlying the standard Futures Contracts available for trading. A decision of
whether, when, and how to hedge involves skill and judgment, and even a
well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required
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AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
to make daily variation margin payments and might be required to maintain the
position being hedged by the Future or option or to maintain cash or securities
in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, 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 is exercised on the
last trading day 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 level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund writes an option on a Futures Contract, it will be required to deposit
initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is
"in-the-money"if the value of the underlying Futures Contract exceeds the
strike, i.e., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Trust's Board
of Trustees without a shareholder vote. This limitation does not limit the
percentage of the Fund's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. A Fund either may
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
A Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. A Fund might sell a
particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement and no commissions are charged at
any stage for trades. Each Fund will enter into such Forward Contracts with
major U.S. or foreign banks and securities or currency dealers in accordance
with the guidelines approved by the Trust's Board of Trustees.
Each Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing a Fund
to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, a Fund may
close out a Forward Contract requiring it to purchase a specified currency by
entering into a second contract, if its contra party agrees, entitling it to
sell the same amount of the same currency on the maturity date of the first
contract. The Fund would realize a gain or loss as a result of entering into
such an offsetting Forward Contract under either circumstance to the extent the
exchange rate or rates between the currencies involved moved between the
execution dates of the first contract and the offsetting contract.
The cost to a Fund of engaging in Forward Contracts varies with factors such as
the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities a Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
Each Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that a Fund owns or intends to acquire that are attributable to changes
in the value of the currency in which it is denominated. Such hedges do not,
however, protect against price movements in the securities that are attributable
to other causes.
A Fund might seek to hedge against changes in the value of a particular currency
when no Futures Contract, Forward Contract or option involving that currency is
available or one of such contracts is more expensive than certain other
contracts. In such cases, a Fund may hedge against price movements in that
currency by entering into a contract on another currency or basket of
currencies, the values of which the Sub-adviser believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts,
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
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AIM EMERGING MARKETS FUND
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occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options purchased by a Fund) expose the Fund to an obligation to another party.
No Fund will enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, currencies, or other options,
Forward Contracts or Futures Contracts, or (2) cash, receivables and short-term
debt securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Funds will comply with SEC
guidelines regarding cover for these instruments and, if the guidelines so
require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
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ILLIQUID SECURITIES
Developing Markets Fund and Emerging Markets Fund each may invest up to 15% of
its net assets, and Latin American Fund up to 10% of its net assets, in illiquid
securities. Securities may be considered illiquid if a Fund cannot reasonably
expect within seven days to sell the security for approximately the amount at
which the Fund values such securities. The sale of illiquid securities, if they
can be sold at all, generally will require more time and result in higher
brokerage charges or dealer discounts and other selling expenses than the sale
of liquid securities, such as securities eligible for trading on U.S. securities
exchanges or in the over-the-counter markets. Moreover, restricted securities
which may be illiquid for purposes of this limitation, often sell, if at all, at
a price lower than similar securities that are not subject to restrictions on
resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
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AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Trust's Board of
Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to the Sub-adviser in accordance with
procedures approved by the Board. The Sub-adviser takes into account a number of
factors in reaching liquidity decisions, including (i) the frequency of trading
in the security, (ii) the number of dealers who make quotes for the security,
(iii) the number of dealers who have undertaken to make a market in the
security, (iv) the number of other potential purchasers and (v) the nature of
the security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). The
Sub-adviser monitors the liquidity of securities in each Fund's portfolio and
periodically reports such determinations to the Board. If the liquidity
percentage restriction of a Fund is satisfied at the time of investment, a later
increase in the percentage of illiquid securities held by the Fund resulting
from a change in market value or assets will not constitute a violation of that
restriction. If as a result of a change in market value or assets, the
percentage of illiquid securities held by a Fund increases above the applicable
limit, the Sub-adviser will take appropriate steps to bring the aggregate amount
of illiquid assets back within the prescribed limitations as soon as reasonably
practicable, taking into account the effect of any disposition on the Fund.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in emerging
markets, any change in the leadership or policies of the governments of those
countries or in the leadership or policies of any other government which
exercises a significant influence over those countries, may halt the expansion
of or reverse the liberalization of foreign investment policies now occurring
and thereby eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property similar to the property which
will be represented by the securities purchased by the Funds. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Funds will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Funds could lose their entire investment in
such countries. The Funds' investments would similarly be adversely affected by
exchange control regulation in any of those countries.
RELIGIOUS AND ETHNIC STABILITY. Certain countries in which the Funds may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of a Fund's investment in those countries. Instability may also
result from, among
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AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
other things, (i) authoritarian governments or military involvement in political
and economic decision-making, including changes in government through
extra-constitutional means, (ii) popular unrest associated with demands for
improved political, economic and social conditions and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which the Funds
invest and adversely affect the value of the Funds' assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Funds. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Funds. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. If there is a
deterioration in a country's balance of payments or for other reasons, a country
may impose restrictions on foreign capital remittances abroad. The Funds could
be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ in some cases significantly from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Funds will
not be registered with the SEC or regulators of any foreign country, nor will
the issuers thereof be subject to the SEC's reporting requirements. Thus, there
will be less available information concerning most foreign issuers of securities
held by the Funds than is available concerning U.S. issuers. In instances where
the financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, the Sub-adviser will take appropriate steps
to evaluate the proposed investment, which may include on-site inspection of the
issuer, interviews with its management and consultations with accountants,
bankers and other specialists. There is substantially less publicly available
information about foreign companies than there are reports and ratings published
about U.S. companies and the U.S. government. In addition, where public
information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities on foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on market manipulation, insider trading
rules, shareholder proxy requirements and timely disclosure of information. In
addition, for companies that keep accounting records in local currency,
inflation accounting rules in some Latin American countries require, for both
tax and accounting purposes, that certain assets and liabilities be restated on
the company's balance sheet in order to express items in terms of currency of
constant purchasing power. Inflation accounting may indirectly generate losses
or profits.
CURRENCY FLUCTUATIONS. Because the Funds, under normal circumstances, each
will invest a substantial portion of its total assets in the securities of
foreign issuers which are denominated in foreign currencies, the strength or
weakness of the U.S. dollar against such foreign currencies will account for
part of each Fund's investment performance. A decline in the value of any
particular currency against the U.S. dollar will cause a decline in the U.S.
dollar value of a Fund's holdings of securities and cash denominated in such
currency and, therefore, will cause an overall decline in the Fund's net asset
value and any net investment income and capital gains derived from such
securities to be distributed in U.S. dollars to shareholders of that Fund.
Moreover, if the value of the foreign currencies in which a Fund receives its
income falls relative to the U.S. dollar between receipt of the income and the
making of Fund distributions, the Fund may be required to liquidate securities
in order to make distributions if the Fund has insufficient cash in U.S. dollars
to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of business activity in certain other countries and the United
States, and other economic and financial conditions affecting the world economy.
Statement of Additional Information Page 21
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Although the Funds value their assets daily in terms of U.S. dollars, they do
not intend to convert their holdings of foreign currencies into U.S. dollars on
a daily basis. The Funds will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to a
Fund at one rate, while offering a lesser rate of exchange should a Fund desire
to sell that currency to the dealer.
Certain Latin American countries may have managed currencies which are
maintained at artificial levels to the U.S. dollar rather than at levels
determined by the market. This type of system can lead to sudden and large
adjustments in the currency which, in turn, can have a disruptive and negative
effect on foreign investors. For example, in late 1994 the value of the Mexican
peso lost more than one-third of its value relative to the dollar. Certain Latin
American countries also may restrict the free conversion of their currency into
foreign currencies, including the U.S. dollar. There is no significant foreign
exchange market for certain currencies and it would, as a result, be difficult
for the Funds to engage in foreign currency transactions designed to protect the
value of the Funds' interests in securities denominated in such currencies.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Funds are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive opportunities. Inability to dispose of a portfolio security due
to settlement problems either could result in losses to a Fund due to subsequent
declines in value of the portfolio security or, if the Fund has entered into a
contract to sell the security, could result in possible liability to the
purchaser. The Sub-adviser will consider such difficulties when determining the
allocation of the Funds' assets, although the Sub-adviser does not believe that
such difficulties will have a material adverse effect on the Funds' portfolio
trading activities.
Each Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian, (ii) maintaining appropriate safeguards
to protect a Fund's investments and (iii) possible difficulties in obtaining and
enforcing judgments against such custodians.
A high proportion of the shares of many Latin American companies may be held by
a limited number of persons, which may further limit the number of shares
available for investment by the Funds, particularly Latin American Fund. A
limited number of issuers in most, if not all, Latin American securities markets
may represent a disproportionately large percentage of market capitalization and
trading value. The limited liquidity of Latin American securities markets also
may affect a Fund's ability to acquire or dispose of securities at the price and
time it wishes to do so. In addition, certain Latin American securities markets,
including those of Argentina, Brazil, Chile and Mexico, are susceptible to being
influenced by large investors trading significant blocks of securities or by
large dispositions of securities resulting from the failure to meet margin calls
when due.
The high volatility of certain Latin American securities markets is evidenced by
dramatic movements in the Brazilian and Mexican markets in recent years. This
market volatility may result in greater volatility in a Fund's net asset value
than would be the case for companies investing in domestic securities. If a Fund
were to experience unexpected net redemptions, it could be forced to sell
securities in its portfolio without regard to investment merit, thereby
decreasing the asset base over which Fund expenses can be spread and possibly
reducing the Fund's rate of return.
WITHHOLDING TAXES. Each Fund's net investment income from securities of
foreign issuers may be subject to withholding taxes by the foreign issuer's
country, thereby reducing that income or delaying the receipt of income where
those taxes may be recaptured. See "Taxes."
CONCENTRATION. To the extent a Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, it may be subject to greater risks and may experience greater volatility
than a fund that is more broadly diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in equity
securities of companies in emerging markets may entail greater risks than
investing in equity securities in developed countries. These risks include (i)
less social, political
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
and economic stability; (ii) the small current size of the markets for such
securities and the currently low or nonexistent volume of trading, which result
in a lack of liquidity and in greater price volatility; (iii) certain national
policies which may restrict a Fund's investment opportunities, including
restrictions on investment in issuers or industries deemed sensitive to national
interests; (iv) foreign taxation; and (v) the absence of developed structures
governing private or foreign investment or allowing for judicial redress for
injury to private property.
Investing in the securities of companies in emerging markets, including the
markets of Latin America and certain Asian markets such as Taiwan, Malaysia and
Indonesia, may entail special risks relating to potential political and economic
instability and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment, convertibility into U.S.
dollars and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, a Fund
could lose its entire investment in any such country.
Emerging securities markets such as the markets of Latin America are
substantially smaller, less developed, less liquid and more volatile than the
major securities markets. The limited size of emerging securities markets and
limited trading value in issuers compared to the volume of trading in U.S.
securities could cause prices to be erratic for reasons apart from factors that
affect the quality of the securities. For example, limited market size may cause
prices to be unduly influenced by traders who control large positions. Adverse
publicity and investors' perceptions, whether or not based on fundamental
analysis, may decrease the value and liquidity of portfolio securities,
especially in these markets. In addition, securities traded in certain emerging
markets may be subject to risks due to the inexperience of financial
intermediaries, a lack of modern technology, the lack of a sufficient capital
base to expand business operations, and the possibility of permanent or
temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities there may
be share registration and delivery delays or failures.
Many emerging market countries including countries in Latin America have
experienced substantial, and in some periods extremely high, rates of inflation
for many years. This has, in turn lead to high interest rates, extreme measures
by governments to keep inflation in check and a generally debilitating effect on
economic growth. Inflation and rapid fluctuations in inflation rates and
corresponding currency devaluations have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries including countries in Latin America.
SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
U.S. securities markets and should be considered highly speculative. Such risks
include the following: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends, and on the ability of Developing Markets Fund and Emerging
Markets Fund to exchange local currencies for U.S. dollars; (7) political
instability and social unrest and violence; (8) the risk that the governments of
Russia and Eastern European countries may decide not to continue to support the
economic reform programs implemented recently and could follow radically
different political and/or economic policies to the detriment of investors,
including non-market-oriented policies such as the support of certain industries
at the expense of other sectors or investors, or a return to the centrally
planned economy that existed when such countries had a communist form of
government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies of Pacific
region countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made periodically in certain of such
currencies. Certain countries, such as India, face serious exchange constraints.
Statement of Additional Information Page 23
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Many of the Asia Pacific region countries may be subject to a greater degree of
social, political and economic instability than is the case in the United
States. Such instability may result from, among other things, the following: (i)
authoritarian governments or military involvement in political and economic
decision making, and changes in government through extra-constitutional means;
(ii) popular unrest associated with demands for improved political, economic and
social conditions; (iii) internal insurgencies; (iv) hostile relations with
neighboring countries; and (v) ethnic, religious and racial disaffection. Such
social, political and economic instability could significantly disrupt the
principal financial markets in which Developing Markets Fund and Emerging
Markets Fund invest and adversely affect the value of such Funds' assets. In
addition, asset expropriations or future confiscatory levels of taxation
possibly may affect the Funds.
Several of the Asia Pacific region countries have, or in the past have had,
hostile relationships with neighboring nations or have experienced internal
insurgency. Thailand has experienced border conflicts with Laos and Cambodia,
and India is engaged in border disputes with several of its neighbors, including
China and Pakistan. An uneasy truce exists between North Korea and South Korea,
and the recurrence of hostilities remains possible. Reunification of North Korea
and South Korea could have a detrimental effect on the economy of South Korea.
Also, China continues to claim sovereignty over Taiwan and recently has
conducted military maneuvers near Taiwan.
The economies of most of the Asia Pacific region countries are heavily dependent
upon international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners, principally the
United States, Japan, China and the European Community. The enactment by the
United States or other principal trading partners of protectionist trade
legislation, reduction of foreign investment in the local economies and general
declines in the international securities markets could have a significant
adverse effect upon the securities markets of the Asia Pacific region countries.
In addition, the economies of some of the Asia Pacific region countries,
Australia and Indonesia, for example, are vulnerable to weakness in world prices
for their commodity exports, including crude oil.
China recently assumed sovereignty over Hong Kong in July 1997. Although China
has committed by treaty to preserve the economic and social freedoms enjoyed in
Hong Kong for fifty years, the continuation of the current form of the economic
system in Hong Kong will depend on the actions of the government of China. In
addition, such assumption of sovereignty has increased sensitivity in Hong Kong
to political developments and statements by public figures in China. Business
confidence in Hong Kong, therefore, can be significantly affected by such
developments and statements, which in turn can affect markets and business
performance.
In addition, the Chinese sovereignty over Hong Kong also presents a risk that
the Hong Kong dollar will be devalued and a risk of possible loss of investor
confidence in the Hong Kong markets and dollar. However, factors exist that are
likely to mitigate this risk. First, China has stated its intention to implement
a "one country, two systems" policy, which would preserve monetary sovereignty
and leave control in the hands of the Hong Kong Monetary Authority ("HKMA").
Second, fixed rate parity with the U.S. dollar is seen as critical to
maintaining investors' confidence in the transition to Chinese rule, and,
therefore, it is anticipated that, if international investors lose confidence in
Hong Kong dollar assets, the HKMA would intervene to support the currency,
though such intervention cannot be assured. Third, Hong Kong's and China's
sizable combined foreign exchange reserve may be used to support the value of
the Hong Kong dollar, provided that China does not appropriate such reserves for
other uses, which is not anticipated but cannot be assured. Finally, China would
be likely to experience significant adverse political and economic consequences
if confidence in the Hong Kong dollar and the territory assets were to be
endangered.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Statement of Additional Information Page 24
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.
It should be noted that some Latin American countries require governmental
approval for the repatriation of investment income, capital or the proceeds of
securities sales by foreign investors. For instance, at present, capital
invested directly in Chile cannot under most circumstances be repatriated for at
least one year. The Funds, particularly Latin American Fund, could be adversely
affected by delays in, or a refusal to grant, any required governmental approval
for repatriation, as well as by the application to it of other restrictions on
investments.
SOVEREIGN DEBT. Sovereign Debt generally offers high yields, reflecting not
only perceived credit risk, but also the need to compete with other local
investments in domestic financial markets. Certain Latin American countries are
among the largest debtors to commercial banks and foreign governments. A
sovereign debtor's willingness or ability to repay principal and interest due in
a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy towards
the International Monetary Fund and the political constraints to which a
sovereign debtor may be subject. Sovereign debtors may default on their
Sovereign Debt. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and others abroad
to reduce principal and interest arrearages on their debt. The commitment on the
part of these governments, agencies and others to make such disbursements may be
conditioned on a sovereign debtor's implementation of economic reforms and/or
economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
In recent years, some of the Latin American countries in which the Funds expect
to invest have encountered difficulties in servicing their Sovereign Debt. Some
of these countries have withheld payments of interest and/or principal of
Sovereign Debt. These difficulties have also led to agreements to restructure
external debt obligations -- in particular, commercial bank loans, typically by
rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. In the future, holders of
Sovereign Debt may be requested to participate in similar reschedulings of such
debt.
The ability of Latin American governments to make timely payments on their
Sovereign Debt is likely to be influenced strongly by a country's balance of
trade and its access to trade and other international credits. A country whose
exports are concentrated in a few commodities could be vulnerable to a decline
in the international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports. Such events could diminish a country's trade account
surplus, if any. To the extent that a country receives payment for its exports
in currencies other than hard currencies, its ability to make hard currency
payments could be affected.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing Sovereign Debt could adversely affect a Fund's investments.
The countries issuing such instruments are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their Sovereign Debt. While the Sub-adviser intends to manage each Fund's
portfolio in a manner that will minimize the exposure to such risks, there can
be no assurance that adverse political changes will not cause the Funds to
suffer losses of interest or principal on any of their holdings.
Periods of economic uncertainty may result in the volatility of market prices of
Sovereign Debt and in turn, a Fund's net asset value, to a greater extent than
the volatility inherent in domestic securities. The value of Sovereign Debt will
likely vary inversely with changes in prevailing interest rates, which are
subject to considerable variance in the international market. If a Fund were to
experience unexpected net redemptions, it may be forced to sell Sovereign Debt
in its portfolio without regard to investment merit, thereby decreasing its
asset base over which Fund expenses can be spread and possibly reducing its rate
of return.
Statement of Additional Information Page 25
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AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
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INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
DEVELOPING MARKETS FUND
Developing Markets Fund's investment objectives may not be changed without the
approval of a majority of its outstanding shares. In addition, Developing
Markets Fund has adopted the following fundamental investment limitations that
may not be changed without approval of a majority of its outstanding voting
securities.
Developing Markets Fund may not:
(1) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of Developing Markets Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Fund may borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes;
(2) purchase any security if, as a result of that purchase, 25% or more
of Developing Markets Fund's total assets would be invested in securities of
issuers having their principal business activities in the same industry,
except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities;
(3) engage in the business of underwriting securities of other issuers,
except to the extent that Developing Markets Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(4) purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
Developing Markets Fund may exercise rights under agreements relating to
such securities, including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner;
(5) purchase or sell physical commodities, but Developing Markets Fund
may purchase, sell or enter into financial options and futures, forward and
spot currency contracts, swap transactions and other financial contracts or
derivative instruments; or
(6) make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan.
Notwithstanding any other investment policy, Developing Markets Fund may invest
all of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of the concentration policy of Developing Markets Fund contained in
limitation (2) above, the Fund intends to comply with the SEC staff position
that securities issued or guaranteed as to principal and interest by any one
single foreign government, or by all supranational organizations in the
aggregate, are considered to be securities of issuers in the same industry.
In addition, to comply with federal tax requirements for qualification as a
"regulated investment company" ("RIC"), Developing Markets Fund's investments
will be limited so that, at the close of each quarter of its taxable year, (a)
not more than 25% of the value of its total assets is invested in the securities
(other than U.S government securities or the securities of other RICs) of any
one issuer and (b) at least 50% of the value of its total assets is represented
by cash and cash items, U.S. government securities, securities of other RICs and
other securities, with these other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of its total assets
and that does not represent more than 10% of the issuer's outstanding voting
securities ("Diversification Requirements"). These tax-related limitations may
be changed by the Trust's Board of Trustees to the extent necessary to comply
with changes to applicable tax requirements.
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
The following investment policy of Developing Markets Fund is not a fundamental
policy and may be changed by vote of the Trust's Board of Trustees without
shareholder approval: Developing Markets Fund will not purchase securities on
margin, provided that the Fund may obtain short-term credits as may be necessary
for the clearance of purchases and sales of securities, and further provided
that the Fund may make margin deposits in connection with its use of financial
options and futures, forward and spot currency contracts, swap transactions and
other financial contracts or derivative instruments.
EMERGING MARKETS FUND
Emerging Markets Fund has adopted the following investment limitations as
fundamental policies which (unless otherwise noted) may not be changed without
approval of a majority of the Fund's outstanding shares.
Emerging Markets Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of Emerging Markets Fund's total assets would be invested in securities of
issuers having their principal business activities in the same industry,
except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
Emerging Markets Fund may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner;
(3) Purchase or sell physical commodities, but Emerging Markets Fund may
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that Emerging Markets Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(5) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(6) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of Emerging Markets Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Fund may borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes; or
(7) Purchase securities of any one issuer if, as a result, more than 5%
of Emerging Markets Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the outstanding
voting securities of that issuer, except that up to 25% of the Fund's total
assets may be invested without regard to this limitation, and except that
this limitation does not apply to securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities or to securities issued
by other investment companies.
Notwithstanding any other investment policy, Emerging Markets Fund may invest
all of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of Emerging Markets Fund's concentration policy contained in
limitation (1) above, the Fund intends to comply with the SEC staff position
that securities issued or guaranteed as to principal and interest by any single
foreign government or any supranational organizations in the aggregate are
considered to be securities of issuers in the same industry.
The following operating policies of Emerging Markets Fund are not fundamental
policies and may be changed by vote of the Trust's Board of Trustees without
shareholder approval. Emerging Markets Fund may not:
Statement of Additional Information Page 27
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
(1) Invest in securities of an issuer if the investment would cause
Emerging Markets Fund to own more than 10% of any class of securities of any
one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of Emerging Markets Fund's portfolio, after
taking into account unrealized profits and unrealized losses on any
contracts the Fund has entered into;
(4) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of Emerging Markets Fund's
total assets, except that the Fund may purchase securities when outstanding
borrowings represent less than 5% of the Fund's assets;
(5) Purchase securities on margin, provided that Emerging Markets Fund
may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the Fund may
make margin deposits in connection with its use of financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to the Emerging Markets Fund's Prospectus for further
information with respect to Emerging Markets Fund's investment objective, which
may not be changed without the approval of the shareholders, and other
investment policies, techniques and limitations, which may be changed without
shareholder approval.
LATIN AMERICAN FUND
Latin American Fund has adopted the following investment limitations as
fundamental policies which (unless otherwise noted) may not be changed without
approval of a majority of the Fund's outstanding shares.
Latin American Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of Latin American Fund's total assets would be invested in securities of
issuers having their principal business activities in the same industry,
except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
Latin American Fund may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that Latin American Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of Latin American Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Fund may borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but Latin American Fund may
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments.
Statement of Additional Information Page 28
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Notwithstanding any other investment policy, Latin American Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of Latin American Fund's concentration policy contained in
limitation (1), above, the Fund intends to comply with the SEC staff position
that securities issued or guaranteed as to principal and interest by any single
foreign government are considered to be securities of issuers in the same
industry.
The following operating policies of Latin American Fund are not fundamental
policies and may be changed by vote of the Trust's Board of Trustees without
shareholder approval. Latin American Fund may not:
(1) Invest in securities of an issuer if the investment would cause
Latin American Fund to own more than 10% of any class of securities of any
one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 10% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of Latin American Fund's portfolio, after taking
into account unrealized profits and unrealized losses on any contracts the
Fund has entered into;
(5) Make any additional investments while borrowings exceed 5% of Latin
American Fund's total assets;
(6) Purchase securities on margin, provided that Latin American Fund may
obtain short-term credits as may be necessary for the clearance of purchases
and sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Latin American Fund has the authority to invest up to 10% of its total assets in
shares of other investment companies pursuant to the 1940 Act. The Fund may not
invest more than 5% of its total assets in any one investment company or acquire
more than 3% of the outstanding voting securities of any one investment company.
Investors should refer to the Latin American Fund's Prospectus for further
information with respect to Latin American Fund's investment objective, which
may not be changed without the approval of the shareholders, and other
investment policies, techniques and limitations, which may be changed without
shareholder approval.
Statement of Additional Information Page 29
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Trust's Board of Trustees, the
Sub-adviser is responsible for the execution of each Fund's portfolio
transactions and the selection of broker/dealers who execute such transactions
on behalf of the Funds. In executing portfolio transactions, the Sub-adviser
seeks the best net results for each Fund, taking into account such factors as
the price (including the applicable brokerage commission or dealer spread), size
of the order, difficulty of execution and operational facilities of the firm
involved. Although the Sub-adviser generally seeks reasonably competitive
commission rates and spreads, payment of the lowest commission or spread is not
necessarily consistent with the best net results. While the Funds may engage in
soft dollar arrangements for research services, as described below, the Funds
have no obligation to deal with any broker/dealer or group of broker/dealers in
the execution of portfolio transactions.
Debt securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
government securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions.
Consistent with the interests of each Fund, the Sub-adviser may select brokers
to execute a Fund's portfolio transactions, on the basis of the research and
brokerage services they provide to the Sub-adviser for its use in managing the
Fund and its other advisory accounts. Such services may include furnishing
analyses, reports and information concerning issuers, industries, securities,
geographic regions, economic factors and trends, portfolio strategy, and
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement). Research and
brokerage services received from such brokers are in addition to, and not in
lieu of, the services required to be performed by the Sub-adviser under the
investment management and administration contracts. A commission paid to such
brokers may be higher than that which another qualified broker would have
charged for effecting the same transaction, provided that the Sub-adviser
determines in good faith that such commission is reasonable in terms either of
that particular transaction or the overall responsibility of the Sub-adviser to
a Fund and its other clients and that the total commissions paid by the Fund
will be reasonable in relation to the benefits it received over the long term.
Research services may also be received from dealers who execute Fund
transactions in OTC markets.
The Sub-adviser may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by a Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for each Fund and for other investment accounts managed by
the Sub-adviser are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts including the Funds. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as a Fund is concerned, in other cases, the Sub-adviser
believes that coordination and the ability to participate in volume transactions
will be beneficial to that Fund.
Under a policy adopted by the Trust's Board of Trustees, and subject to the
policy of obtaining the best net results, the Sub-adviser may consider a
broker/dealer's sale of the shares of a Fund and the other funds for which AIM
or the Sub-adviser serves as investment manager in selecting brokers and dealers
for the execution of portfolio transactions. This policy does not imply a
commitment to execute portfolio transactions through all broker/dealers that
sell shares of the Funds and such other funds.
Each Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best
Statement of Additional Information Page 30
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
available market. The fixed commissions paid in connection with most such
foreign stock transactions generally are higher than negotiated commissions on
U.S. transactions. There generally is less government supervision and regulation
of foreign stock exchanges and brokers than in the United States. Foreign
security settlements may in some instances be subject to delays and related
administrative uncertainties.
Foreign equity securities may be held by each Fund in the form of ADRs, ADSs,
EDRs, GDRs, CDRs or securities convertible into foreign equity securities. ADRs,
ADSs, EDRs, GDRs and CDRs may be listed on stock exchanges, or traded in the OTC
markets in the United States or Europe, as the case may be. ADRs, like other
securities traded in the United States, will be subject to negotiated commission
rates. The foreign and domestic debt securities and money market instruments in
which a Fund may invest generally are traded in the OTC markets.
Each Fund contemplates that, consistent with the policy of obtaining the best
net results, brokerage transactions may be conducted through certain companies
affiliated with AIM or Sub-adviser. The Trust's Board of Directors has adopted
procedures in conformity with Rule 17e-1 under the 1940 Act to ensure that all
brokerage commissions paid to such affiliates are reasonable and fair in the
context of the market in which they are operating. Any such transactions will be
effected and related compensation paid only in accordance with applicable SEC
regulations.
For the fiscal years ended December 31, 1997, 1996 and 1995, the Predecessor
Fund paid aggregate brokerage commissions of $2,212,022, $1,580,879 and
$1,311,090, respectively. For the fiscal years ended October 31, 1997, 1996 and
1995, Emerging Markets Fund paid aggregate brokerage commissions of $3,274,528,
$3,648,347 and $3,307,402, respectively. For the fiscal years ended October 31,
1997, 1996 and 1995, Latin American Fund paid aggregate brokerage commissions of
$2,719,660, $2,094,634 and $891,513, respectively.
PORTFOLIO TRADING AND TURNOVER
Each Fund engages in portfolio trading when the Sub-adviser has concluded that
the sale of a security owned by the Fund and/or the purchase of another security
of better value can enhance principal and/or increase income. A security may be
sold to avoid any prospective decline in market value, or a security may be
purchased in anticipation of a market rise. Consistent with each Fund's
investment objective, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although none of the Funds generally intends to trade for short-term profits,
the securities in a Fund's portfolio will be sold whenever management believes
it is appropriate to do so, without regard to the length of time a particular
security may have been held. Portfolio turnover rate is calculated by dividing
the lesser of sales or purchases of portfolio securities by a Fund's average
month-end portfolio values, excluding short-term investments. The portfolio
turnover rate will not be a limiting factor when the Sub-adviser deems portfolio
changes appropriate. Higher portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs that a Fund will bear directly
and may result in the realization of net capital gains that are taxable when
distributed to that Fund's shareholders. For the fiscal years ended December 31,
1997 and 1996, the Predecessor Fund's portfolio turnover rates were 184% and
138%, respectively. For the fiscal years ended October 31, 1997 and 1996,
Emerging Markets Fund's portfolio turnover rates were 150% and 104%,
respectively. Latin American Fund's portfolio turnover rates for the fiscal
years ended October 31, 1997 and 1996 were 130% and 101%, respectively.
Statement of Additional Information Page 31
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Trust's Trustees and Executive Officers are listed below. Unless otherwise
indicated, the address of each Executive Officer is 11 Greenway Plaza, Suite
100, Houston, Texas 77046.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 40 President, GT Global, Inc. ("GT Global") since 1995; Director, GT Global since
Trustee, Chairman of the Board and President 1991; Senior Vice President and Director of Sales and Marketing, GT Global from
50 California Street May 1992 to April 1995; Director, Liechtenstein Global Trust AG (holding company
San Francisco, CA 94111 of the various international LGT companies) Advisory Board from January 1996 to
May 1998; Director, G.T. Global Insurance Agency ("G.T. Insurance") since 1996;
President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice
President and Director, Sales and Marketing, G.T. Insurance from April 1995 to
November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992
to 1993; and Trustee, each of the other investment companies registered under
the 1940 Act, that is sub-advised or sub-administered by the Sub-adviser.
C. Derek Anderson, 57 President, Plantagenet Capital Management, LLC (an investment partnership);
Trustee Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director,
Suite 400 PremiumWear, Inc. (formerly Munsingwear, Inc.) (a casual apparel company);
San Francisco, CA 94104 Director, "R" Homes, Inc. and various other companies; and Trustee, each of the
other investment companies registered under the 1940 Act that is sub-advised or
sub-administered by the Sub-adviser.
Frank S. Bayley, 58 Partner, law firm of Baker & McKenzie; Director and Chairman, C.D. Stimson
Trustee Company (a private investment company); and Trustee, each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is sub-advised or sub-
Suite 2400 administered by the Sub-adviser.
San Francisco, CA 94111
Arthur C. Patterson, 54 Managing Partner, Accel Partners (a venture capital firm); Director, Viasoft and
Trustee PageMart, Inc. (both public software companies) and several other privately held
428 University Avenue software and communications companies; and Trustee, each of the other investment
Palo Alto, CA 94301 companies registered under the 1940 Act that is sub-advised or sub-administered
by the Sub-adviser.
Ruth H. Quigley, 63 Private investor; President, Quigley Friedlander & Co., Inc. (a financial
Trustee advisory services firm) from 1984 to 1986; and Trustee, each of the other
1055 California Street investment companies registered under the 1940 Act that is sub-advised or sub-
San Francisco, CA 94108 administered by the Sub-adviser.
</TABLE>
- --------------
* Mr. Guilfoyle is an "interested person" of the Trust as defined by the 1940
Act due to his affiliation with the Sub-adviser.
Statement of Additional Information Page 32
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
John J. Arthur+, 53 Director, Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice President and
Vice President Treasurer, A I M Management Group Inc., A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and Fund Management Company.
Kenneth W. Chancey, 53 Senior Vice President -- Mutual Fund Accounting, the Sub-adviser since 1997; Vice
Vice President and President -- Mutual Fund Accounting, the Sub-adviser from 1992 to 1997.
Principal Accounting Officer
50 California Street
San Francisco, CA 94111
Melville B. Cox, 54 Vice President and Chief Compliance Officer, A I M Advisors, Inc., A I M Capital
Vice President Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company.
Gary T. Crum, 50 Director and President, A I M Capital Management, Inc.; Director and Senior Vice
Vice President President, A I M Management Group Inc. and A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
Robert H Graham, 51 Director, President and Chief Executive Officer, A I M Management Group Inc.; Director and
Vice President President, A I M Advisors, Inc.; Director and Senior Vice President, A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company; and Director, AMVESCAP PLC.
Helge K. Lee, 52 Chief Legal and Compliance Officer -- North America, the Sub-adviser since October 1997;
Vice President and Secretary Secretary and Chief Legal and Compliance Officer, INVESCO (NY) Asset Management, Inc.,
50 California Street INVESCO (NY), Inc., GT Global Investor Services, Inc. and G.T. Insurance since August
San Francisco, CA 94111 1997; Secretary and Chief Legal and Compliance Officer, GT Global from August 1997 to
April 1998; Executive Vice President of the Asset Management Division of Liechtenstein
Global Trust AG, from October 1996 to May 1998; Senior Vice President, General Counsel and
Secretary of INVESCO (NY) Asset Management, Inc., INVESCO (NY), Inc., GT Global, GT Global
Investor Services, Inc. and G.T. Insurance from May 1994 to October 1996; and Senior Vice
President, General Counsel and Secretary of Strong/Corneliuson Management, Inc. and
Secretary of each of the Strong Funds from October 1991 to May 1994.
Carol F. Relihan+, 43 Director, Senior Vice President, General Counsel and Secretary, A I M Advisors, Inc.; Vice
Vice President President, General Counsel and Secretary, A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management Company; Vice President and General
Counsel, A I M Fund Services, Inc.; and Vice President, A I M Capital Management, Inc. and
A I M Distributors, Inc.
Dana R. Sutton, 39 Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice President and
Vice President and Assistant Treasurer, Fund Management Company.
Assistant Treasurer
</TABLE>
- ------------------
+ Mr. Arthur and Ms. Relihan are married to each other.
Statement of Additional Information Page 33
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
The Board of Trustees has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and its
funds and recommending firms to serve as independent auditors for the Trust.
Each of the Trustees and Officers of the Trust is also a Director or Trustee and
Officer of AIM Investment Portfolios, AIM Floating Rate Fund, AIM Growth Series,
AIM Series Trust, AIM Eastern Europe Fund, GT Global Variable Investment Trust,
GT Global Variable Investment Series, Global High Income Portfolio, Growth
Portfolio, Floating Rate Portfolio and Global Investment Portfolio, which are
also registered investment companies advised by AIM and sub-advised by the
Sub-adviser or an affiliate thereof. All of the Trust's Trustees also serve as
directors or trustees of some or all of the other investment companies managed,
administered or advised by AIM. All of the Trust's executive officers hold
similar offices with some or all of the other investment companies managed,
administered or advised by AIM. Each Trustee who is not a director, officer or
employee of the Sub-adviser or any affiliated company is paid aggregate fees of
$5,000 a year plus $300 per Fund for each meeting of the Board attended, and
reimbursed travel and other expenses incurred in connection with attendance at
such meetings. Other Trustees and Officers receive no compensation or expense
reimbursement from the Trust. For the fiscal year ended October 31, 1997, Mr.
Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not directors,
officers or employees of the Sub-adviser or any affiliated company, received
total compensation of $38,650, $38,650, $27,850 and $38,650, respectively, from
the Trust for their services as Trustees. For the fiscal year ended October 31,
1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not
directors, officers or employees of the Sub-adviser or any other affiliated
company, received total compensation of $117,304, $114,386, $88,350 and
$111,688, respectively, from the investment companies managed or administered by
AIM and sub-advised or sub-administered by the Sub-adviser for which he or she
serves as a Director or Trustee. Fees and expenses disbursed to the Trustees
contained no accrued or payable pension or retirement benefits. As of June 26,
1998, the Officers and Trustees and their families as a group owned in the
aggregate beneficially or of record less than 1% of the outstanding shares of
the Funds or of all the Trust's series in the aggregate.
- --------------------------------------------------------------------------------
CONTROL PERSONS AND
PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
To the best knowledge of the Trust, the names and addresses of the holders of 5%
or more of the outstanding shares of any class of each Fund's equity securities
as of June 26, 1998, and the percentage of the outstanding shares held by such
holders are set forth below:
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ------------------------------ ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Developing Markets Fund -- Olde Discount
Class B FBO 05012322
751 Griswold Street
Detroit, Michigan 48226-3224 58.88% -0-
Raymond James & Assoc. Inc. CSDN
Mary Lynn James IRA
1215 W. Los Angeles Circle
Broken Arrow, Oklahoma 74011-4215 8.08% -0-
Smith Barney Inc.
150926032
388 Greenwich Street
New York, New York 10013-2339 5.45% -0-
</TABLE>
Statement of Additional Information Page 34
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ------------------------------ ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Developing Markets Fund -- PaineWebber FBO
Class B Joseph McDonald & Mildred McDonald JJWRO
379 Quarry Pond Court
Moriches, New York 11955-1706 5.35% -0-
- -- Advisor Class G.T. Capital Holdings, Inc. 401(k) FBO
Account 546-33-3477
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources 76.81% -0-
Emerging Markets Fund G.T. Capital Holdings, Inc.
-- Advisor Class SERP Deferred Compensation
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Ellen Hoke 27.87% -0-
Latin American Fund G.T. Capital Holdings, Inc. 401(k) FBO
-- Advisor Class Account 102505451
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources 7.43% -0-
G.T. Capital Holdings, Inc.
SERP Deferred Compensation
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Ellen Hoke 5.88% -0-
</TABLE>
- --------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
Statement of Additional Information Page 35
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
MANAGEMENT
- --------------------------------------------------------------------------------
THE DISTRIBUTION PLANS
THE CLASS A PLAN. The Trust has adopted a Master Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act relating to the Class A shares of the Funds (the
"Class A Plan"). The Class A Plan provides that the Class A shares pay 0.50% per
annum of their average daily net assets as compensation to AIM Distributors for
the purpose of financing any activity which is primarily intended to result in
the sale of Class A shares. Of such amounts, each Fund pays a service fee of
0.25% of the average daily net assets attributable to Class A shares to selected
dealers and other institutions which furnish continuing personal shareholder
services to their customers who purchase and own Class A shares. Activities
appropriate for financing under the Class A Plan include, but are not limited
to, the following: printing of prospectuses and statements of additional
information and reports for other than existing shareholders; overhead;
preparation and distribution of advertising material and sales literature;
expenses of organizing and conducting sales seminars; supplemental payments to
dealers and other institutions such as asset-based sales charges or as payments
of service fees under shareholder service arrangements; and costs of
administering the Class A Plan.
THE CLASS B PLAN. The Trust has also adopted a Master Distribution Plan pursuant
to Rule 12b-1 under the 1940 Act relating to Class B shares of the Funds (the
"Class B Plan", and collectively with the Class A Plan, the "Plans"). Under the
Class B Plan, each Fund pays 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, each Fund pays a service fee of 0.25% of the average daily net assets
attributable to Class B shares to selected dealers and other institutions which
furnish continuing personal shareholder services to their customers who purchase
and own Class B shares. Amounts paid in accordance with the Class B Plan may be
used to finance any activity primarily intended to result in the sale of Class B
shares, including but not limited to printing of prospectuses and statements of
additional information and reports for other than existing shareholders;
overhead; preparation and distribution of advertising material and sales
literature; expenses of organizing and conducting sales seminars; supplemental
payments to dealers and other institutions such as asset-based sales charges or
as payments of service fees under shareholder service arrangements; and costs of
administering the Class B Plan. AIM Distributors may transfer and sell its
rights to payments under the Class B Plan in order to finance distribution
expenditures in respect of Class B shares.
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 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 the several special investment plans offered in connection
with the purchase of the Funds' shares; assisting in the establishment and
maintenance of customer accounts and records and in the processing of purchase
and redemption transactions; investing dividends and any capital gains
distributions automatically in the Funds' 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; 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 Fund shares; and such
Statement of Additional Information Page 36
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
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.
Financial intermediaries and any other person entitled to receive compensation
for selling Fund shares may receive different compensation for selling shares of
one particular class over another.
Under a Shareholder Service Agreement, each Fund agrees to pay periodically fees
to selected dealers and other institutions who render the foregoing services to
their customers. The fees payable under a Shareholder Service Agreement
generally will be calculated at the end of each payment period for each business
day of the 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 each Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc. ("NASD"). The
Plans conform to rules of the NASD by limiting payments made to dealers and
other financial institutions who provide continuing personal shareholder
services to their customers who purchase and own shares of the Funds to no more
than 0.25% per annum of the average daily net assets of the Funds attributable
to the customers of such dealers or financial institutions, and by imposing a
cap on the total sales charges, including asset based sales charges, that may be
paid by the Funds and their respective classes.
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.
Prior to June 1, 1998, the Trust had adopted a different Rule 12b-1, that
operated as a "reimbursement-type" plan (the "Prior Plan"). The information
provided below relates to payments made under the Prior Plan, which provided for
payments to GT Global Inc., the distributor of the Funds at the time the Prior
Plan was in effect.
For the fiscal year ended December 31, 1997, each Fund paid the following
amounts under the Prior Plan:
<TABLE>
<CAPTION>
% OF CLASS
AVERAGE DAILY
NET ASSETS
--------------------
CLASS A CLASS B CLASS A CLASS B
-------------- -------------- --------- ---------
<S> <C> <C> <C> <C>
Developing Markets Fund........................................ $ -- $ -- --% --%
Emerging Markets Fund.......................................... $ -- $ -- --% --%
Latin American Growth Fund..................................... $ -- $ -- --% --%
</TABLE>
Actual fees by category paid by each Fund with regard to the Class A shares
during the year ended December 31, 1997 follows:
<TABLE>
<CAPTION>
LATIN AMERICAN
DEVELOPING MARKETS EMERGING MARKETS GROWTH FUND
------------------- ----------------- ---------------
<S> <C> <C> <C>
CLASS A
Advertising................................................. $ -- $ -- $ --
Printing and mailing prospectuses, semi-annual reports and
annual reports (other than to current shareholders)........ $ -- $ -- $ --
Seminars.................................................... $ -- $ -- $ --
Compensation to Underwriters to partially offset other
marketing expenses......................................... $ -- $ -- $ --
Compensation to Dealers including finder's fees............. $ -- $ -- $ --
Compensation to Sales Personnel............................. $ -- $ -- $ --
Annual Report Total......................................... $ -- $ -- $ --
</TABLE>
Statement of Additional Information Page 37
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Actual fees by category paid by each Fund with regard to the Class B Shares
during the year ended December 31, 1997 as follows:
<TABLE>
<CAPTION>
LATIN AMERICAN
DEVELOPING MARKETS EMERGING MARKETS GROWTH FUND
------------------- ----------------- ---------------
<S> <C> <C> <C>
CLASS B
Advertising................................................. $ -- $ -- $ --
Printing and mailing prospectuses, semi-annual reports and
annual reports (other than to current shareholders)........ $ -- $ -- $ --
Seminars.................................................... $ -- $ -- $ --
Compensation to Underwriters to partially offset upfront
dealer commissions and other marketing costs............... $ -- $ -- $ --
Compensation to Dealers..................................... $ -- $ -- $ --
Compensation to Sales Personnel............................. $ -- $ -- $ --
Annual Report Total......................................... $ -- $ -- $ --
</TABLE>
The Plans require AIM Distributors to provide the Board of Trustees at least
quarterly with a written report of the amounts expended pursuant to the Plans
and the purposes for which such expenditures were made. The Board of Trustees
reviews these reports in connection with their decisions with respect to the
Plans.
As required by Rule 12b-1, the Plans and related forms of Shareholder Service
Agreements were approved by the Board of Trustees, including a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust and who have no direct or indirect financial interest in the operation of
the Plans or in any agreements related to the Plans ("Qualified Trustees"). In
approving the Plans in accordance with the requirements of Rule 12b-1, the
Trustees considered various factors and determined that there is a reasonable
likelihood that the Plans would benefit each class of each Fund and their
respective shareholders.
The Plans do not obligate the Funds to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Plans. Thus, even if AIM Distributors' actual expenses exceed the fee payable to
AIM Distributors thereunder at any given time, the Funds will not be obligated
to pay more than that fee. If AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee.
Unless terminated earlier in accordance with their terms, the Plans continue in
effect until [June 30, 1999] and each year thereafter, as long as such
continuance is specifically approved at least annually by the Board of Trustees,
including a majority of the Qualified Trustees.
The Plans may be terminated by the vote of a majority of the Independent
Trustees, or, with respect to a particular class, by the vote of a majority of
the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution expenses
paid by the applicable class requires shareholder approval; otherwise, it may be
amended by the Trustees, including a majority of the Qualified Trustees, by
votes cast in person at a meeting called for the purpose of voting upon such
amendment. As long as the Plans are in effect, the selection or nomination of
the Qualified Trustees is committed to the discretion of the Qualified Trustees.
In the event the Class A Plan is amended in a manner which the Board of Trustees
determines would materially increase the charges paid under the Class A Plan,
the Class B shares of the Funds will no longer convert into Class A shares of
the same Funds unless the Class B shares, voting separately, approve such
amendment. If the Class B shareholders do not approve such amendment, the Board
of Trustees will (i) create a new class of shares of the Funds which is
identical in all material respects to the Class A shares as they existed prior
to the implementation of the amendment and (ii) ensure that the existing Class B
shares of the Funds will be exchanged or converted into such new class of shares
no later than the date the Class B shares were scheduled to convert into Class A
shares.
The principal differences between the Class A Plan, on the one hand, and the
Class B Plan, on the other hand, are: (i) the Class A Plan allows payment to AIM
Distributors or to dealers or financial institutions of up to 0.50% of average
daily net assets of the Class A shares of each Fund, as compared to 1.00% of
such assets of each Fund's Class B shares; (ii) the Class B Plan obligates the
Class B shares to continue to make payments to AIM Distributors following
termination of the Class B
Statement of Additional Information Page 38
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
shares Distribution Agreement with respect to Class B shares sold by or
attributable to the distribution efforts of AIM Distributors unless there has
been a complete termination of the Class B Plan (as defined in such Plan) and
(iii) the Class B Plan expressly authorizes AIM Distributors to assign, transfer
or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of the
Funds' shares is set forth in the Prospectus under the headings "How to Purchase
Shares" and "Terms and Conditions of Purchase of the AIM Funds." A Master
Distribution Agreement with AIM Distributors relating to the Class A and Class B
shares of the Funds was approved by the Board of Trustees on , 1998.
Both such Master Distribution Agreements are hereinafter collectively referred
to as the "Distribution Agreements."
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 Fund), 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 Fund's 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 shares of the Funds at the time of
such sales. Payments with respect to Class B shares will equal 4.0% 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 anticipates that it will
require a number of years to recoup from Class B Plan payments the sales
commissions paid to dealers and institutions in connection with sales of Class B
shares. In the future, if multiple distributors serve a Fund, each such
distributor (or its assignee or transferee) would receive a share of the
payments under the Class B Plan based on the portion of the Fund's Class B
shares sold by or attributable to the distribution efforts of that distributor.
The Trust (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 Distribution
Agreement does not affect the obligation of the Funds and their Class B
shareholders to pay contingent deferred sales charges.
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 GT Global, Inc.,
the Trust's distributor prior to June 1, 1998, for the fiscal year ended
December 31, 1997.
<TABLE>
<CAPTION>
1997
--------------------------------
SALES AMOUNT
CHARGES RETAINED
---------------- --------------
<S> <C> <C>
Developing Markets Fund............................................................... $ -- $ --
Emerging Markets Fund................................................................. $ -- $ --
Latin American Growth Fund............................................................ $ -- $ --
</TABLE>
The following chart reflects the contingent deferred sales charges paid by Class
A and Class B shareholders for the fiscal year ended December 31, 1997, for
Class A and Class B shares:
<TABLE>
<CAPTION>
1997
------------
<S> <C>
Class A................................................................................................... $ --
Class B................................................................................................... $ --
</TABLE>
Statement of Additional Information Page 39
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agency and Service Agreement between the Trust and A I M Fund
Services, Inc. ("AFS"), a registered transfer agent and wholly-owned subsidiary
of AIM, provides that AFS will perform certain shareholder services for the
Funds for a fee per account serviced. The Transfer Agency and Service Agreement
provides that AFS will receive a per account fee plus out-of-pocket expenses to
process orders for purchases, redemptions and exchanges of shares; prepare and
transmit payments for dividends and distributions declared by the Funds;
maintain shareholder accounts and provide shareholders with information
regarding the Funds and their accounts. The Transfer Agency and Service
Agreement became effective on September 8, 1998. The Sub-adviser serves as each
Fund's pricing and accounting agent. For the fiscal years ended October 31,
1997, 1996 and 1995, Emerging Markets Fund paid accounting services fees to the
Sub-adviser of $103,144, $125,349 and $33,216, and Latin American Fund paid
accounting services fees of $90,733, $86,436 and $24,138, respectively.
EXPENSES OF THE FUNDS
Each Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM
Distributors and other agents. These expenses include, in addition to the
advisory, distribution, transfer agency, pricing and accounting agency and
brokerage fees discussed above, legal and audit expenses, custodian fees,
directors' fees, organizational fees, fidelity bond and other insurance
premiums, taxes, extraordinary expenses and the expenses of reports and
prospectuses sent to existing investors. The allocation of general Trust
expenses and expenses shared among the Funds and other funds organized as series
of the Trust are allocated on a basis deemed fair and equitable, which may be
based on the relative net assets of the Funds or the nature of the services
performed and relative applicability to the Funds. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of each Fund's expenses to its relative net assets can be
expected to be higher than the expense ratios of funds investing solely in
domestic securities, since the cost of maintaining the custody of foreign
securities and the rate of investment management fees paid by each Fund
generally are higher than the comparable expenses of such other funds.
Statement of Additional Information Page 40
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
The net asset value per share of each Fund is normally determined daily as of
the close of trading of the New York Stock Exchange ("NYSE") (generally 4:00
p.m. Eastern time) of each business day of the Funds. In the event the NYSE
closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, the net
asset value of a Fund is determined as of the close of the NYSE on such day. Net
asset value per share is determined by dividing the value of a Fund's
securities, cash and other assets (including interest accrued but not collected)
attributable to a particular class, less all its liabilities (including accrued
expenses and dividends payable) attributable to that class, by the total number
of shares outstanding of that class. Determination of each Fund's net asset
value per share is made in accordance with generally accepted accounting
principles.
Each equity security held by a Fund is valued at its last sales price on the
exchange where the security is principally traded or, lacking any sales on a
particular day, the security is valued at the mean between the closing bid and
asked prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. Each security reported on the
NASDAQ National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the mean between the closing bid and asked
prices on that day. Debt securities are valued on the basis of prices provided
by an independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, yield, quality, coupon
rate, maturity, type of issue, individual trading characteristics and other
market data. Securities for which market quotations are not readily available or
are questionable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers in a manner specifically
authorized by the Board of Trustees. Short-term obligations having 60 days or
less to maturity are valued on the basis of amortized cost. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of each Fund's shares are determined at such
times. Foreign currency exchange rates are also generally determined prior the
close of the NYSE. Occasionally, events affecting the values of such securities
and such exchange rates may occur between the times at which such values are
determined and the close of the NYSE which will not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
- --------------------------------------------------------------------------------
HOW TO PURCHASE AND
REDEEM SHARES
- --------------------------------------------------------------------------------
A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
The sales charge normally deducted on purchases of Class A shares is used to
compensate AIM Distributors and participating dealers for their expenses
incurred in connections with the distribution of the Funds' Class A shares.
Since there is little expenses 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
Statement of Additional Information Page 41
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
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' best interests that such persons, and certain
other persons whose purchases result in relatively low expenses of distribution,
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 set forth in the Funds' Prospectuses. In
addition, the Funds offer programs such as Right of Accumulation and Letter of
Intent, which are described in the Prospectuses, that are designed to permit
investors to aggregate purchases of different funds, or separate purchases over
time, in order to qualify for a lower sales charge rate. See "Terms and
Conditions of Purchase of the AIM Funds -- Reductions in Initial Sales Charges"
in the Prospectuses.
Class B shares will automatically convert into Class A shares of the same Fund
eight years following the end of the calendar month in which a purchase was
made. For the purpose of calculating the holding period required for conversion
of Class B shares, the initial issuance of Class B shares shall mean (i) the
date on which such Class B shares were issued, or (ii) for Class B shares
obtained through an exchange, or a series of exchanges, the date on which the
original Class B shares were issued. For purposes of conversion to Class A,
Class B shares purchased through the reinvestment of dividends and other
distributions paid in respect of Class B shares will be held in a separate
sub-account. Each time any Class B shares in the shareholder's regular account
(other than those in the sub-account) convert to Class A, a pro rata portion of
the Class B shares in the sub-account will also convert to Class A. The portion
will be determined by the ratio that the shareholder's Class B shares converting
to Class A bears to the shareholder's total Class B shares not acquired through
dividends and other distributions.
The availability of the conversion feature is subject to the continuing
availability of an opinion of counsel to the effect that the dividends and other
distributions paid on Class A and Class B shares will not result in
"preferential dividends" under the Internal Revenue Code and the conversion of
shares does not constitute a taxable event. If the conversion feature ceased to
be available, the Class B shares beyond the eighth year. AIM and the Sub-adviser
has no reason to believe that this condition for the availability of the
conversion feature will not be met.
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 the 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 invested in AIM 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
AIM 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.
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 the 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) a one-time reinvestment in Class B shares of the Fund within 180 days of a
prior redemption; (4) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in AIM Funds, which are
permitted to be made without penalty pursuant to the Code, other than tax-free
rollovers or transfers of assets,
Statement of Additional Information Page 42
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
and the proceeds of which are reinvested in AIM Funds; (5) redemptions made in
connection with participant-directed exchanges between options in an
employer-sponsored benefit plan; (6) redemptions made for the purpose of
providing cash to fund a loan to a participant in a tax-qualified retirement
plan; (7) 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; (8)
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 (9) 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.
For purposes of a Letter of Intent entered into prior to June 1, 1998, any
registered investment adviser, trust company or bank trust department which
exercises investment discretion and which intends within thirteen months to
invest $500,000 or more can be treated as a single purchaser, provided further
that such entity places all purchases and redemption orders. Such entities
should be prepared to establish their qualifications for such treatment.
Complete information concerning the method of exchanging shares of the Funds for
shares of the other AIM Funds is set forth in the Prospectuses under the heading
"Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "How to Redeem Shares." 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 Funds at (800) 959-4246 and guarantee delivery of all
required documents in good order. A repurchase is effected at the net asset
value per share of the applicable Fund next determined after the repurchase
order is received. Such an arrangement is subject to timely receipt by A I M
Fund Services, Inc., the Funds' transfer agent, of all required documents in
good order. If such documents are not received within a reasonable time after
the order is placed, the order is subject to cancellation. While there is no
charge imposed by a Fund or by AIM Distributors (other than any applicable
contingent deferred sales charge) 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 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.
QUALIFYING FOR A REDUCED FRONT-END SALES CHARGE
As described in each Prospectus, the front-end sales charge for Class A shares
is calculated by multiplying an investor's total investment by the applicable
sales charge rate. The applicable rate varies with the amount invested. The
Funds offer programs such as Right of Accumulation and Letter of Intent, which
are described in the Prospectus, and are designed to permit investors to
aggregate purchases of different funds, or separate purchases over time, in
order to qualify for a lower sales charge rate. See "Terms and Conditions of
Purchase of the AIM Funds -- Reductions in Initial Sales Charges" in the
Prospectus.
PROGRAMS AND SERVICES FOR SHAREHOLDERS
The Funds provide certain services for shareholders and certain investment or
redemption programs. See "Exchange Privilege" and "How to Redeem Shares" in the
Prospectus. All inquiries concerning these programs should be made directly to
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, toll free
at (800) 959-4246.
DIVIDEND ORDER. Dividends may be paid to someone other than the registered
owner, or sent to an address other than the address of record. (Please note that
signature guarantees are required to effect this option.) An investor also may
direct that his or her dividends be invested in one of the AIM Funds and there
is no sales charge for these investments; initial investment minimums apply. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" in the
Prospectus. To effect this option, please contact your authorized dealer. For
more information concerning AIM Funds other than the Funds, please obtain a
current prospectus by contacting your authorized dealer, by writing to A I M
Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, or by calling
toll free (800) 959-4246.
Statement of Additional Information Page 43
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
TAXES
- --------------------------------------------------------------------------------
GENERAL
Each Fund is treated as a separate corporation for federal income tax purposes.
To continue to qualify for treatment as a RIC under the Code, each Fund must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, Futures or Forward Contracts) derived with respect to its
business of investing in securities or those currencies ("Income Requirement");
and (2) the Diversification Requirements.
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by each Fund, and gains realized thereby, may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("foreign taxes") that would reduce the yield and/or total
return on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate foreign taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors. If more than 50% of the value of a Fund's total assets at the
close of its taxable year consists of securities of foreign corporations, the
Fund will be eligible to, and may, file an election with the Internal Revenue
Service that will enable its shareholders, in effect, to receive the benefit of
the foreign tax credit with respect to any foreign taxes paid by it. Pursuant to
the election, the Fund would treat those taxes as dividends paid to its
shareholders and each shareholder would be required to (1) include in gross
income, and treat as paid by him, his share of those taxes, (2) treat his share
of those taxes and of any dividend paid by the Fund that represents income from
foreign and U.S. possessions sources as his own income from those sources and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. Each Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's foreign
taxes and income from sources within, and taxes paid to, foreign countries and
U.S. possessions if it makes this election. Pursuant to the Taxpayer Relief Act
of 1997 ("Tax Act"), individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Form 1099 and
all of whose foreign source income is "qualified passive income" may elect each
year to be exempt from the extremely complicated foreign tax credit limitation
and will be able to claim a foreign tax credit without having to file the
detailed Form 1116 that otherwise is required.
PASSIVE FOREIGN INVESTMENT COMPANIES
Each Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation -- other than a "controlled foreign
corporation" (I.E., a foreign corporation in which, on any day during its
taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly
Statement of Additional Information Page 44
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly or constructively, at least 10% of that
voting power) as to which a Fund is a U.S. shareholder (effective with respect
to each Fund for its taxable year beginning November 1, 1998) -- that, in
general, meets either of the following tests: (1) at least 75% of its gross
income is passive or (2) an average of at least 50% of its assets produce, or
are held for the production of, passive income. Under certain circumstances, a
Fund will be subject to federal income tax on a portion of any "excess
distribution" received on, or of any gain from the disposition of, stock of a
PFIC (collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent it
distributes that income to its shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the QEF's ordinary earnings and net capital gain (I.E., the excess
of net long-term capital gain over net short-term capital loss) -- which most
likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
Effective for its taxable year beginning November 1, 1998, each Fund may elect
to "mark to market" its stock in any PFIC. "Marking-to-market," in this context,
means including in ordinary income each taxable year the excess, if any, of the
fair market value of the stock over a Fund's adjusted basis therein as of the
end of that year. Pursuant to the election, a Fund also will be allowed to
deduct (as an ordinary, not capital, loss) the excess, if any, of its adjusted
basis in PFIC stock over the fair market value thereof as of the taxable
year-end, but only to the extent of any net mark-to-market gains with respect to
that stock included in income by the Fund for prior taxable years. A Fund's
adjusted basis in each PFIC's stock subject to the election will be adjusted to
reflect the amounts of income included and deductions taken thereunder.
Regulations proposed in 1992 provided a similar election with respect to the
stock of certain PFICs.
NON-U.S. SHAREHOLDERS
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
Each Fund's use of hedging transactions, such as selling (writing) and
purchasing options and Futures and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the amount,
character and timing of recognition of the gains and losses a Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by a Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Fund at the end of its taxable year generally
will be deemed to have been sold at that time at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. That 60% portion
will qualify for the reduced maximum tax rates on noncorporate taxpayers' net
capital gain enacted by the Tax Act -- 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain recognized on capital assets held for more than
18 months -- instead of the 28% rate in effect before that legislation, which
now applies to gain recognized on capital assets held for more than one year but
not more than 18 months.
Section 988 of the Code also may apply to gains and losses from transactions in
foreign currencies, foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains and
losses). Each Section 988 gain or loss generally is computed separately and
treated as ordinary income or loss. In the case
Statement of Additional Information Page 45
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
of overlap between sections 1256 and 988, special provisions determine the
character and timing of any income, gain or loss. The Funds attempt to monitor
section 988 transactions to minimize any adverse tax impact.
If a Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures or Forward Contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Fund will be treated as having made an actual sale thereof, with
the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
Futures or Forward Contract entered into by a Fund or a related person with
respect to the same or substantially similar property. In addition, if the
appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting each Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Funds.
Statement of Additional Information Page 46
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
AIM was organized in 1976, and along with its subsidiaries, manages or advises
approximately 90 investment company 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. AIM is the sole
shareholder of the Fund's principal underwriter, AIM Distributors. 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 that has a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 02110, acts as custodian of each Fund's assets. State Street is
authorized to establish and has established separate accounts in foreign
currencies and to cause securities of each Fund to be held in separate accounts
outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are .
conducts an annual audit of each Fund, assists in the
preparation of the Funds' federal and state income tax returns and consults with
the Company and the Funds as to matters of accounting, regulatory filings, and
federal and state income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by , as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of that firm as experts in accounting and auditing.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations
extended to shareholders of private, for-profit corporations. There is a remote
possibility, however, that under certain circumstances shareholders of the Trust
may be held personally liable for the Trust's obligations. However, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or a trustee. The
Trust Agreement provides for indemnification from the Trust property for all
losses and expenses of any shareholder held personally liable for the Trust's
obligations. Thus, the risk of a shareholder incurring financial loss on account
of such liability is limited to circumstances in which the Trust itself would be
unable to meet its obligations and where the other party was held not to be
bound by the disclaimer.
NAME
Prior to May 29, 1998, Developing Markets Fund, Emerging Markets Fund and Latin
American Fund operated under the names GT Global Developing Markets Fund, GT
Global Emerging Markets Fund, and GT Global Latin America Growth Fund,
respectively.
Statement of Additional Information Page 47
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in each
Prospectus, is as follows:
P(1+T)to the power of n=ERV
<TABLE>
<S> <C> <C>
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable maximum sales load is deducted at
the beginning of the 1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the 1, 5, or 10
year periods (or fractional portion of such period).
</TABLE>
The standard total returns of Developing Market's Predecessor Fund (recomputed
for Class A shares to reflect the deduction of the maximum sales charge of 4.75%
for Class A shares), stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
DEVELOPING
MARKETS FUND
PERIOD (CLASS A)
- ----------------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Fiscal year ended Oct. 31, 1997............................................................................ [(9.61)%
Jan. 11, 1994 (commencement of operations) through Oct. 31, 1997........................................... (2.47)%]
</TABLE>
Class B shares of Developing Markets Fund have not been in operation for a full
year since the Fund's conversion from a closed-end to an open-end fund.
The standard total returns for the Class A and Class B shares of Emerging
Markets Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997.................................................... [(18.52)% (19.16)%
Oct. 31, 1992 through Oct. 31, 1997................................................ 2.30% n/a
April 1, 1993 (commencement of operations) through Oct. 31, 1997................... n/a 1.81%
May 18, 1992 (commencement of operations) through Oct. 31, 1997.................... 1.57% n/a]
</TABLE>
The standard total returns for the Class A and Class B shares of Latin American
Fund, stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
LATIN AMERICAN LATIN AMERICAN
PERIOD FUND (CLASS A) FUND (CLASS B)
- ---------------------------------------------------------------------------------------- ----------------- -------------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997......................................................... [3.37% 3.04%
Oct. 31, 1992 through Oct. 31, 1997..................................................... 7.01% n/a
April 1, 1993 (commencement of operations) through Oct. 31, 1997........................ n/a 5.20%
Aug. 13, 1991 (commencement of operations) through Oct. 31, 1997........................ 7.23% n/a]
</TABLE>
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
P(1+U)to the power of n=ERV
<TABLE>
<S> <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.
</TABLE>
Statement of Additional Information Page 48
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
<TABLE>
<S> <C> <C>
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the stated period.
</TABLE>
The average annual non-standard total returns of Developing Markets Fund's
Predecessor Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
PERIOD
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Fiscal year ended Oct. 31, 1997............................................................................ [(5.10)%
Jan. 11, 1994 (commencement of operations) through Oct. 31, 1997........................................... (1.21)%]
</TABLE>
The average annual non-standard total returns for the Class A and Class B shares
of Emerging Markets Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997.................................................... [(14.45)% (14.91)%
Oct. 31, 1992 through Oct. 31, 1997................................................ 3.30% n/a
April 1, 1993 (commencement of operations) through Oct. 31, 1997................... n/a 2.21%
May 18, 1992 (commencement of operations) through Oct. 31, 1997.................... 2.48% n/a]
</TABLE>
The average annual non-standard total returns for the Class A and Class B shares
of Latin American Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
LATIN AMERICAN LATIN AMERICAN
PERIOD FUND (CLASS A) FUND (CLASS B)
- ---------------------------------------------------------------------------------------- ----------------- -------------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997......................................................... [8.52% 8.04%
Oct. 31, 1991 through Oct. 31, 1997..................................................... 8.06% n/a
April 1, 1993 (commencement of operations) through Oct. 31, 1997........................ n/a 5.56%
Aug. 13, 1991 (commencement of operations) through Oct. 31, 1997........................ 8.07% n/a]
</TABLE>
Cumulative total return across a stated period may be calculated as follows:
P(1+V)to the power of n=ERV
<TABLE>
<S> <C> <C>
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a stated portion of, or none of, the
applicable maximum sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the stated period.
</TABLE>
The cumulative total return of Developing Markets Fund's Predecessor Fund (not
recomputed to take sales charges into account) for the period January 11, 1994
(commencement of operations) through October 31, 1997 was (4.53)%.
The cumulative total return of Developing Market's Predecessor Fund (recomputed
for Class A shares to reflect the deduction of the maximum sales charge of 4.75%
for Class A shares), stated as aggregate total returns for the periods shown,
were:
<TABLE>
<CAPTION>
DEVELOPING
MARKETS FUND
PERIOD (CLASS A)
- ----------------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Jan. 11, 1994 (commencement of operations) through Oct. 31, 1997........................................... [(9.07)%]
</TABLE>
Class B shares of Developing Markets Fund have not been in operation for a full
year since the Fund's conversion from a closed-end to an open-end fund.
The cumulative total returns (not taking sales charges into account) for the
Class A and Class B shares of Emerging Markets Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------- ------------------- ---------------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through Oct. 31, 1997................... [n/a 10.55%
May 18, 1992 (commencement of operations) through Oct. 31, 1997.................... 14.32% n/a]
</TABLE>
Statement of Additional Information Page 49
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
The aggregate cumulative total returns (taking sales charges into account) for
the Class A and B shares of Emerging Markets Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------- --------------------- ---------------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through Oct. 31, 1997................... [n/a 8.55%
May 18, 1992 (commencement of operations) through Oct. 31, 1997.................... 8.89% n/a]
</TABLE>
The cumulative total returns (not taking sales charges into account) for the
Class A and Class B shares of Latin American Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
LATIN AMERICAN LATIN AMERICAN
PERIOD FUND (CLASS A) FUND (CLASS B)
- ---------------------------------------------------------------------------------------- --------------- -----------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through Oct. 31, 1997........................ [n/a 28.14%
Aug. 13, 1991 (commencement of operations) through Oct. 31, 1996........................ 62.00% n/a]
</TABLE>
The aggregate cumulative total returns (taking sales charges into account) for
the Class A and B shares of Latin American Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
LATIN AMERICAN LATIN AMERICAN
PERIOD FUND (CLASS A) FUND (CLASS B)
- ---------------------------------------------------------------------------------------- --------------- -----------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through Oct. 31, 1997........................ [n/a 26.14%
Aug. 13, 1991 (commencement of operations) through Oct. 31, 1997........................ 54.30% n/a]
</TABLE>
OTHER INFORMATION REGARDING STANDARD TOTAL AND NON-STANDARD TOTAL RETURNS FOR
DEVELOPING MARKETS FUND
The standard total and non-standard total return data of Developing Markets Fund
are based on the performance of the Predecessor Fund as a closed-end investment
company. The standard total return data, however, have been recomputed to
reflect the deduction of the current maximum sales charge of 4.75% for Class A
shares which went into effect on November 1, 1997. Future performance of
Developing Markets Fund will be effected by expenses that it will incur as a
series of an open-end investment company.
PERFORMANCE INFORMATION
Total return and yield figures for the Funds are neither fixed nor guaranteed,
and no Fund's principal is insured. Performance quotations reflect historical
information and should not be considered representative of a Fund's performance
for any period in the future. Performance is a function of a number of factors
which can be expected to fluctuate. The Funds may provide performance
information in reports, sales literature and advertisements. The Funds may also,
from time to time, quote information about the Funds published or aired by
publications or other media entities which contain articles or segments relating
to investment results or other data about one or more of the Funds. Such
publications or media entities may include the following, among others:
Advertising Age
Barron's
Best's Review
Broker World
Business Week
Changing Times
Christian Science Monitor
Consumer Reports
Economist
EuroMoney
FACS of the Week
Financial Planning
Financial Product News
Financial World
Forbes
Fortune
Global Finance
Hartford Courant Inc.
Institutional Investor
Insurance Forum
Insurance Week
Investor's Daily
Journal of the American
Society of CLU & ChFC
Kiplinger Letter
Money
Mutual Fund Forecaster
Mutual Fund Magazine
Nation's Business
New York Times
Pension World
Pensions & Investments
Personal Investor
Financial Services Week
Philadelphia Inquirer
Smart Money
USA Today
U.S. News & World Report
Wall Street Journal
Washington Post
CNN
CNBC
PBS
Statement of Additional Information Page 50
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
The Funds and AIM Distributors may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
each Fund with the following, or compare each Fund's performance to performance
data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services
(data and mutual fund rankings and comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and
Development (publications)
International Finance Corporation Emerging
Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Analytical Data Services, Inc. (data and
mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings
and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All Country
(AC) World Index
Morgan Stanley Capital International World
Indices
Morningstar, Inc. (data and mutual fund rankings
and comparisons)
NASDAQ
Organization for Economic Cooperation and
Development (publications)
Salomon Brothers Global Telecommunications
Index
Salomon Brothers World Government Bond
Index-Non-U.S.
Salomon Brothers World Government Bond
Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price
Index
Stangar
Wilshire Associaties
World Bank (publications and reports)
The World Bank Publication of Trends in
Developing Countries
Worldscope
Each Fund may also compare its performance to rates on Certificates of Deposit
and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or AIM
Distributors. Advertising for the Funds may from time to time include
discussions of general economic conditions and interest rates. Advertising for
the Funds may also include reference to the use of those Funds as part of an
individual's overall retirement investment program. From time to time, sales
literature and/or advertisements for any of the Funds may disclose (i) the
largest holdings in the Fund's portfolio, (ii) certain selling group members
and/or (iii) certain institutional shareholders.
From time to time, the Funds' sales literature and/or advertisements may discuss
generic topics pertaining to the mutual fund industry. This includes, but is not
limited to, literature addressing general information about mutual funds,
variable annuities, dollar-cost averaging, stocks, bonds, money markets,
certificates of deposit, retirement, retirement plans, asset allocation,
tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when comparing
a Fund's performance with other funds and other potential investments, investors
should note that the methods of computing performance of other potential
investments are not necessarily comparable to the methods employed by a Fund.
Statement of Additional Information Page 51
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
DESCRIPTION OF DEBT RATINGS
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DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
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 edged." 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 bond 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 risk appear somewhat
larger than the 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
some time 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.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are 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 which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Statement of Additional Information Page 52
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of
Statement of Additional Information Page 53
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
fixed financial charges and high internal cash generation; and well-established
access to a range of financial markets and assured sources of alternate
liquidity. Issues rated Prime-2 have a strong ability for repayment of senior
short-term debt obligations. This normally will be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
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FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds as of October 31, 1997 and for the
fiscal year then ended, and the unaudited financial statements as of April 30,
1998 and for the six months then ended, appear on the following pages.
Statement of Additional Information Page 54
<PAGE>
Statement of Additional Information
AIM GLOBAL THEME FUNDS
Class A and Class B shares of
AIM GLOBAL FINANCIAL SERVICES FUND
AIM GLOBAL INFRASTRUCTURE FUND
AIM GLOBAL RESOURCES FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
AIM GLOBAL HEALTH CARE FUND
AIM GLOBAL TELECOMMUNICATIONS FUND
(SERIES PORTFOLIOS OF AIM INVESTMENT FUNDS)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TX 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 FREE
OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON TX 77210-4739
OR BY CALLING (800) 374-4246.
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION DATED SEPTEMBER 8, 1998
RELATING TO THE AIM GLOBAL FINANCIAL SERVICES FUND PROSPECTUS,
THE AIM GLOBAL INFRASTRUCTURE FUND PROSPECTUS, THE AIM GLOBAL
RESOURCES FUND PROSPECTUS, THE AIM GLOBAL CONSUMER PRODUCTS
AND SERVICES FUND PROSPECTUS, THE AIM GLOBAL HEALTH CARE FUND
PROSPECTUS AND THE AIM GLOBAL TELECOMMUNICATIONS FUND PROSPECTUS
EACH DATED SEPTEMBER 8, 1998
[LOGO]
Statement of Additional Information Page 1
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Introduction............................................................................................................. 3
Investment Objectives and Policies....................................................................................... 4
Options, Futures and Currency Strategies................................................................................. 8
Risk Factors............................................................................................................. 17
Investment Limitations................................................................................................... 21
Execution of Portfolio Transactions...................................................................................... 25
Trustees and Executive Officers.......................................................................................... 28
Management............................................................................................................... 30
Valuation of Fund Shares................................................................................................. 37
How to Purchase and Redeem Shares........................................................................................ 37
Taxes.................................................................................................................... 40
Additional Information................................................................................................... 43
Investment Results....................................................................................................... 44
Description of Debt Ratings.............................................................................................. 50
Financial Statements..................................................................................................... 52
</TABLE>
Statement of Additional Information Page 2
<PAGE>
AIM GLOBAL THEME FUNDS
INTRODUCTION
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This Statement of Additional Information relates to the Class A and Class B
shares of AIM Global Financial Services Fund ("Financial Services Fund"), AIM
Global Infrastructure Fund ("Infrastructure Fund"), AIM Global Resources Fund
("Resources Fund"), AIM Global Consumer Products and Services Fund ("Consumer
Products and Services Fund"), AIM Global Health Care Fund ("Health Care Fund")
and AIM Global Telecommunications Fund ("Telecommunications Fund") (each, a
"Fund" or "Theme Fund," and, collectively, the "Funds" or "Theme Funds"). Each
Fund is a diversified series of AIM Investment Funds (the "Trust"), a registered
open-end management investment company organized as a Delaware business trust.
The Financial Services Fund, Infrastructure Fund, Resources Fund and Consumer
Products and Services Fund (each, a "Feeder Fund," and, collectively, the
"Feeder Funds") invest all of their investable assets in the Global Financial
Services Portfolio, Global Infrastructure Portfolio, Global Resources Portfolio
and Global Consumer Products and Services Portfolio (each, a "Portfolio," and,
collectively, the "Portfolios"), respectively.
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and INVESCO (NY), Inc. (the "Sub-adviser") serves as the
investment sub-adviser of and sub-administrator for the Health Care Fund,
Telecommunications Fund and the Portfolios (each a "Theme Portfolio," and
collectively the "Theme Portfolios"). AIM and the Sub-adviser also serve as the
administrator and sub-administrator, respectively, for each Feeder Fund.
The Trust is a series mutual fund. The rules and regulations of the United
States Securities and Exchange Commission (the "SEC") require all mutual funds
to furnish prospective investors certain information concerning the activities
of the fund being considered for investment. This information for Financial
Services Fund is included in a Prospectus dated September 8, 1998, for
Infrastructure Fund is included in a separate Prospectus dated September 8,
1998, for Resources Fund is included in a separate Prospectus dated September 8,
1998, for Consumer Products and Services Fund is included in a separate
Prospectus dated September 8, 1998, for Health Care Fund is included in a
separate Prospectus dated September 8, 1998, and for Telecommunications Fund is
included in a separate Prospectus dated September 8, 1998. Additional copies of
the Prospectuses and this Statement of Additional Information may be obtained
without charge by writing the principal distributor of the Funds' shares, A I M
Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, TX 77210-4739
or by calling (800) 347-4246. Investors must receive a Prospectus before they
invest.
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
Registration Statement filed with the SEC. Copies of the Registration Statement,
including items from the Prospectus and this Statement of Additional
Information, may be obtained from the SEC by paying the charges described under
its rules and regulations.
GENERAL INFORMATION ABOUT THE FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name G.T. Investment Funds, Inc., which
was organized as a Maryland corporation on October 29, 1987. The Trust was
reorganized on September 4, 1998 as a Delaware business trust, and is registered
with the SEC as a diversified open-end series management investment company. The
Trust currently consists of thirteen separate portfolios: each of the six Theme
Funds, AIM Global Government Income Fund, AIM Global High Income Fund, AIM
Strategic Income Fund, AIM Global Growth and Income Fund, AIM Emerging Markets
Fund, AIM Developing Markets Fund, and AIM Latin American Growth Fund. Each of
these funds has three separate classes: Class A, Class B and Advisor Class
shares. All historical financial and other information contained in this
Statement of Additional Information for periods prior to September 4, 1998, is
that of the series of G.T. Investment Funds, Inc. (renamed AIM Investment Funds,
Inc.).
This Statement of Additional Information relates solely to the Class A and B
shares of the Funds.
Statement of Additional Information Page 3
<PAGE>
AIM GLOBAL THEME FUNDS
The term "majority of the outstanding shares" of the Trust, of a particular Fund
or of a particular class of a Fund or of a particular Portfolio means,
respectively, the vote of the lesser of (a) 67% or more of the shares of the
Trust, such Fund or such class present at a meeting of the Trust's shareholders,
if the holders of more than 50% of the outstanding shares of the Trust, such
Fund or such class are present or represented by proxy, or (b) more than 50% of
the outstanding shares of the Trust, such Fund or such class.
Class A, Class B and Advisor Class shares of each Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees 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 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 Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
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
Trustees of the Trust. In such event, the remaining holders cannot elect any
trustees of the Trust.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
The investment objective of each Feeder Fund is long-term capital growth. The
investment objective of the Health Care Fund and Telecommunications Fund is
long-term capital appreciation and long-term growth of capital, respectively.
Each Feeder Fund seeks to achieve its investment objective by investing all of
its investable assets in a Portfolio, each of which is a subtrust (a "series")
of Global Investment Portfolio (an open-end management investment company), with
an investment objective that is identical to that of its corresponding Feeder
Fund. Whenever the phrase "all of a Fund's investable assets" is used herein and
in the Prospectus, it means that the only investment securities held by a Feeder
Fund will be its interest in its corresponding Portfolio. A Feeder Fund may
withdraw its investment in its corresponding Portfolio at any time, if the Board
of Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. Upon any such withdrawal, a Feeder Fund's assets
would be invested in accordance with the investment policies of its
corresponding Portfolio described below and in the Prospectus.
SELECTION OF EQUITY INVESTMENTS
With respect to the Resources Portfolio, the Sub-adviser has identified four
areas that it expects will create investment opportunities: (i) improving
supply/demand fundamentals, which may result in higher commodity prices; (ii)
privatization of state-owned natural resource businesses; (iii) management which
can improve production efficiencies without correspondingly increasing commodity
prices; and (iv) service companies with emerging technologies that can enhance
productivity or reduce production costs. Of course, there is no certainty that
these factors will produce the anticipated results.
With respect to the Telecommunications Fund, the Sub-adviser has identified four
areas that it expects will create investment opportunities: (i) deregulation of
companies in the industry, which will allow competition to promote greater
efficiencies; (ii) privatization of state-owned telecommunications businesses;
(iii) development of infrastructure in underdeveloped countries and upgrading of
services in other countries; and (iv) emerging technologies that will enhance
productivity and reduce costs in the telecommunications industry. Of course,
there is no certainty that these factors will produce the anticipated results.
There may be times when, in the opinion of the Sub-adviser, prevailing market,
economic or political conditions warrant reducing the proportion of the Theme
Portfolios' assets invested in equity securities and increasing the proportion
held in cash (U.S. dollars, foreign currencies or multinational currency units)
or invested in debt securities or high quality money market instruments issued
by corporations, or the U.S., or a foreign government. A portion of each Theme
Portfolio's assets normally will be held in cash (U.S. dollars, foreign
currencies or multinational currency units) or invested in foreign
Statement of Additional Information Page 4
<PAGE>
AIM GLOBAL THEME FUNDS
or domestic high quality money market instruments pending investment of proceeds
from new sales of Fund shares to provide for ongoing expenses and to satisfy
redemptions.
For each Theme Portfolio's investment purposes, an issuer is typically
considered as located in a particular country if it (a) is organized under the
laws of or has its principal office in a particular country, or (b) normally
derives 50% or more of its total revenues from business in that country,
provided that, in the Sub-adviser's view, the value of such issuer's securities
will tend to reflect such country's development to a greater extent than
developments elsewhere. However, these are not absolute requirements, and
certain companies incorporated in a particular country and considered by the
Sub-adviser to be located in that country may have substantial foreign
operations or subsidiaries and/or export sales exceeding in size the assets or
sales in that country.
In certain countries, governmental restrictions and other limitations on
investment may affect a Theme Portfolio's ability to invest in such countries.
In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals. The Sub-adviser is
not aware at this time of the existence of any investment or exchange control
regulations which might substantially impair the operations of the Theme
Portfolios as described in the Prospectus and this Statement of Additional
Information. Restrictions may in the future, however, make it undesirable to
invest in certain countries. None of the Theme Portfolios has a present
intention of making any significant investment in any country or stock market in
which the Sub-adviser considers the political or economic situation to threaten
a Theme Portfolio with substantial or total loss of its investment in such
country or market.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
Each Theme Portfolio may invest in the securities of investment companies
(including investment vehicles or companies advised by the Sub-adviser or its
affiliates ("Affiliated Funds")) within the limits of the Investment Company Act
of 1940, as amended (the "1940 Act"). These limitations currently provide that,
in general, a Theme Portfolio may purchase shares of an investment company
unless (a) such a purchase would cause a Theme Portfolio to own in the aggregate
more than 3% of the total outstanding voting stock of the investment company or
(b) such a purchase would cause the Theme Portfolio to have more than 5% of its
assets invested in the investment company or more than 10% of its assets
invested in an aggregate of all such investment companies. The foregoing
restrictions do not apply to the investment of the Financial Services Fund,
Infrastructure Fund, Resources Fund and Consumer Products and Services Fund in
their corresponding Portfolios. Investment in closed-end investment companies
may involve the payment of substantial premiums above the value of such
companies' portfolio securities. Each Theme Portfolio does not intend to invest
in such investment companies unless, in the judgment of the Sub-adviser, the
potential benefits of such investments justify the payment of any applicable
premiums. The return on such securities will be reduced by operating expenses of
such companies, including payments to the investment managers of those
investment companies. With respect to investments in Affiliated Funds, the
Sub-adviser waives its advisory fee to the extent that such fees are based on
assets of a Theme Portfolio invested in Affiliated Funds.
DEPOSITARY RECEIPTS
A Theme Portfolio may hold securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs"), Global
Depositary Receipts ("GDRs") and European Depositary Receipts ("EDRs") or other
securities convertible into securities of eligible foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. ADRs and ADSs are typically issued
by an American bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depositary Receipts ("CDRs"), are issued in Europe typically
by foreign banks and trust companies and evidence ownership of either foreign or
domestic securities. GDRs are similar to EDRs and are designed for use in
several international financial markets. Generally, ADRs and ADSs in registered
form are designed for use in U.S. securities markets and EDRs in bearer form are
designed for use in European securities markets. For purposes of each Theme
Portfolio's investment policies, a Theme Portfolio's investments in ADRs, ADSs,
GDRs and EDRs will be deemed to be investments in the equity securities
representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
Statement of Additional Information Page 5
<PAGE>
AIM GLOBAL THEME FUNDS
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Theme Portfolios may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Theme Portfolio in connection with other
securities or separately and provide the Theme Portfolio with the right to
purchase at a later date other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Theme Portfolio may make
secured loans of its securities holdings amounting to not more than 30% of its
total assets. Securities loans are made to broker/dealers or institutional
investors pursuant to agreements requiring that the loans be continuously
secured by collateral at least equal at all times to the value of the securities
lent plus any accrued interest, "marked to market" on a daily basis. The Theme
Portfolios may pay reasonable administrative and custodial fees in connection
with the loans of their securities. While the securities loan is outstanding, a
Theme Portfolio will continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. A Theme Portfolio will
have a right to call each loan and obtain the securities within the stated
settlement period. A Theme Portfolio will not have the right to vote equity
securities while they are being lent, but it may call in a loan in anticipation
of any important vote. Loans will only be made to firms deemed by the
Sub-adviser to be of good standing and will not be made unless, in the judgment
of the Sub-adviser, the consideration to be earned from such loans would justify
the risk.
MONEY MARKET INSTRUMENTS
Money market instruments in which the Theme Portfolios may invest include U.S.
government securities, high-grade commercial paper, bank certificates of
deposit, bankers' acceptances and repurchase agreements related to any of the
foregoing. "High-grade commercial paper" refers to commercial paper rated A-1 by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or P-1 by
Moody's Investors Services, Inc. or, if not rated, determined by the Sub-adviser
to be of comparable quality.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Theme Portfolio's investment policies with respect to
bank obligations, obligations of foreign branches of U.S. banks and of foreign
banks are obligations of the issuing bank and may be general obligations of the
parent bank. Such obligations may, however, be limited by the terms of a
specific obligation and by government regulation. As with investments in
non-U.S. securities in general, investments in the obligations of foreign
branches of U.S. banks and of foreign banks may subject each Theme Portfolio to
investment risks that are different in some respects from those of investments
in obligations of U.S. issuers. Although each Theme Portfolio will typically
acquire obligations issued and supported by the credit of U.S. or foreign banks
having total assets at the time of purchase of $1 billion or more, this $1
billion figure is not an investment policy or restriction of each Theme
Portfolio. For the purposes of calculation with respect to the $1 billion
figure, the assets of a bank will be deemed to include the assets of its U.S.
and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Theme Portfolio purchases a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed upon price, date, and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investments in securities, including possible decline in
the market value of the underlying securities and delays and costs to the Theme
Portfolio if the other party to the repurchase agreement becomes bankrupt, the
Theme Portfolios intend to enter into repurchase agreements only with banks and
dealers believed by the Sub-adviser to present minimal credit risks in
accordance with guidelines established by the Trust's or the Portfolios' Board
of Trustees, as applicable. The Sub-adviser will review and monitor the
creditworthiness of such institutions under the applicable Board's general
supervision.
Statement of Additional Information Page 6
<PAGE>
AIM GLOBAL THEME FUNDS
Each Theme Portfolio will invest only in repurchase agreements collateralized at
all times in an amount at least equal to the repurchase price plus accrued
interest. To the extent that the proceeds from any sale of such collateral upon
a default in the obligation to repurchase were less than the repurchase price, a
Theme Portfolio would suffer a loss. If the financial institution which is party
to the repurchase agreement petitions for bankruptcy or otherwise becomes
subject to bankruptcy or other liquidation proceedings, there may be
restrictions on a Theme Portfolio's ability to sell the collateral and a Theme
Portfolio could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, each Theme Portfolio intends to comply with provisions under such Code
that would allow the immediate resale of such collateral. Each Theme Portfolio
will not enter into a repurchase agreement with a maturity of more than seven
days if, as a result, more than 15% of the value of its net assets (except for
Health Care Fund, more than 10% of the value of its total assets) would be
invested in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Theme Portfolio's borrowings will not exceed 33 1/3% of its total assets,
i.e., the Theme Portfolio's total assets at all times will equal at least 300%
of the amount of outstanding borrowings. If market fluctuations in the value of
a Theme Portfolio's securities holdings or other factors cause the ratio of a
Theme Portfolio's total assets to outstanding borrowings to fall below 300%,
within three days (excluding Sundays and holidays) of such event that Theme
Portfolio may be required to sell portfolio securities to restore the 300% asset
coverage, even though from an investment standpoint such sales might be
disadvantageous. Each Theme Portfolio may also borrow up to 5% of its total
assets for temporary or emergency purposes other than to meet redemptions. Any
borrowing by a Theme Portfolio may cause greater fluctuation in the value of its
shares than would be the case if that Theme Portfolio did not borrow.
Each Theme Portfolio's fundamental investment limitations permit the Theme
Portfolio to borrow money for leveraging purposes. However, each Theme Portfolio
(except the Health Care Fund) is currently prohibited, pursuant to a non-
fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by the
Trust's or the Portfolios' Board of Trustees, as applicable. If a Theme
Portfolio employs leverage in the future, it would be subject to certain
additional risks. Use of leverage creates an opportunity for greater growth of
capital but would exaggerate any increases or decreases in the net asset value
of the Financial Services Fund, Infrastructure Fund, Resources Fund, Consumer
Products and Services Fund or a Theme Portfolio. When the income and gains on
securities purchased with the proceeds of borrowings exceed the costs of such
borrowings, a Theme Portfolio's earnings or a Fund's net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, a Theme Portfolio's earnings or a Fund's net
asset value would decline faster than would otherwise be the case.
Each Theme Portfolio may enter into reverse repurchase agreements. A reverse
repurchase agreement is a borrowing transaction in which the Portfolio transfers
possession of a security to another party, such as a bank or broker/dealer, in
return for cash, and agrees to repurchase the security in the future at an
agreed upon price, which includes an interest component. Each Theme Portfolio
may also engage in "roll" borrowing transactions, which involve the sale of
Government National Mortgage Association certificates or other securities
together with a commitment (for which the Theme Portfolio may receive a fee) to
purchase similar, but not identical, securities at a future date. Each Theme
Portfolio will segregate with a custodian, cash or liquid securities in an
amount sufficient to cover its obligations under "roll" transactions and reverse
repurchase agreements with broker/dealers. No segregation is required for
reverse repurchase agreements with banks.
SHORT SALES
Each Theme Portfolio may make short sales of securities. A short sale is a
transaction in which a Theme Portfolio sells a security in anticipation that the
market price of that security will decline. A Theme Portfolio may make short
sales (i) as a form of hedging to offset potential declines in long positions in
securities it owns, or anticipates acquiring, or in similar securities, and (ii)
in order to maintain flexibility in its securities holdings.
When a Theme Portfolio makes a short sale of a security it does not own, it must
borrow the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Theme Portfolio may have
to pay a fee to borrow particular securities and will often be obligated to pay
over any payments received on such borrowed securities.
A Theme Portfolio's obligation to replace the borrowed security when the
borrowing is called or expires will be secured by collateral deposited with the
intermediary. The Theme Portfolio will also be required to deposit collateral
with its custodian to the extent, if any, necessary so that the value of both
collateral deposits in the aggregate is at all times equal to at least 100% of
the current market value of the security sold short. Depending on arrangements
made with the
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AIM GLOBAL THEME FUNDS
intermediary from which it borrowed the security regarding payment of any
amounts received by that Theme Portfolio on such security, a Theme Portfolio may
not receive any payments (including interest) on its collateral deposited with
such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time a Theme Portfolio replaces the borrowed security, that Theme
Portfolio will incur a loss; conversely, if the price declines, the Theme
Portfolio will realize a gain. Any gain will be decreased, and any loss
increased, by the transaction costs associated with the transaction. Although a
Theme Portfolio's gain is limited by the price at which it sold the security
short, its potential loss theoretically is unlimited.
No Theme Portfolio will make a short sale if, after giving effect to such sale,
the market value of the securities sold short exceeds 25% of the value of its
total assets or the Theme Portfolio's aggregate short sales of the securities of
any one issuer exceed the lesser of 2% of the Theme Portfolio's net assets or 2%
of the securities of any class of the issuer. Moreover, a Theme Portfolio may
engage in short sales only with respect to securities listed on a national
securities exchange. A Theme Portfolio may make short sales "against the box"
without respect to such limitations. In this type of short sale, at the time of
the sale the Theme Portfolio owns the security it has sold short or has the
immediate and unconditional right to acquire at no additional cost the identical
security.
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Sub-adviser's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While the Sub-adviser is experienced in
the use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Theme Portfolio
entered into a short hedge because the Sub-adviser projected a decline in
the price of a security in the Theme Portfolio's portfolio, and the price of
that security increased instead, the gain from that increase might be wholly
or partially offset by a decline in the price of the hedging instrument.
Moreover, if the price of the hedging instrument declined by more than the
increase in the price of the security, the Theme Portfolio could suffer a
loss. In either such case, the Theme Portfolio would have been in a better
position had it not hedged at all.
(4) As described below, the Theme Portfolio might be required to
maintain assets as "cover," maintain segregated accounts or make margin
payments when it takes positions in instruments involving obligations to
third parties (I.E., instruments other than purchased options). If the Theme
Portfolio were unable to close out its positions in such instruments, it
might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. The requirements might
impair the Theme Portfolio's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Theme Portfolio sell a portfolio security at a
disadvantageous time. The Theme Portfolio's ability to close out a position
in an instrument
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AIM GLOBAL THEME FUNDS
prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Theme Portfolio.
WRITING CALL OPTIONS
Each Theme Portfolio may write (sell) call options on securities, indices and
currencies. Call options generally will be written on securities and currencies
that, in the opinion of the Sub-adviser are not expected to make any major price
moves in the near future but that, over the long term, are deemed to be
attractive investments for the Theme Portfolios.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he or she may be
assigned an exercise notice, requiring him or her to deliver the underlying
security or currency against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by purchasing an option
identical to that previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Theme Portfolio's investment objective. When writing a call option, a Theme
Portfolio, in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security or currency above the exercise price,
and retains the risk of loss should the price of the security or currency
decline. Unlike one who owns securities or currencies not subject to an option,
a Theme Portfolio has no control over when it may be required to sell the
underlying securities or currencies, since most options may be exercised at any
time prior to the option's expiration. If a call option that a Theme Portfolio
has written expires, the Theme Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Theme Portfolio will realize a gain or loss from the
sale of the underlying security or currency, which will be increased or offset
by the premium received. Each Theme Portfolio does not consider a security or
currency covered by a call option to be "pledged" as that term is used in that
Theme Portfolio's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Theme Portfolio will be
obligated to sell the security or currency at less than its market value.
The premium that a Theme Portfolio receives for writing a call option is deemed
to constitute the market value of an option. The premium the Theme Portfolio
will receive from writing a call option will reflect, among other things, the
current market price of the underlying investment, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying investment, and the length of the option period. In determining
whether a particular call option should be written, the Sub-adviser will
consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit a Theme Portfolio to
write another call option on the underlying security or currency with either a
different exercise price or expiration date, or both.
Each Theme Portfolio will pay transaction costs in connection with the writing
of options and in entering into closing purchase contracts. Transaction costs
relating to options activity are normally higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities, indices or currencies at the time
the options are written. From time to time, a Theme Portfolio may purchase an
underlying security or currency for delivery in accordance with the exercise of
an option, rather than delivering such security or currency from its portfolio.
In such cases, additional costs will be incurred.
A Theme Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security or currency, any loss resulting from the
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AIM GLOBAL THEME FUNDS
repurchase of a call option is likely to be offset in whole or in part by
appreciation of the underlying security or currency owned by a Theme Portfolio.
WRITING PUT OPTIONS
Each Theme Portfolio may write put options on securities, indices and
currencies. A put option gives the purchaser of the option the right to sell,
and the writer (seller) the obligation to buy, the underlying security or
currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The operation of put options in other
respects, including their related risks and rewards, is substantially identical
to that of call options.
A Theme Portfolio generally would write put options in circumstances where the
Sub-adviser wishes to purchase the underlying security or currency for a Theme
Portfolio's holdings at a price lower than the current market price of the
security or currency. In such event, a Theme Portfolio would write a put option
at an exercise price that, reduced by the premium received on the option,
reflects the lower price it is willing to pay. Since the Theme Portfolio would
also receive interest on debt securities or currencies maintained to cover the
exercise price of the option, this technique could be used to enhance current
return during periods of market uncertainty. The risk in such a transaction
would be that the market price of the underlying security or currency would
decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Theme Portfolio will be
obligated to purchase the security or currency at greater than its market value.
PURCHASING PUT OPTIONS
Each Theme Portfolio may purchase put options on securities, indices and
currencies. As the holder of a put option, a Theme Portfolio would have the
right to sell the underlying security or currency at the exercise price at any
time until (American style) or on (European style) the expiration date. A Theme
Portfolio may enter into closing sale transactions with respect to such options,
exercise such option or permit such option to expire.
Each Theme Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Theme Portfolio in order to protect
against an anticipated decline in the value of the security or currency. Such
hedge protection is provided only during the life of the put option when the
Theme Portfolio, as the holder of the put option, is able to sell the underlying
security or currency at the put exercise price regardless of any decline in the
underlying security's market price or currency's exchange value. The premium
paid for the put option and any transaction costs would reduce any profit
otherwise available for distribution when the security or currency is eventually
sold.
A Theme Portfolio may also purchase put options at a time when it does not own
the underlying security or currency. By purchasing put options on a security or
currency it does not own, that Theme Portfolio seeks to benefit from a decline
in the market price of the underlying security or currency. If the put option is
not sold when it has remaining value, and if the market price of the underlying
security or currency remains equal to or greater than the exercise price during
the life of the put option, the Theme Portfolio will lose its entire investment
in the put option. In order for the purchase of a put option to be profitable,
the market price of the underlying security or currency must decline
sufficiently below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Theme Portfolio may purchase call options on securities, indices and
currencies. As the holder of a call option, the Theme Portfolio would have the
right to purchase the underlying security or currency at the exercise price at
any time until (American style) or on (European style) the expiration date. A
Theme Portfolio may enter into closing sale transactions with respect to such
options, exercise such options or permit such options to expire.
Call options may be purchased by a Theme Portfolio for the purpose of acquiring
the underlying security or currency for its portfolio. Utilized in this fashion,
the purchase of call options would enable a Theme Portfolio to acquire the
security or currency at the exercise price of the call option plus the premium
paid. At times, the net cost of acquiring the security or currency in this
manner may be less than the cost of acquiring the security or currency directly.
This technique may also be useful to a Theme Portfolio in purchasing a large
block of securities that would be more difficult to acquire by direct market
purchases. So long as it holds such a call option, rather than the underlying
security or currency itself, the Theme Portfolio is partially protected from any
unexpected decline in the market price of the underlying security or currency
and, in such event, could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.
A Theme Portfolio may also purchase call options on underlying securities or
currencies it owns to avoid realizing losses that would result in a reduction of
its current return. For example, where a Theme Portfolio has written a call
option on an
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AIM GLOBAL THEME FUNDS
underlying security or currency having a current market value below the price at
which it purchased the security or currency, an increase in the market price
could result in the exercise of the call option written by the Theme Portfolio
and the realization of a loss on the underlying security or currency.
Accordingly, the Theme Portfolio could purchase a call option on the same
underlying security or currency, which could be exercised to fulfill the Theme
Portfolio's delivery obligations under its written call (if it is exercised).
This strategy could allow the Theme Portfolio to avoid selling the portfolio
security or currency at a time when it has an unrealized loss; however, the
Theme Portfolio would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of each
Theme Portfolio's total assets at the time of each purchase.
A Theme Portfolio may attempt to accomplish objectives similar to those involved
in using Forward Contracts, by purchasing put or call options on currencies. A
put option gives the Theme Portfolio as purchaser the right (but not the
obligation) to sell a specified amount of currency at the exercise price at any
time until (American style) or on (European style) the expiration date of the
option. A call option gives the Theme Portfolio as purchaser the right (but not
the obligation) to purchase a specified amount of currency at the exercise price
at any time until (American style) or on (European style) the expiration date of
the option. A Theme Portfolio might purchase a currency put option, for example,
to protect itself against a decline in the dollar value of a currency in which
it holds or anticipates holding securities. If the currency's value should
decline against the dollar, the loss in currency value should be offset, in
whole or in part, by an increase in the value of the put. If the value of the
currency instead should rise against the dollar, any gain to a Theme Portfolio
would be reduced by the premium it had paid for the put option. A currency call
option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which a Theme
Portfolio anticipates purchasing securities.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Theme Portfolio will not purchase an OTC option unless it believes that
daily valuations for such options are readily obtainable. OTC options differ
from exchange-traded options in that OTC options are transacted with dealers
directly and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
A Theme Portfolio may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written by
the Theme Portfolio. The assets used as cover for OTC options written by a Theme
Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Theme Portfolio may repurchase any OTC
option it writes at a maximum price to be calculated by a formula set forth in
the option agreement. The cover for an OTC option written subject to this
procedure would be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the option.
A Theme Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. A Theme
Portfolio intends to purchase or write only those exchange-traded options for
which there appears to be a liquid secondary market. However, there can be no
assurance that such a market will exist at any particular time. Closing
transactions can be made for OTC options only by negotiating directly with the
contra party or by a transaction in the secondary market if any such market
exists. Although a Theme Portfolio will enter into OTC options only with contra
parties that are expected to be capable of entering into closing transactions
with the Theme Portfolio, there is no assurance that the Theme Portfolio will in
fact be able to close out an OTC option position at a favorable price prior to
expiration. In the event of insolvency of the contra party, the Theme Portfolio
might be unable to close out an OTC option position at any time prior to its
expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Theme Portfolio writes a
call on an index, it receives a premium and agrees that, prior to the expiration
date, the purchaser of the call, upon exercise of the call, will receive from
the Theme Portfolio an amount of cash if the closing level
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AIM GLOBAL THEME FUNDS
of the index upon which the call is based is greater than the exercise price of
the call. The amount of cash is equal to the difference between the closing
price of the index and the exercise price of the call times a specified multiple
(the "multiplier"), which determines the total dollar value for each point of
such difference. When a Theme Portfolio buys a call on an index, it pays a
premium and has the same rights as to such call as are indicated above. When a
Theme Portfolio buys a put on an index, it pays a premium and has the right,
prior to the expiration date, to require the seller of the put, upon the Theme
Portfolio's exercise of the put, to deliver to the Theme Portfolio an amount of
cash if the closing level of the index upon which the put is based is less than
the exercise price of the put, which amount of cash is determined by the
multiplier, as described above for calls. When the Theme Portfolio writes a put
on an index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Theme Portfolio to deliver to it an amount of
cash equal to the difference between the closing level of the index and the
exercise price times the multiplier, if the closing level is less than the
exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Theme Portfolio
writes a call on an index it cannot provide in advance for its potential
settlement obligations by acquiring and holding the underlying securities. A
Theme Portfolio can offset some of the risk of writing a call index option
position by holding a diversified portfolio of securities similar to those on
which the underlying index is based. However, a Theme Portfolio cannot, as a
practical matter, acquire and hold a portfolio containing exactly the same
securities as underlie the index and, as a result, bears a risk that the value
of the securities held will vary from the value of the index.
Even if a Theme Portfolio could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Theme Portfolio, as the call
writer, will not know that it has been assigned until the next business day at
the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Theme Portfolio purchases an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Theme Portfolio will be required
to pay the difference between the closing index value and the exercise price of
the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each Theme Portfolio may enter into interest rate or currency futures contracts,
and may enter into stock index futures contracts (collectively, "Futures" or
"Futures Contracts"), as a hedge against changes in prevailing levels of
interest rates, currency exchange rates or stock price levels in order to
establish more definitely the effective return on securities or currencies held
or intended to be acquired by the Theme Portfolio. A Theme Portfolio's hedging
may include sales of Futures as an offset against the effect of expected
increases in interest rates, and decreases in currency exchange rates and stock
prices, and purchases of Futures as an offset against the effect of expected
declines in interest rates, and increases in currency exchange rates or stock
prices.
Each Theme Portfolio only will enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading thereon in the United States
are regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Theme Portfolio's exposure to interest rate, currency exchange
rate and stock market fluctuations, that Theme Portfolio may be able to hedge
its exposure more effectively and at a lower cost through using Futures
Contracts.
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AIM GLOBAL THEME FUNDS
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Theme Portfolio realizes a gain;
if it is more, the Theme Portfolio realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Theme
Portfolio realizes a gain; if it is less, the Theme Portfolio realizes a loss.
The transaction costs must also be included in these calculations. There can be
no assurance, however, that a Theme Portfolio will be able to enter into an
offsetting transaction with respect to a particular Futures Contract at a
particular time. If a Theme Portfolio is not able to enter into an offsetting
transaction, that Theme Portfolio will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Theme
Portfolio.
Each Theme Portfolio's Futures transactions will be entered into for hedging
purposes only; that is, Futures Contracts will be sold to protect against a
decline in the price of securities or currencies that a Theme Portfolio owns, or
Futures Contracts will be purchased to protect a Theme Portfolio against an
increase in the price of securities or currencies it has committed to purchase
or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Theme Portfolio in order to initiate Futures trading and maintain
the Theme Portfolio's open positions in Futures Contracts. A margin deposit made
when the Futures Contract is entered into ("initial margin") is intended to
ensure the Theme Portfolio's performance under the Futures Contract. The margin
required for a particular Futures Contract is set by the exchange on which the
Futures Contract is traded and may be significantly modified from time to time
by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Theme Portfolio entered into the Futures
Contract will be made on a daily basis as the price of the underlying security,
currency or index fluctuates making the Futures Contract more or less valuable,
a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Theme Portfolio's
portfolio being hedged. The degree of imperfection of correlation depends upon
circumstances such as variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
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AIM GLOBAL THEME FUNDS
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contracts prices during a single trading day.
The daily limit establishes the maximum amount that the price of a Futures
Contract or option may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular type of Futures Contract or option, no trades may be made on that
day at a price beyond that limit. The daily limit governs only price movement
during a particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions. Futures
Contract and option prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of positions and subjecting some traders to substantial
losses.
If a Theme Portfolio were unable to liquidate a Futures or option on Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Theme Portfolio would
continue to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Theme Portfolio would continue to
be required to make daily variation margin payments and might be required to
maintain the position being hedged by the Future or option or to maintain cash
or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, 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 is exercised on the
last trading day 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 level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Theme Portfolio writes an option on a Futures Contract, it will be required
to deposit initial and variation margin pursuant to requirements similar to
those applicable to Futures Contracts. Premiums received from the writing of an
option on a Futures Contract are included in the initial margin deposit.
A Theme Portfolio may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Theme Portfolio enters into Futures Contracts, options on
Futures Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Theme Portfolio, after taking into
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AIM GLOBAL THEME FUNDS
account unrealized profits and unrealized losses on any contracts the Theme
Portfolio has entered into. In general, a call option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract exceeds the
strike, I.E., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Trust's Board
of Trustees and the Portfolio's Board of Trustees, as applicable, without a
shareholder vote. This limitation does not limit the percentage of a Theme
Portfolio's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. A Theme Portfolio
either may accept or make delivery of the currency at the maturity of the
Forward Contract. A Theme Portfolio may also, if its contra party agrees prior
to maturity, enter into a closing transaction involving the purchase or sale of
an offsetting contract.
A Theme Portfolio engages in forward currency transactions in anticipation of,
or to protect itself against, fluctuations in exchange rates. A Theme Portfolio
might sell a particular foreign currency forward, for example, when it holds
bonds denominated in a foreign currency but anticipates, and seeks to be
protected against, a decline in the currency against the U.S. dollar. Similarly,
a Theme Portfolio might sell the U.S. dollar forward when it holds bonds
denominated in U.S. dollars but anticipates, and seeks to be protected against,
a decline in the U.S. dollar relative to other currencies. Further, a Theme
Portfolio might purchase a currency forward to "lock in" the price of securities
denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. Each Theme Portfolio will enter into such Forward
Contracts with major U.S. or foreign banks and securities or currency dealers in
accordance with guidelines approved by the Trust's or the Portfolios' Board of
Trustees, as applicable.
A Theme Portfolio may enter into Forward Contracts either with respect to
specific transactions or with respect to overall investments of that Theme
Portfolio. The precise matching of the Forward Contract amounts and the value of
specific securities generally will not be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the Forward Contract
is entered into and the date it matures. Accordingly, it may be necessary for
that Theme Portfolio to purchase additional foreign currency on the spot (I.E.,
cash) market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Theme Portfolio is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on the
spot market some of the foreign currency the Theme Portfolio is obligated to
deliver. The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward Contracts involve the risk that anticipated currency
movements will not be predicted accurately, causing a Theme Portfolio to sustain
losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Theme Portfolio to
sell a currency, that Theme Portfolio either may sell a security and use the
sale proceeds to make delivery of the currency or retain the security and offset
its contractual obligation to deliver the currency by purchasing a second
contract pursuant to which the Theme Portfolio will obtain, on the same maturity
date, the same amount of the currency that it is obligated to deliver.
Similarly, a Theme Portfolio may close out a Forward Contract requiring it to
purchase a specified currency by entering into a second contract, if its contra
party agrees, entitling it to sell the same amount of the same currency on the
maturity date of the first contract. A Theme Portfolio would realize a gain or
loss as a result of entering into such an offsetting Forward Contract under
either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
the offsetting contract.
The cost to a Theme Portfolio of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because Forward Contracts are usually
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities a Theme Portfolio owns or intends to acquire, but it does
establish a rate of exchange in advance. In addition, while Forward Contract
sales limit the risk of loss due to a decline in the value of the hedged
currencies, they also limit any potential gain that might result should the
value of the currencies increase.
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AIM GLOBAL THEME FUNDS
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Theme Portfolio may use options on foreign currencies, Futures on foreign
currencies, options on Futures on foreign currencies and Forward Contracts to
hedge against movements in the values of the foreign currencies in which the
Theme Portfolio's securities are denominated. Such currency hedges can protect
against price movements in a security that the Theme Portfolio owns or intends
to acquire that are attributable to changes in the value of the currency in
which it is denominated. Such hedges do not, however, protect against price
movements in the securities that are attributable to other causes.
A Theme Portfolio might seek to hedge against changes in the value of a
particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Theme Portfolio may hedge
against price movements in that currency by entering into a contract on another
currency or basket of currencies, the values of which the Sub-adviser believes
will have a positive correlation to the value of the currency being hedged. The
risk that movements in the price of the contract will not correlate perfectly
with movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Theme Portfolio could be disadvantaged by dealing in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Theme Portfolio might be required to accept or
make delivery of the underlying foreign currency in accordance with any U.S. or
foreign regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options purchased by a Theme Portfolio) expose the Theme Portfolio to an
obligation to another party. A Theme Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies, or other options, Forward Contracts or Futures
Contracts, or (2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. Each Theme Portfolio will comply with SEC guidelines
regarding cover for these instruments and, if the guidelines so require, set
aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Theme Portfolio's assets is used for cover or otherwise set aside, it could
affect portfolio management or the Theme Portfolio's ability to meet redemption
requests or other current obligations.
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RISK FACTORS
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ILLIQUID SECURITIES
Each Theme Portfolio may invest up to 15% of its net assets in illiquid
securities. Securities may be considered illiquid if a Theme Portfolio cannot
reasonably expect within seven days to sell the securities for approximately the
amount at which that Theme Portfolio values such securities. See "Investment
Limitations." The sale of illiquid securities, if they can be sold at all,
generally will require more time and result in higher brokerage charges or
dealer discounts and other selling expenses than will the sale of liquid
securities such as securities eligible for trading on U.S. securities exchanges
or in OTC markets. Moreover, restricted securities, which may be illiquid for
purposes of this limitation, often sell, if at all, at a price lower than
similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Theme Portfolio may be obligated to pay all or part
of the registration expenses and a considerable period may elapse between the
time of the decision to sell and the time the Theme Portfolio may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Theme Portfolio might
obtain a less favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Theme Portfolio, however, could affect adversely the marketability of such
portfolio securities and the Theme Portfolio might be unable to dispose of such
securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Trust's or the
Portfolios' Board of Trustees, as applicable, has the ultimate responsibility
for determining whether specific securities, including restricted securities
pursuant to Rule 144A under the 1933 Act, are liquid or illiquid. Each Board has
delegated the function of making day-to-day determinations of liquidity to the
Sub-adviser, in accordance with procedures approved by that Board. The
Sub-adviser takes into account a number of factors in reaching liquidity
decisions, including, but not limited to, (i) the frequency of trading in the
security; (ii) the number of dealers that make quotes for the security; (iii)
the number of dealers that have undertaken to make a market in the security;
(iv) the number of other potential purchasers; and (v) the nature of the
security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). The
Sub-adviser monitors the liquidity of securities held by each Theme Portfolio
and periodically reports such determinations to the Trust's or the Portfolios'
Board of Trustees, as applicable. If the liquidity percentage restriction of a
Theme Portfolio is satisfied at the time of investment, a later increase in the
percentage of illiquid securities held by the Theme Portfolio resulting from a
change in market value or assets will not constitute a violation of that
restriction. If as a result of a change in market value or assets, the
percentage of illiquid securities held by the Theme Portfolio increases above
the applicable limit, the Sub-adviser will take appropriate steps to bring the
aggregate amount of illiquid assets back within the
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AIM GLOBAL THEME FUNDS
prescribed limitations as soon as reasonably practicable, taking into account
the effect of any disposition on the Theme Portfolio.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment convertibility of currencies into U.S. dollars and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation by any country, a Theme Portfolio could lose its entire investment
in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Theme Portfolio may invest may have groups that advocate radical religious or
revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for widespread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of a Theme Portfolio's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which a Theme
Portfolio invests and adversely affect the value of a Theme Portfolio's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Theme Portfolio. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the cost and expenses of a Theme Portfolio. For
example, certain countries require prior governmental approval before
investments by foreign persons may be made, or may limit the amount of
investment by foreign persons in a particular company or limit the investment by
foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
for the repatriation of investment income, capital or the proceeds of securities
sales by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
restrictions on foreign capital remittances abroad. A Theme Portfolio could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the foreign securities held by a Theme
Portfolio will not be registered with the SEC or regulators of any foreign
country, nor will the issuers thereof be subject to the SEC's reporting
requirements. Thus, there will be less available information concerning most
foreign issuers of securities held by a Theme Portfolio than is available
concerning U.S. issuers. In instances where the financial statements of an
issuer are not deemed to reflect accurately the financial situation of the
issuer, the Sub-adviser will take appropriate steps to evaluate the proposed
investment, which may include on-site inspection of the issuer, interviews with
its management and consultations with accountants, bankers and other
specialists. There is substantially less publicly available information about
foreign companies than there are reports and ratings published about U.S.
companies and the U.S. government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because each Theme Portfolio, under normal
circumstances, will invest a substantial portion of its total assets in the
securities of foreign issuers which are denominated in foreign currencies, the
strength or weakness of the U.S. dollar against such foreign currencies will
account for part of a Theme Portfolio's investment performance. A decline in the
value of any particular currency against the U.S. dollar will cause a decline in
the U.S. dollar value of that Theme Portfolio's holdings of securities and cash
denominated in such currency and, therefore, will cause an overall decline in
the appropriate Fund's net asset value and any net investment income and capital
gains derived from such securities to be distributed in U.S. dollars to
shareholders of that Fund. Moreover, if the value of the foreign currencies in
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AIM GLOBAL THEME FUNDS
which a Theme Portfolio receives its income falls relative to the U.S. dollar
between receipt of the income and the making of Theme Portfolio distributions,
the Theme Portfolio may be required to liquidate securities in order to make
distributions if the Theme Portfolio has insufficient cash in U.S. dollars to
meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and the pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Theme Portfolio values its assets daily in terms of U.S. dollars,
the Portfolios do not intend to convert their holdings of foreign currencies
into U.S. dollars on a daily basis. Each Portfolio will do so, from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference ("spread") between the prices at which
they buy and sell various currencies. Thus, a dealer may offer to sell a foreign
currency to a Portfolio at one rate, while offering a lesser rate of exchange
should a Portfolio desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of a Theme Portfolio
are uninvested and no return is earned thereon. The inability of a Theme
Portfolio to make intended security purchases due to settlement problems could
cause that Theme Portfolio to miss attractive investment opportunities.
Inability to dispose of a portfolio security due to settlement problems either
could result in losses to that Theme Portfolio due to subsequent declines in
value of the portfolio security or, if that Theme Portfolio has entered into a
contract to sell the security, could result in possible liability to the
purchaser. The Sub-adviser will consider such difficulties when determining the
allocation of a Theme Portfolio's assets, although the Sub-adviser does not
believe that such difficulties will have a material adverse effect on a Theme
Portfolio's portfolio trading activities.
Each Theme Portfolio may use foreign custodians, which may involve risks in
addition to those related to its use of U.S. custodians. Such risks include
uncertainties relating to determining and monitoring the foreign custodian's
financial strength, reputation and standing; maintaining appropriate safeguards
concerning that Theme Portfolio's investments; and possible difficulties in
obtaining and enforcing judgments against such custodians.
WITHHOLDING TAXES. Each Theme Portfolio's net investment income from foreign
issuers may be subject to withholding taxes by the foreign issuer's country,
thereby reducing that income or delaying the receipt of income when those taxes
may be recaptured. See "Taxes."
CONCENTRATION. To the extent a Theme Portfolio invests a significant portion
of its assets in securities of issuers located in a particular country or region
of the world, such Portfolio may be subject to greater risks and may experience
greater volatility than a fund that is more broadly diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. The countries
that are members of the European Economic Community ("Common Market") (Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain, and the United Kingdom) eliminated certain import tariffs and
quotas and other trade barriers with respect to one another over the past
several years. The Sub-adviser believes that this deregulation should improve
the prospects for economic growth in many Western European countries. Among
other things, the deregulation could enable companies domiciled in one country
to avail themselves of lower labor costs existing in other countries. In
addition, this deregulation could benefit companies domiciled in one country by
opening additional markets for their goods and services in other countries.
Since, however, it is not clear what the exact form or effect of these Common
Market reforms will be on business in Western Europe, it is impossible to
predict the long-term impact of the implementation of these programs on the
securities owned by a Theme Portfolio.
SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
United States securities markets, and should be considered highly speculative.
Such risks include: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging
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AIM GLOBAL THEME FUNDS
instruments; (5) higher rates of inflation (including the risk of social unrest
associated with periods of hyper-inflation) and high unemployment; (6) controls
on foreign investment and local practices disfavoring foreign investors and
limitations on repatriation of invested capital, profits and dividends, and on a
fund's ability to exchange local currencies for U.S. dollars; (7) political
instability and social unrest and violence; (8) the risk that the governments of
Russia and Eastern European countries may decide not to continue to support the
economic reform programs implemented recently and could follow radically
different political and/or economic policies to the detriment of investors,
including non-market-oriented policies such as the support of certain industries
at the expense of other sectors or investors, or a return to the centrally
planned economy that existed when such countries had a communist form of
government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING JAPAN. Japan's economic growth has declined
significantly since 1990. The general government position has deteriorated as a
result of weakening economic growth and stimulative measures taken to support
economic activity and to restore financial stability. Although the decline in
interest rates and fiscal stimulation packages have helped to contain
recessionary forces, uncertainties remain. Japan is also heavily dependent upon
international trade, so its economy is especially sensitive to trade barriers
and disputes. Japan has had difficult relations with its trading partners,
particularly the United States, where the trade imbalance is the greatest. It is
possible that trade sanctions and other protectionist measures could impact
Japan adversely in both the short and the long term.
The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially in the U.S. In general, however, reported net income in Japan is
understated relative to U.S. accounting standards and this is one reason why
price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the U.S., both of
which factors tend to result in lower discount rates and higher price-earnings
ratios in Japan than in the U.S.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are not always equally
enforced. In addition, Japan's banking industry is undergoing problems related
to bad loans and declining values in real estate.
SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies of Pacific
region countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made periodically in certain of such
currencies. Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea. In
addition, the Theme Portfolios may invest in Hong Kong, which reverted to
Chinese Administration on July 1, 1997. Investments in Hong Kong may be subject
to expropriation, national, nationalization or confiscation, in which case a
Theme Portfolio could lose its entire investment in Hong Kong. In addition, the
reversion of Hong Kong also presents a risk that the Hong Kong dollar will be
devalued and a risk of possible loss of investor confidence in Hong Kong's
currency, stock market and assets.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
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AIM GLOBAL THEME FUNDS
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the
securities of companies in emerging markets may entail special risks relating to
potential political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Theme Portfolio could lose its entire
investment in any such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities there may
be share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.
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INVESTMENT LIMITATIONS
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FEEDER FUNDS
The Financial Services Fund, Infrastructure Fund, Resources Fund and Consumer
Products and Services Fund each has the following fundamental investment policy
to enable it to invest in the Financial Services Portfolio, Infrastructure
Portfolio, Resources Portfolio and Consumer Products and Services Portfolio,
respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
All other fundamental investment policies, and the non-fundamental investment
policies, of each Feeder Fund and its corresponding Portfolio are identical.
Therefore, although the following discusses the investment policies of each
Portfolio and its Board of Trustees, it applies equally to each Feeder Fund and
its Board of Trustees.
Each Portfolio has adopted the following investment limitations as fundamental
policies that (unless otherwise noted) may not be changed without approval by
the affirmative vote of a majority of the outstanding shares of the Portfolio.
Whenever a Feeder Fund is requested to vote on a change in the investment
limitations of its corresponding Portfolio, the Fund will hold a meeting of its
shareholders and will cast its votes as instructed by its shareholders.
No Portfolio may:
(1) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Portfolio may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner;
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AIM GLOBAL THEME FUNDS
(2) Purchase or sell physical commodities, but the Portfolio may
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Portfolio might be considered an underwriter
under the federal securities laws in connection with its disposition of
portfolio securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Portfolio's total
assets (including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the
Portfolio may borrow up to an additional 5% of its total assets (not
including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Portfolio's total assets would be invested in securities of that
issuer or the Portfolio would own or hold more than 10% of the outstanding
voting securities of that issuer, except that up to 25% of the Portfolio's
total assets may be invested without regard to this limitation, and except
that this limitation does not apply to securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities or to securities
issued by other investment companies.
The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of the Portfolios' Board of Trustees without
shareholder approval. No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Portfolio's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the
Portfolio has entered into;
(5) Borrow money except for temporary or emergency purposes (other than
to meet redemptions). While borrowings exceed 5% of the Portfolio's total
assets, the Portfolio will not make any additional investments;
(6) Invest more than 10% of its total assets in shares of other
investment companies and may not invest more than 5% of its total assets in
any one investment company or acquire more than 3% of the outstanding voting
securities of any one investment company;
(7) Purchase securities on margin, provided that each Portfolio may
obtain short-term credits as may be necessary for the clearance of purchases
and sales of securities, and further provided that the Portfolio may make
margin deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(8) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to the Prospectus for further information with respect to
the investment objective of each Feeder Fund, which may not be changed without
the approval of Fund shareholders, and its corresponding Portfolio's investment
objective, which may be changed without the approval of its shareholders, and
other investment policies, techniques and limitations, which may or may not be
changed without shareholder approval.
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AIM GLOBAL THEME FUNDS
HEALTH CARE FUND
The Health Care Fund has adopted the following investment limitations as
fundamental policies, which (unless otherwise noted) may not be changed without
approval by the affirmative vote of the lesser of (i) 67% of its shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares.
The Health Care Fund may not:
(1) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Health Care Fund may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner;
(2) Engage in the business of underwriting securities of other issuers,
except to the extent that the Health Care Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(3) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(4) Purchase or sell physical commodities, but the Health Care Fund may
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Health Care Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Health Care Fund may borrow up to an additional 5% of its total assets (not
including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Health Care Fund's total assets would be invested in securities of
that issuer or the Health Care Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to 25% of the
Health Care Fund's total assets may be invested without regard to this
limitation, and except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to securities issued by other investment companies.
Notwithstanding any other investment policy of the Health Care Fund, the Health
Care Fund may invest all of its investable assets (cash, securities and
receivables related to securities) in an open-end management investment company
having substantially the same investment objective, policies and limitations as
the Fund.
The following investment policies of the Health Care Fund are not fundamental
policies and may be changed by vote of the Trust's Board of Trustees without
shareholder approval. The Health Care Fund will not:
(1) Purchase securities for which there is no readily available market,
or enter into repurchase agreements or purchase time deposits maturing in
more than seven days, or purchase OTC options or hold assets set aside to
cover OTC options written by the Health Care Fund, if immediately after and
as a result, the value of such securities would exceed, in the aggregate,
15% of the Health Care Fund's net assets;
(2) Purchase securities on margin, provided that the Health Care Fund
may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the Health Care
Fund may make margin deposits in connection with its use of financial
options and futures, forward and spot currency contracts, swap transactions
and other financial contracts or derivative instruments; or
(3) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities; or
(4) Borrow money except for temporary or emergency purposes (other than
to meet redemptions). While borrowings exceed 5% of the Health Care Fund's
total assets, it will not make any additional investments.
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AIM GLOBAL THEME FUNDS
Investors should refer to the Health Care Fund's Prospectus for further
information with respect to the Health Care Fund's investment objective, which
may not be changed without the approval of its shareholders, and other
investment policies, techniques and limitations, which may be changed without
shareholder approval.
TELECOMMUNICATIONS FUND
The Telecommunications Fund has adopted the following investment limitations as
fundamental policies, which (unless otherwise noted) may not be changed without
approval by the affirmative vote of the lesser of (i) 67% of its shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares.
The Telecommunications Fund may not:
(1) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Telecommunications Fund may exercise rights under agreements relating to
such securities, including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner;
(2) Purchase or sell physical commodities, but the Telecommunications
Fund may purchase, sell or enter into financial options and futures, forward
and spot currency contracts, swap transactions and other financial contracts
or derivative instruments;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Telecommunications Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Telecommunications
Fund's total assets (including the amount borrowed but reduced by any
liabilities not constituting borrowings) at the time of the borrowing,
except that the Telecommunications Fund may borrow up to an additional 5% of
its total assets (not including the amount borrowed) for temporary or
emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Telecommunications Fund's total assets would be invested in
securities of that issuer or the Telecommunications Fund would own or hold
more than 10% of the outstanding voting securities of that issuer, except
that up to 25% of the Telecommunications Fund's total assets may be invested
without regard to this limitation, and except that this limitation does not
apply to securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities or to securities issued by other investment
companies.
Notwithstanding any other investment policy of the Telecommunications Fund, the
Telecommunications Fund may invest all of its investable assets (cash,
securities and receivables related to securities) in an open-end management
investment company having substantially the same investment objective, policies
and limitations as the Fund.
The following investment policies of the Telecommunications Fund are not
fundamental policies and may be changed by vote of the Trust's Board of Trustees
without shareholder approval. The Telecommunications Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Telecommunications Fund to own more than 10% of any class of securities of
any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
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AIM GLOBAL THEME FUNDS
(5) Borrow money except for temporary or emergency purposes (other than
to meet redemptions). While borrowings exceed 5% of the Telecommunications
Fund's total assets, it will not make any additional investments;
(6) Purchase securities on margin, provided that the Telecommunications
Fund may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the
Telecommunications Fund may make margin deposits in connection with its use
of financial options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments; or
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to the Telecommunications Fund's Prospectus for further
information with respect to the Telecommunications Fund's investment objective,
which may not be changed without the approval of shareholders, and other
investment policies, techniques and limitations, which may be changed without
shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's or Portfolio's investment policies or
restrictions. A Fund or Portfolio may exchange securities, exercise conversion
or subscription rights, warrants or other rights to purchase common stock or
other equity securities and may hold, except to the extent limited by the 1940
Act, any such securities so acquired without regard to the Fund's or Portfolio's
investment policies and restrictions. The original cost of the securities so
acquired will be included in any subsequent determination of a Fund's or
Portfolio's compliance with the investment percentage limitations referred to
above and in the Prospectus.
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EXECUTION OF PORTFOLIO
TRANSACTIONS
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Subject to policies established by the Trust's and the Portfolios' Board of
Trustees, the Sub-adviser is responsible for the execution of each Theme
Portfolio's securities transactions and the selection of broker/dealers who
execute such transactions on behalf of each Theme Portfolio. In executing
transactions, the Sub-adviser seeks the best net results for each Theme
Portfolio, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although the
Sub-adviser generally seeks reasonably competitive commission rates and spreads,
payment of the lowest commission or spread is not necessarily consistent with
the best net results. While each Theme Portfolio may engage in soft dollar
arrangements for research services, as described below, it has no obligation to
deal with any broker/dealer or group of broker/dealers in the execution of
portfolio transactions.
Consistent with the interests of each Theme Portfolio, the Sub-adviser may
select broker/dealers to execute that Theme Portfolio's portfolio transaction on
the basis of the research and brokerage services they provide to the Sub-adviser
for its use in managing that Theme Portfolio and its other advisory accounts.
Such services may include furnishing analyses, reports and information
concerning issuers, industries, securities, geographic regions, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement). Research and brokerage services received from such
broker are in addition to, and not in lieu of, the services required to be
performed by the Sub-adviser under the applicable investment management and
administration contract. A commission paid to such broker may be higher than
that which another qualified broker would have charged for effecting the same
transaction, provided that the Sub-adviser determines in good faith that such
commission is reasonable in terms either of that particular transaction or the
overall responsibility of the Sub-adviser to the Theme Portfolio and its other
clients and that the total commissions paid by that Theme Portfolio will be
reasonable in relation to the benefits it received over the long term. Research
services may also be received from dealers who execute portfolio transactions in
OTC markets.
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AIM GLOBAL THEME FUNDS
The Sub-adviser may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by a Theme Portfolio toward payment of its expenses, such
as custodian fees.
Investment decisions for a Theme Portfolio and for other investment accounts
managed by the Sub-adviser are made independently of each other in light of
differing conditions. However, the same investment decision occasionally may be
made for two or more of such accounts, including a Theme Portfolio. In such
cases, simultaneous transactions may occur. Purchases or sales are then
allocated as to price or amount in a manner deemed fair and equitable to all
accounts involved. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as a Theme Portfolio is
concerned, in other cases the Sub-adviser believes that coordination and the
ability to participate in volume transactions will be beneficial to that Theme
Portfolio.
Under a policy adopted by the Trust's and the Portfolios' Board of Trustees, and
subject to the policy of obtaining the best net results, the Sub-adviser may
consider a broker/dealer's sale of the shares of the Theme Funds and the other
portfolios for which AIM or the Sub-adviser serves as investment manager or
administrator in selecting broker/dealers for the execution of portfolio
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Theme Funds and
such other portfolios.
Each Theme Portfolio contemplates purchasing most foreign equity securities in
OTC markets or stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located, if that
is the best available market. The fixed commissions paid in connection with most
such foreign stock transactions generally are higher than negotiated commissions
on U.S. transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by a Theme Portfolio in the form of ADRs,
ADSs, EDRs, CDRs or securities convertible into foreign equity securities. ADRs,
ADSs, EDRs and CDRs may be listed on stock exchanges, or traded in the OTC
markets in the United States or Europe, as the case may be. ADRs, like other
securities traded in the United States, will be subject to negotiated commission
rates. The foreign and domestic debt securities and money market instruments in
which a Theme Portfolio may invest are generally traded in the OTC markets.
A Theme Portfolio does not have any obligation to deal with any broker/dealer or
group of broker/dealers in the execution of securities transactions. Each Theme
Portfolio contemplates that, consistent with the policy of obtaining the best
net results, brokerage transactions may be conducted through certain companies
that are affiliated with AIM or the Sub-adviser. The Trust's or the Portfolios'
Board of Trustees, as applicable, has adopted procedures in conformity with Rule
17e-1 under the 1940 Act to ensure that all brokerage commissions paid to such
affiliates are reasonable and fair in the context of the market in which they
are operating. Any such transactions will be effected and related compensation
paid only in accordance with applicable SEC regulations.
For the fiscal years ended October 31, 1997, 1996 and 1995, the Health Care Fund
paid aggregate brokerage commissions of $1,150,118, $1,619,500 and $545,743,
respectively. For the fiscal years ended October 31, 1997, 1996 and 1995, the
Telecommunications Fund paid aggregate brokerage commissions of $2,254,069,
$2,848,733 and $2,253,982, respectively. For the fiscal years ended October 31,
1997, 1996 and 1995, the Financial Services Portfolio paid aggregate brokerage
commissions of $250,893, $77,822 and $38,814, respectively. For the fiscal years
ended October 31, 1997, 1996 and 1995, the Infrastructure Portfolio paid
aggregate brokerage commissions of $131,543, $124,164 and $122,399,
respectively. For the fiscal years ended October 31, 1997, 1996 and 1995, the
Resources Portfolio paid aggregate brokerage commissions of $1,281,212, $496,370
and $98,462, respectively. For the fiscal years ended October 31, 1997, 1996 and
for the fiscal period December 30, 1994 (commencement of operations) to October
31, 1995, the Consumer Products and Services Portfolio paid aggregate brokerage
commissions of $1,454,348, $356,459 and $17,605, respectively. For the fiscal
years ended October 31, 1997 and 1996, the Health Care Fund paid to LGT Bank in
Liechtenstein AG, which was an "affiliated" broker, aggregate brokerage
commissions of $23,081 and $32,898, respectively, for transactions involving
purchases and sales of portfolio securities which represented 2.01% and 2.03%,
respectively of the total brokerage commissions paid by the Health Care Fund and
1.61% and 1.71%, respectively, of the aggregate dollar amount of transactions
involving payment of commissions by the Health Care Fund. For fiscal year ended
October 31, 1997, the Telecommunications Fund paid to LGT Bank in Liechtenstein,
AG, which was an "affiliated" broker, aggregate brokerage commissions of
$220,584 for transactions involving purchases and sales of portfolio securities
which represented 1.00% of the total brokerage commissions paid by the Fund and
.67% of the aggregate dollar amount of transactions involving payment of
commissions by the Fund.
Statement of Additional Information Page 26
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AIM GLOBAL THEME FUNDS
PORTFOLIO TRADING AND TURNOVER
Although each Theme Portfolio does not intend generally to trade for short-term
profits, the securities held by that Theme Portfolio will be sold whenever
management believes it is appropriate to do so, without regard to the length of
time a particular security may have been held. Portfolio turnover rate is
calculated by dividing the lesser of sales or purchases of portfolio securities
by each Theme Portfolio's average month-end portfolio value, excluding
short-term investments. The portfolio turnover rate will not be a limiting
factor when management deems portfolio changes appropriate. Higher portfolio
turnover involves correspondingly greater brokerage commissions and other
transaction costs that the Theme Portfolio will bear directly, and may result in
the realization of net capital gains that are taxable when distributed to each
Fund's shareholders. For the fiscal years ended October 31, 1996 and 1997, the
Telecommunications Fund's portfolio turnover rates were 37% and 35%,
respectively. For the fiscal years ended October 31, 1996 and 1997, the Health
Care Fund's portfolio turnover rates were 157% and 149%, respectively. For the
fiscal years ended October 31, 1996 and 1997, the portfolio turnover rates for
the Financial Services Portfolio, Infrastructure Portfolio and Resources
Portfolio were 103% and 91%, 41% and 41%, and 94% and 321%, respectively. For
the fiscal years ended October 31, 1996 and 1997, the portfolio turnover rates
for the Consumer Products and Services Portfolio were 169% and 392%,
respectively.
Statement of Additional Information Page 27
<PAGE>
AIM GLOBAL THEME FUNDS
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Trust's Trustees and Executive Officers and the Portfolios' Trustees and
Executive Officers are listed below. Unless otherwise indicated, the address of
each Executive Officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST AND ADDRESS EXPERIENCE FOR THE PAST 5 YEARS
- --------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 40 President, GT Global, Inc. ("GT Global") since 1995; Director, GT Global since
Director, Chairman of the Board and President 1991; Senior Vice President and Director of Sales and Marketing, GT Global from
50 California Street May 1992 to April 1995; Director, Liechtenstein Global Trust AG (holding company
San Francisco, CA 94111 of the various international LGT companies) Advisory Board from January 1996 to
May 1998; Director, G.T. Global Insurance Agency ("G.T. Insurance") since 1996;
President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice
President and Director, Sales and Marketing, G.T. Insurance from April 1995 to
November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992
to 1993; and Trustee, each of the other investment companies registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), that is
sub-advised or sub-administered by the Sub-adviser.
C. Derek Anderson, 57 President, Plantagenet Capital Management, LLC (an investment partnership);
Director Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director,
Suite 400 PremiumWear, Inc. (formerly Munsingwear, Inc.) (a casual apparel company);
San Francisco, CA 94104 Director, "R" Homes, Inc. and various other companies; and Trustee, each of the
other investment companies registered under the 1940 Act that is sub-advised or
sub-administered by the Sub-adviser.
Frank S. Bayley, 58 Partner, law firm of Baker & McKenzie; Director and Chairman, C.D. Stimson
Director Company (a private investment company); and Trustee, each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is sub-advised or sub-
Suite 2400 administered by the Sub-adviser.
San Francisco, CA 94111
Arthur C. Patterson, 54 Managing Partner, Accel Partners (a venture capital firm); Director, Viasoft and
Director PageMart, Inc. (both public software companies) and several other privately held
428 University Avenue software and communications companies; and Trustee, each of the other investment
Palo Alto, CA 94301 companies registered under the 1940 Act that is sub-advised or sub-administered
by the Sub-adviser.
Ruth H. Quigley, 63 Private investor; President, Quigley Friedlander & Co., Inc. (a financial
Director advisory services firm) from 1984 to 1986; and Trustee, each of the other
1055 California Street investment companies registered under the 1940 Act that is sub-advised or sub-
San Francisco, CA 94108 administered by the Sub-adviser.
</TABLE>
- --------------
* Mr. Guilfoyle is an "interested person" of the Trust as defined by the 1940
Act due to his affiliation with the Sub-adviser.
Statement of Additional Information Page 28
<PAGE>
AIM GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST AND ADDRESS EXPERIENCE FOR THE PAST 5 YEARS
- --------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
John J. Arthur+, 53 Director, Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice
Vice President President and Treasurer, A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company.
Kenneth W. Chancey, 53 Senior Vice President -- Mutual Fund Accounting, the Sub-adviser since 1997;
Vice President and Principal Vice President -- Mutual Fund Accounting, the Sub-adviser from 1992 to 1997.
Accounting Officer
50 California Street
San Francisco, CA 94111
Melville B. Cox, 54 Vice President and Chief Compliance Officer, A I M Advisors, Inc., A I M Capital
Vice President Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund
Management Company.
Gary T. Crum, 50 Director and President, A I M Capital Management, Inc.; Director and Senior Vice
Vice President President, A I M Management Group Inc., and A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP PLC.
Robert H Graham, 51 Director, President, and Chief Executive Officer, A I M Management Group Inc.;
Vice President Director and President, A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company; and Director, AMVESCAP PLC;
Helge K. Lee, 52 Chief Legal and Compliance Officer -- North America, the Sub-adviser since
Vice President and Secretary October 1997; Secretary and Chief Legal and Compliance Officer, INVESCO (NY)
50 California Street Asset Management, Inc., INVESCO (NY), Inc., GT Global Investor Services, Inc.
San Francisco, CA 94111 and G.T. Insurance since August 1997; Secretary and Chief Legal and Compliance
Officer, GT Global from August 1997 to April 1998; Executive Vice President of
the Asset Management Division of Liechtenstein Global Trust AG, from October
1996 to May 1998; Senior Vice President, General Counsel and Secretary of
INVESCO (NY) Asset Management, Inc., INVESCO (NY), Inc., GT Global, GT Global
Investor Services, Inc. and G.T. Insurance from May 1994 to October 1996; and
Senior Vice President, General Counsel and Secretary of Strong/Corneliuson
Management, Inc. and Secretary of each of the Strong Funds from October 1991 to
May 1994.
Carol F. Relihan+, 43 Director, Senior Vice President, General Counsel and Secretary, A I M Advisors,
Vice President Inc.; Vice President, General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel, Fund Management Company;
Vice President and General Counsel, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and A I M Distributors, Inc.
Dana R. Sutton, 39 Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice
Vice President and Assistant President and Assistant Treasurer, Fund Management Company.
Treasurer
</TABLE>
- ------------------
+ Mr. Arthur and Ms. Relihan are married to each other.
Statement of Additional Information Page 29
<PAGE>
AIM GLOBAL THEME FUNDS
The Board of Trustees has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Trust and its
funds and recommending firms to serve as independent auditors of the Trust. Each
of the Trustees and Officers of the Trust is also a Director or Trustee and
Officer of AIM Investment Portfolios, Inc., AIM Floating Rate Fund, AIM Series
Trust, AIM Growth Series, AIM Eastern Europe Fund, GT Global Variable Investment
Trust, GT Global Variable Investment Series, Global Investment Portfolio (of
which the Portfolios are subtrusts), Growth Portfolio, Floating Rate Portfolio
and Global High Income Portfolio, which also are registered investment companies
advised by AIM and sub-advised by the Sub-adviser or an affiliate thereof. All
of the Trust's Trustees also serve as directors or trustees of some or all of
the other investment companies managed, administered or advised by AIM. All of
the Trust's executive officers hold similar offices with some or all of the
other investment companies managed, administered or advised by AIM. Each Trustee
who is not a director, officer or employee of the Sub-adviser or any affiliated
company is paid aggregate fees of $5,000 a year, plus $300 per Fund for each
meeting of the Board attended, and reimbursed travel and other expenses incurred
in connection with attendance at such meetings. Other Trustees and Officers
receive no compensation or expense reimbursement from the Trust. For the fiscal
year ended October 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss
Quigley, who are not directors, officers or employees of the Sub-adviser or any
affiliated company, received total compensation of $38,650, $38,650, $27,850 and
$38,650, respectively, from the Trust for their services as Trustees. For the
fiscal year ended October 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and
Miss Quigley, who are not directors, officers or employees of the Sub-adviser or
any other affiliated company, received total compensation of $117,304, $114,386,
$88,350 and $111,688, respectively, from the investment companies managed or
administered by AIM and sub-advised or sub-administered by the Sub-adviser for
which he or she serves as a Director or Trustee. Fees and expenses disbursed to
the Directors contained no accrued or payable pension or retirement benefits. As
of May 7, 1998, the Officers and Trustees and their families as a group owned in
the aggregate beneficially or of record less than 1% of the outstanding shares
of each Fund or of all the Trust's series in the aggregate.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FEEDER FUNDS
AND THE PORTFOLIOS
AIM serves as each Portfolio's investment manager and administrator under an
investment management and administration contract between each Portfolio and AIM
("Portfolio Management Contract"). The Sub-adviser serves as each Portfolio's
sub-adviser and sub-administrator under a sub-advisory and sub-administration
agreement between AIM and the Sub-adviser ("Portfolio Management Sub-Contract,"
and together with the Portfolio Management Contract, the "Portfolio Management
Contracts"). AIM serves as administrator to each Feeder Fund under an
administration contract between the Trust and AIM ("Administration Contract").
The Sub-adviser serves as sub-administrator to each Feeder Fund under a
sub-administration contract between AIM and the Sub-adviser ("Administration
Sub-Contract," and together with the Administration Contract, the
"Administration Contracts"). The Administration Contracts will not be deemed
advisory contracts, as defined under the 1940 Act. As investment managers and
administrators, AIM and the Sub-adviser make all investment decisions for each
Portfolio and, as administrators, administer each Portfolio's and each Feeder
Fund's affairs. Among other things, AIM and the Sub-adviser furnish the services
and pay the compensation and travel expenses of persons who perform the
executive, administrative, clerical and bookkeeping functions of each Portfolio
and each Feeder Fund and provide suitable office space, necessary small office
equipment and utilities.
The Portfolio Management Contracts may be renewed with respect to a Portfolio
for additional one-year terms, provided that any such renewal has been
specifically approved at least annually by (i) the Portfolios' Board of Trustees
or the vote of a majority of the Portfolio's outstanding voting securities (as
defined in the 1940 Act) and (ii) a majority of Trustees who are not parties to
the Portfolio Management Contracts or "interested persons" of any such party (as
defined in the 1940 Act), cast in person at a meeting called for the specific
purpose of voting on such approval. The Portfolio Management Contracts provide
that with respect to each Portfolio, and the Administration Contracts provide
that with respect to each Feeder Fund, either the Trust, each Portfolio or each
of AIM or the Sub-adviser may terminate the Contracts without penalty upon sixty
days' written notice to the other party. The Portfolio Management Contracts
terminate automatically in the event of their assignment (as defined in the 1940
Act).
Statement of Additional Information Page 30
<PAGE>
AIM GLOBAL THEME FUNDS
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE HEALTH CARE
FUND AND TELECOMMUNICATIONS FUND
AIM serves as the investment manager and administrator to the Health Care Fund
and Telecommunications Fund under an Investment Management and Administration
Contract ("Management Contract") between the Trust and AIM. The Sub-adviser
serves as the sub-adviser and sub-administrator to the Health Care Fund and
Telecommunications Fund under a Sub-Advisory and Sub-Administration Contract
between AIM and the Sub-adviser ("Sub-Management Contract," and together with
the Management Contract, the "Management Contracts"). As investment managers and
administrators, AIM and the Sub-adviser make all investment decisions for the
Health Care Fund and Telecommunications Fund and administer the Health Care
Fund's and Telecommunications Fund's affairs. Among other things, AIM and the
Sub-adviser furnish the services and pay the compensation and travel expenses of
persons who perform the executive, administrative, clerical and bookkeeping
functions of the Trust and the Health Care Fund and Telecommunications Fund, and
provide suitable office space, necessary small office equipment and utilities.
The Management Contracts may be renewed for additional one-year terms with
respect to the Health Care Fund and Telecommunications Fund, provided that any
such renewal has been specifically approved at least annually by: (i) the
Trust's Board of Trustees, or by the vote of a majority of the Health Care Fund
and Telecommunications Fund's outstanding voting securities (as defined in the
1940 Act), and (ii) a majority of Trustees who are not parties to the Management
Contracts or "interested persons" of any such party (as defined in the 1940
Act), cast in person at a meeting called for the specific purpose of voting on
such approval. The Management Contracts provide that with respect to the Health
Care Fund and Telecommunications Fund either the Trust or each of AIM or the
Sub-adviser may terminate the Contracts without penalty upon sixty days' written
notice to the other party. The Management Contracts terminate automatically in
the event of their assignment (as defined in the 1940 Act).
The following table discloses the amount of investment management and
administration fees paid by the Theme Portfolios to the Sub-adviser during the
periods shown:
HEALTH CARE FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 5,820,067
1996...................................................................................................... 5,495,494
1995...................................................................................................... 4,453,857
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 17,999,111
1996...................................................................................................... 23,119,601
1995...................................................................................................... 23,861,460
</TABLE>
FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 346,965
1996...................................................................................................... 99,991
1995...................................................................................................... 51,353
</TABLE>
INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 772,727
1996...................................................................................................... 635,456
1995...................................................................................................... 601,421
</TABLE>
RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 979,215
1996...................................................................................................... 425,745
1995...................................................................................................... 213,856
</TABLE>
Statement of Additional Information Page 31
<PAGE>
AIM GLOBAL THEME FUNDS
CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 1,207,854
1996...................................................................................................... 422,640
Dec. 30, 1994 (commencement of operations) to Oct. 31, 1995............................................... 16,284
</TABLE>
For the fiscal years ended October 31, 1995 and 1996, the Sub-adviser reimbursed
the Financial Services Portfolio, Infrastructure Portfolio and Resources
Portfolio for their respective investment management and administration fees in
the amounts of $51,353 and $103,267; $0 and $0; and $213,856 and $0,
respectively. Each of these Portfolios had no reimbursement for the fiscal year
ended October 31, 1997. For the fiscal years ended October 31, 1995, 1996 and
1997, the Financial Services Fund, Infrastructure Fund and Resources Fund paid
administration fees of $18,756, $34,865 and $119,765; $208,892, $218,735 and
$266,025; and $74,485, $147,614 and $338,578, respectively. However, the Sub-
adviser reimbursed those Funds for such fees in the amounts of $18,756, $34,865
and $0; $177,376, $0 and $0; and $74,485, $0 and $0, respectively. For the
fiscal period December 30, 1994 (commencement of operations) to October 31,
1995, and for the fiscal years ended October 31, 1996 and 1997, the Sub-adviser
reimbursed the Consumer Products and Services Portfolio for investment
management and administration fees in the amounts of $16,284, $0 and $0,
respectively. For the same periods, the Consumer Products and Services Fund paid
$5,933, $147,623 and $416,297, respectively, in administration fees; however,
the Sub-adviser reimbursed the Fund in the amounts of $5,933, $0 and $0,
respectively.
THE DISTRIBUTION PLANS
THE CLASS A PLAN. The Trust has adopted a Master Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act relating to the Class A shares of the Funds (the
"Class A Plan"). The Class A Plan provides that the Class A shares pay 0.50% per
annum of their average daily net assets as compensation to AIM Distributors for
the purpose of financing any activity which is primarily intended to result in
the sale of Class A shares. Of such amounts, each Fund pays a service fee of
0.25% of the average daily net assets attributable to Class A shares to selected
dealers and other institutions which furnish continuing personal shareholder
services to their customers who purchase and own Class A shares. Activities
appropriate for financing under the Class A Plan include, but are not limited
to, the following: printing of prospectuses and statements of additional
information and reports for other than existing shareholders; overhead;
preparation and distribution of advertising material and sales literature;
expenses of organizing and conducting sales seminars; supplemental payments to
dealers and other institutions such as asset-based sales charges or as payments
of service fees under shareholder service arrangements; and costs of
administering the Class A Plan.
THE CLASS B PLAN. The Trust has also adopted a Master Distribution Plan pursuant
to Rule 12b-1 under the 1940 Act relating to Class B shares of the Funds (the
"Class B Plan", and collectively with the Class A Plan, the "Plans"). Under the
Class B Plan, each Fund pays 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, each Fund pays a service fee of 0.25% of the average daily net assets
attributable to Class B shares to selected dealers and other institutions which
furnish continuing personal shareholder services to their customers who purchase
and own Class B shares. Amounts paid in accordance with the Class B Plan may be
used to finance any activity primarily intended to result in the sale of Class B
shares, including but not limited to printing of prospectuses and statements of
additional information and reports for other than existing shareholders;
overhead; preparation and distribution of advertising material and sales
literature; expenses of organizing and conducting sales seminars; supplemental
payments to dealers and other institutions such as asset-based sales charges or
as payments of service fees under shareholder service arrangements; and costs of
administering the Class B Plan. AIM Distributors may transfer and sell its
rights to payments under the Class B Plan in order to finance distribution
expenditures in respect of Class B shares.
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 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 Fund; assisting customers in
changing dividend options, account designations and addresses, and in enrolling
in any of the several special investment plans offered in connection with the
purchase of a Fund's shares; assisting in the establishment and maintenance of
customer accounts and records and in the processing of
Statement of Additional Information Page 32
<PAGE>
AIM GLOBAL THEME FUNDS
purchase and redemption transactions; investing dividends and any capital gains
distributions automatically in a Fund's shares; and providing such other
information and services as a Fund 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; 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 Fund shares; and such
other administrative services as a Fund 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.
Financial intermediaries and any other person entitled to receive compensation
for selling Fund shares may receive different compensation for selling shares of
one particular class over another.
Under a Shareholder Service Agreement, each Fund agrees to pay periodically fees
to selected dealers and other institutions who render the foregoing services to
their customers. The fees payable under a Shareholder Service Agreement
generally will be calculated at the end of each payment period for each business
day of a Fund during such period at the annual rate of 0.25% of the average
daily net asset value of the Fund's shares purchased or acquired through
exchange. Fees calculated in this manner shall be paid only to those selected
dealers or other institutions who are dealers or institutions of record at the
close of business on the last business day of the applicable payment period for
the account in which each Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc. ("NASD"). The
Plans conform to rules of the NASD by limiting payments made to dealers and
other financial institutions who provide continuing personal shareholder
services to their customers who purchase and own shares of the Funds to no more
than 0.25% per annum of the average daily net assets of the funds attributable
to the customers of such dealers or financial institutions, and by imposing a
cap on the total sales charges, including asset based sales charges, that may be
paid by the Fund and its respective classes.
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 a Fund and not of AIM Distributors.
Prior to June 1, 1998, the Trust had adopted a different Rule 12b-1, that
operated as a "reimbursement-type" plan (the "Prior Plan"). The information
provided below relates to payments made under the Prior Plan, which provided for
payments to GT Global Inc., the distributor of the Trust at the time the Prior
Plan was in effect.
For the fiscal year ended December 31, 1997, each Fund paid the following
amounts under the Prior Plan:
<TABLE>
<CAPTION>
% OF CLASS
AVERAGE DAILY
NET ASSETS
--------------------
CLASS A CLASS B CLASS A CLASS B
-------------- -------------- --------- ---------
<S> <C> <C> <C> <C>
Health Care Fund............................................... $ -- $ -- --% --%
Telecommunications Fund........................................ $ -- $ -- --% --%
Financial Services Fund........................................ $ -- $ -- --% --%
Infrastructure Fund............................................ $ -- $ -- --% --%
Resources Fund................................................. $ -- $ -- --% --%
Consumer Products and Services Fund............................ $ -- $ -- --% --%
</TABLE>
Statement of Additional Information Page 33
<PAGE>
AIM GLOBAL THEME FUNDS
Actual fees by category paid by each Fund with regard to the Class A shares
during the year ended December 31, 1997 follows:
<TABLE>
<CAPTION>
FINANCIAL
HEALTH CARE TELECOMMUNICATIONS SERVICES INFRASTRUCTURE RESOURCES
FUND FUND FUND FUND FUND
------------ -------------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
CLASS A
Advertising..................................... $ -- $ -- $ -- $ -- $ --
Printing and mailing prospectuses, semi-annual
reports and annual reports (other than to
current shareholders).......................... $ -- $ -- $ -- $ -- $ --
Seminars........................................ $ -- $ -- $ -- $ -- $ --
Compensation to Underwriters to partially offset
other marketing expenses....................... $ -- $ -- $ -- $ -- $ --
Compensation to Dealers including finder's
fees........................................... $ -- $ -- $ -- $ -- $ --
Compensation to Sales Personnel................. $ -- $ -- $ -- $ -- $ --
Annual Report Total............................. $ -- $ -- $ -- $ -- $ --
<CAPTION>
CONSUMER
PRODUCTS AND
SERVICES FUND
-------------
<S> <C>
CLASS A
Advertising..................................... $ --
Printing and mailing prospectuses, semi-annual
reports and annual reports (other than to
current shareholders).......................... $ --
Seminars........................................ $ --
Compensation to Underwriters to partially offset
other marketing expenses....................... $ --
Compensation to Dealers including finder's
fees........................................... $ --
Compensation to Sales Personnel................. $ --
Annual Report Total............................. $ --
</TABLE>
Actual fees by category paid by each Fund with regard to the Class B Shares
during the year ended December 31, 1997 as follows:
<TABLE>
<CAPTION>
FINANCIAL
HEALTH CARE TELECOMMUNICATIONS SERVICES INFRASTRUCTURE RESOURCES
FUND FUND FUND FUND FUND
------------ -------------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
CLASS B
Advertising..................................... $ -- $ -- $ -- $ -- $ --
Printing and mailing prospectuses, semi-annual
reports and annual reports (other than to
current shareholders).......................... $ -- $ -- $ -- $ -- $ --
Seminars........................................ $ -- $ -- $ -- $ -- $ --
Compensation to Underwriters to partially offset
upfront dealer commissions and other marketing
costs.......................................... $ -- $ -- $ -- $ -- $ --
Compensation to Dealers......................... $ -- $ -- $ -- $ -- $ --
Compensation to Sales Personnel................. $ -- $ -- $ -- $ -- $ --
Annual Report Total............................. $ -- $ -- $ -- $ -- $ --
<CAPTION>
CONSUMER
PRODUCTS AND
SERVICES FUND
-------------
<S> <C>
CLASS B
Advertising..................................... $ --
Printing and mailing prospectuses, semi-annual
reports and annual reports (other than to
current shareholders).......................... $ --
Seminars........................................ $ --
Compensation to Underwriters to partially offset
upfront dealer commissions and other marketing
costs.......................................... $ --
Compensation to Dealers......................... $ --
Compensation to Sales Personnel................. $ --
Annual Report Total............................. $ --
</TABLE>
The Plans require AIM Distributors to provide the Board of Trustees at least
quarterly with a written report of the amounts expended pursuant to the Plans
and the purposes for which such expenditures were made. The Board of Trustees
reviews these reports in connection with their decisions with respect to the
Plans.
As required by Rule 12b-1, the Plans and related forms of Shareholder Service
Agreements were approved by the Board of Trustees, including a majority of the
trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust and who have no direct or indirect financial interest in the operation of
the Plans or in any agreements related to the Plans ("Qualified Trustees"). In
approving the Plans in accordance with the requirements of Rule 12b-1, the
Trustees considered various factors and determined that there is a reasonable
likelihood that the Plans would benefit each class of each Fund and their
respective shareholders.
The Plans do not obligate the Funds to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Plans. Thus, even if AIM Distributors' actual expenses exceed the fee payable to
AIM Distributors thereunder at any given time, a Fund will not be obligated to
pay more than that fee. If AIM Distributors' expenses are less than the fee it
receives, AIM Distributors will retain the full amount of the fee.
Statement of Additional Information Page 34
<PAGE>
AIM GLOBAL THEME FUNDS
Unless terminated earlier in accordance with their terms, the Plans continue in
effect until [June 30, 1999] and each year thereafter, as long as such
continuance is specifically approved at least annually by the Board of Trustees,
including a majority of the Qualified Trustees.
The Plans may be terminated by the vote of a majority of the Independent
Trustees, or, with respect to a particular class, by the vote of a majority of
the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution expenses
paid by the applicable class requires shareholder approval; otherwise, it may be
amended by the trustees, including a majority of the Qualified Trustees, by
votes cast in person at a meeting called for the purpose of voting upon such
amendment. As long as the Plans are in effect, the selection or nomination of
the Qualified Trustees is committed to the discretion of the Qualified Trustees.
In the event the Class A Plan is amended in a manner which the Board of Trustees
determines would materially increase the charges paid under the Class A Plan,
the Class B shares of each Fund will no longer convert into Class A shares of
the same Fund unless the Class B shares, voting separately, approve such
amendment. If the Class B shareholders do not approve such amendment, the Board
of Trustees will (i) create a new class of shares of the Fund which is identical
in all material respects to the Class A shares as they existed prior to the
implementation of the amendment and (ii) ensure that the existing Class B shares
of the Fund will be exchanged or converted into such new class of shares no
later than the date the Class B shares were scheduled to convert into Class A
shares.
The principal differences between the Class A Plan, on the one hand, and the
Class B Plan, on the other hand, are: (i) the Class A Plan allows payment to AIM
Distributors or to dealers or financial institutions of up to 0.50% of average
daily net assets of the Class A shares of each Fund, as compared to 1.00% of
such assets of the Funds' Class B shares; (ii) the Class B Plan obligates the
Class B shares to continue to make payments to AIM Distributors following
termination of the Class B shares Distribution Agreement with respect to Class B
shares sold by or attributable to the distribution efforts of AIM Distributors
unless there has been a complete termination of the Class B Plan (as defined in
such Plan) and (iii) the Class B Plan expressly authorizes AIM Distributors to
assign, transfer or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of each
Fund's shares is set forth in the Prospectus under the headings "How to Purchase
Shares" and "Terms and Conditions of Purchase of the AIM Funds." A Master
Distribution Agreement with AIM Distributors relating to the Class A and Class B
shares of the Funds was approved by the Board of Trustees on , 1998.
Both such Master Distribution Agreements are hereinafter collectively referred
to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the expenses
of printing from the final proof and distributing each Fund's 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 Fund), and any promotional or sales literature used by AIM
Distributors or furnished by AIM Distributors to dealers in connection with the
public offering of each Fund's 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 any Fund.
AIM Distributors expects to pay sales commissions from its own resources to
dealers and institutions who sell Class B shares of the Funds at the time of
such sales. Payments with respect to Class B shares will equal 4.0% 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 anticipates that it will
require a number of years to recoup from Class B Plan payments the sales
commissions paid to dealers and institutions in connection with sales of Class B
shares. In the future, if multiple distributors serve a Fund, each such
distributor (or its assignee or transferee) would receive a share of the
payments under the Class B Plan based on the portion of the Fund's Class B
shares sold by or attributable to the distribution efforts of that distributor.
The Trust (on behalf of any class of a 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
Statement of Additional Information Page 35
<PAGE>
AIM GLOBAL THEME FUNDS
Plan) would terminate all payments to AIM Distributors. Termination of the Class
B Plan or Distribution Agreement does not affect the obligation of the Funds and
their Class B shareholders to pay contingent deferred sales charges.
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 GT Global, Inc.,
the Trust's distributor prior to June 1, 1998, for the fiscal year ended
December 31, 1997.
<TABLE>
<CAPTION>
1997
--------------------------------
SALES AMOUNT
CHARGES RETAINED
---------------- --------------
<S> <C> <C>
Health Care Fund...................................................................... $ -- $ --
Telecommunications Fund............................................................... $ -- $ --
Financial Services Fund............................................................... $ -- $ --
Infrastructure Fund................................................................... $ -- $ --
Resources Fund........................................................................ $ -- $ --
Consumer Products and Services Fund................................................... $ -- $ --
</TABLE>
The following chart reflects the contingent deferred sales charges paid by Class
A and Class B shareholders for the fiscal year ended December 31, 1997, for
Class A and Class B shares:
<TABLE>
<CAPTION>
1997
--------------------------
<S> <C> <C>
CLASS A CLASS B
------------ ------------
Health Care Fund............................................................................ $ -- $ --
Telecommunications Fund..................................................................... $ -- $ --
Financial Services Fund..................................................................... $ -- $ --
Infrastructure Fund......................................................................... $ -- $ --
Resources Fund.............................................................................. $ -- $ --
Consumer Products and Services Fund......................................................... $ -- $ --
</TABLE>
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agency and Service Agreement between the Trust and A I M Fund
Services, Inc. ("AFS"), a registered transfer agent and wholly-owned subsidiary
of AIM, provides that AFS will perform certain shareholder services for the
Funds for a fee per account serviced. The Transfer Agency and Service Agreement
provides that AFS will receive a per account fee plus out-of-pocket expenses to
process orders for purchases, redemptions and exchanges of shares; prepare and
transmit payments for dividends and distributions declared by the Funds;
maintain shareholder accounts and provide shareholders with information
regarding the Funds and their accounts. The Transfer Agency and Service
Agreement became effective on September 8, 1998. The Sub-adviser also serves as
each Fund's pricing and accounting agent. For the fiscal years ended October 31,
1995, 1996 and 1997, the accounting services fees for the Health Care Fund,
Telecommunications Fund, Financial Services Fund, Infrastructure Fund, Resources
Fund and Consumer Products and Services Fund were $30,660, $141,582 and
$153,780; $170,297, $621,480 and $493,322; $616, $3,493 and $12,292; $5,836,
$21,910 and $27,303; $1,931, $14,761 and $34,698; and $318, $14,778 and $43,330,
respectively.
EXPENSES OF THE FUNDS AND OF THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by AIM, the
Sub-adviser, AIM Distributors and other agents. These expenses include, in
addition to the advisory, administration, distribution, transfer agency, pricing
and accounting agency and brokerage fees discussed above, legal and audit
expenses, custodian fees, trustees' fees, organizational fees, fidelity bond and
other insurance premiums, taxes, extraordinary expenses and expenses of reports
and prospectuses sent to existing investors. The allocation of general Trust
expenses and expenses shared among the Funds and other funds organized as series
of the Trust are allocated on a basis deemed fair and equitable, which may be
based on the relative net assets of the Funds or the nature of the service
performed and relative applicability to the Funds. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of each Fund's expenses to its relative net assets can be
expected to be higher than the expense ratios of funds investing solely in
domestic securities, since the cost of maintaining the custody of foreign
securities and the rate of investment management fees paid by the Funds or the
Portfolios generally are higher than the comparable expenses of such other
funds.
Statement of Additional Information Page 36
<PAGE>
AIM GLOBAL THEME FUNDS
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
The net asset value per share of each Fund is normally determined daily as of
the close of trading of the New York Stock Exchange ("NYSE") (generally 4:00
p.m. Eastern time) on each business day of the Fund. In the event the NYSE
closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, the net
asset value of a Fund is determined as of the close of the NYSE on such day. Net
asset value per share is determined by dividing the value of each Theme
Portfolio's securities, cash and other assets (including interest accrued but
not collected) attributable to a particular class, less all its liabilities
(including accrued expenses and dividends payable) attributable to that class,
by the total number of shares outstanding of that class. Determination of each
Fund's net asset value per share is made in accordance with generally accepted
accounting principles.
Each equity security held by a Theme Portfolio is valued at its last sales price
on the exchange where the security is principally traded or, lacking any sales
on a particular day, the security is valued at the mean between the closing bid
and asked prices on that day. Each security traded in the over-the-counter
market (but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based upon
quotes furnished by market makers for such securities. Each security reported on
the NASDAQ National Market System is valued at the last sales price on the
valuation date or absent a last sales price, at the mean between the closing bid
and asked prices on that day. Debt securities are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and may
reflect appropriate factors such as institution-size trading in similar groups
of securities, developments related to special securities, yield, quality,
coupon rate, maturity, type of issue, individual trading characteristics and
other market data. Securities for which market quotations are not readily
available or are questionable are valued at fair value as determined in good
faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations having
60 days or less to maturity are valued on the basis of amortized cost. For
purposes of determining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of each Fund's shares are determined at such
times. Foreign currency exchange rates are also generally determined prior 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 such
values are determined and the close of the NYSE which will not be reflected in
the computation of a Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees of the Fund and the Portfolio.
- --------------------------------------------------------------------------------
HOW TO PURCHASE AND
REDEEM SHARES
- --------------------------------------------------------------------------------
A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the headings "How to Purchase
Shares," "Terms and Conditions of Purchases of the AIM Funds" and "Special
Plans."
The sales charge normally deducted on purchases of Class A shares is used to
compensate AIM Distributors and participating dealers for their expenses
incurred in connections with the distribution of the Funds' Class A shares.
Since there is little expenses 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' best interests that such persons, and
certain other persons whose purchases result in relatively low expenses of
distribution, be permitted to purchase Class A shares of the Funds
Statement of Additional Information Page 37
<PAGE>
AIM GLOBAL THEME 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 set forth in the
Funds' Prospectuses. In addition, the Funds offer programs such as Right of
Accumulation and Letter of Intent, which are described in the Prospectuses, that
are designed to permit investors to aggregate purchases of different funds, or
separate purchases over time, in order to qualify for a lower sales charge rate.
See "Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges" in the Prospectuses.
Class B shares will automatically convert into Class A shares of the same Fund
eight years following the end of the calendar month in which a purchase was
made. For the purpose of calculating the holding period required for conversion
of Class B shares, the initial issuance of Class B shares shall mean (i) the
date on which such Class B shares were issued, or (ii) for Class B shares
obtained through an exchange, or a series of exchanges, the date on which the
original Class B shares were issued. For purposes of conversion to Class A,
Class B shares purchased through the reinvestment of dividends and other
distributions paid in respect of Class B shares will be held in a separate
sub-account. Each time any Class B shares in the shareholder's regular account
(other than those in the sub-account) convert to Class A, a pro rata portion of
the Class B shares in the sub-account will also convert to Class A. The portion
will be determined by the ratio that the shareholder's Class B shares converting
to Class A bears to the shareholder's total Class B shares not acquired through
dividends and other distributions.
The availability of the conversion feature is subject to the continuing
availability of an opinion of counsel to the effect that the dividends and other
distributions paid on Class A and Class B shares will not result in
"preferential dividends" under the Code and the conversion of shares does not
constitute a taxable event. If the conversion feature ceased to be available,
the Class B shares beyond the eighth year. AIM and the Sub-adviser has no reason
to believe that this condition for the availability of the conversion feature
will not be met.
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 invested in AIM 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
AIM 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.
Class B shares purchased before June 1, 1998 are subject to the waivers from the
contingent deferred sales charge otherwise due upon redemptions, in addition to
the waivers provided for redemptions of currently issued Class B shares as
described in the 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) a
one-time reinvestment in Class B shares of a Fund within 180 days of a prior
redemption; (4) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in AIM 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
AIM Funds; (5) redemptions made in connection with participant-directed
exchanges between options in an employer-sponsored benefit plan; (6) redemptions
made for the purpose of providing cash to fund a loan to a participant in a
tax-qualified retirement plan; (7) 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; (8) redemptions made in connection with a distribution
from a qualified profit-
Statement of Additional Information Page 38
<PAGE>
AIM GLOBAL THEME FUNDS
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 (9) 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.
For purposes of a Letter of Intent entered into prior to June 1, 1998, any
registered investment adviser, trust company or bank trust department which
exercises investment discretion and which intends within thirteen months to
invest $500,000 or more can be treated as a single purchaser, provided further
that such entity places all purchases and redemption orders. Such entities
should be prepared to establish their qualifications for such treatment.
Complete information concerning the method of exchanging shares of the Funds for
shares of the other AIM Funds is set forth in the Prospectuses under the heading
"Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "How to Redeem Shares." 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 Funds at (800) 959-4246 and guarantee delivery of all
required documents in good order. A repurchase is effected at the net asset
value per share of the applicable Fund next determined after the repurchase
order is received. Such an 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 a Fund or by AIM Distributors
(other than any applicable contingent deferred sales charge) 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 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.
A Fund's net asset value is calculated by dividing the number of outstanding
shares into the net assets of the Fund. Net assets are the excess of a Fund's
assets over its liabilities. A more detailed description of how each Fund's net
asset value is calculated appears in the Prospectuses under the heading
"Determination of Net Asset Value."
QUALIFYING FOR A REDUCED FRONT-END SALES CHARGE. As described in the Prospectus,
the front-end sales charge for Class A shares is calculated by multiplying an
investor's total investment by the applicable sales charge rate. The applicable
rate varies with the amount invested. The Funds offer programs such as Right of
Accumulation and Letter of Intent, which are described in the Prospectus, and
are designed to permit investors to aggregate purchases of different funds, or
separate purchases over time, in order to qualify for a lower sales charge rate.
See "Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges" in the Prospectus.
PROGRAMS AND SERVICES FOR SHAREHOLDERS. The Funds provide certain services for
shareholders and certain investment or redemption programs. See "Exchange
Privilege" and "How to Redeem Shares" in the Prospectus. All inquiries
concerning these programs should be made directly to A I M Fund Services, Inc.
P.O. Box 4739, Houston, Texas 77210-4739, toll free at (800) 959-4246.
DIVIDEND ORDER. Dividends may be paid to someone other than the registered
owner, or sent to an address other than the address of record. (Please note that
signature guarantees are required to effect this option.) An investor also may
direct that his or her dividends be invested in one of the other AIM Funds and
there is no sales charge for these investments; initial investment minimums
apply. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions" in the Prospectus. To effect this option, please contact your
authorized dealer. For more information concerning AIM Funds other than those in
the Trust, please obtain a current prospectus by contacting your authorized
dealer, by writing to A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas
77210-4739, or by calling toll free (800) 959-4246.
Statement of Additional Information Page 39
<PAGE>
AIM GLOBAL THEME FUNDS
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
To continue to qualify for treatment as a regulated investment company ("RIC")
under the Code, each Fund must distribute to its shareholders for each taxable
year at least 90% of its investment company taxable income (consisting generally
of net investment income, net short-term capital gain and net gains from certain
foreign currency transactions) ("Distribution Requirement") and must meet
several additional requirements. With respect to each Fund, these requirements
include the following: (1) the Fund must derive at least 90% of its gross income
each taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); and (2) the Diversification
Requirements. Each Feeder Fund, as an investor in its corresponding Portfolio,
is deemed to own a proportionate share of the Portfolio's assets, and to earn a
proportionate share of the Portfolio's income, for purposes of determining
whether the Fund satisfies the requirements described above to qualify as a RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See the next section for a discussion of the tax consequences to each Feeder
Fund of hedging transactions engaged in, and investments in passive foreign
investment companies ("PFICs") and other foreign securities by its corresponding
Portfolio and to the Health Care Fund and Telecommunications Fund of those
transactions and investments.
TAXATION OF THE THEME PORTFOLIOS
THE PORTFOLIOS AND THEIR RELATIONSHIP TO THE FEEDER FUNDS. Each Portfolio is
treated as a separate partnership for federal income tax purposes and is not a
"publicly traded partnership." As a result, each Portfolio is not subject to
federal income tax; instead, each Feeder Fund, as an investor in its
corresponding Portfolio, is required to take into account in determining its
federal income tax liability its share of the Portfolio's income, gains, losses,
deductions and credits, without regard to whether it has received any cash
distributions from the Portfolio. Each Portfolio also is not subject to Delaware
income or franchise tax.
Because, as noted above, each Feeder Fund is deemed to own a proportionate share
of its corresponding Portfolio's assets, and to earn a proportionate share of
its corresponding Portfolio's income, for purposes of determining whether the
Fund satisfies the requirements to qualify as a RIC, each Portfolio intends to
conduct its operations so that its corresponding Fund will be able to continue
to satisfy all those requirements.
Distributions to each Feeder Fund from its corresponding Portfolio (whether
pursuant to a partial or complete withdrawal or otherwise) will not result in
the Fund's recognition of any gain or loss for federal income tax purposes,
except that (1) gain will be recognized to the extent any cash that is
distributed exceeds the Fund's basis for its interest in the Portfolio before
the distribution, (2) income or gain will be recognized if the distribution is
in liquidation of the Fund's entire interest in the Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio, and
(3) loss will be recognized if a liquidation distribution consists solely of
cash and/or unrealized receivables. Each Feeder Fund's basis for its interest in
its corresponding Portfolio generally will equal the amount of cash and the
basis of any property the Fund invests in the Portfolio, increased by the Fund's
share of the Portfolio's net income and gains and decreased by (a) the amount of
cash and the basis of any property the Portfolio distributes to the Fund and (b)
the Fund's share of the Portfolio's losses.
FOREIGN TAXES. Dividends and interest received by a Theme Portfolio, and
gains realized thereby, may be subject to income, withholding or other taxes
imposed by foreign countries and U.S. possessions ("foreign taxes") that would
reduce the yield and/or total return on its securities. Tax conventions between
certain countries and the United States may reduce or eliminate foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of
Statement of Additional Information Page 40
<PAGE>
AIM GLOBAL THEME FUNDS
investments by foreign investors. If more than 50% of the value of a Fund's
total assets (taking into account, in the case of a Feeder Fund, its
proportionate share of its corresponding Portfolio's assets) at the close of its
taxable year consists of securities of foreign corporations, the Fund will be
eligible to, and may, file an election with the Internal Revenue Service that
will enable its shareholders, in effect, to receive the benefit of the foreign
tax credit with respect to any foreign taxes paid by it (taking into account, in
the case of a Feeder Fund, its proportionate share of any foreign taxes paid by
its corresponding Portfolio) (a "Fund's foreign taxes"). Pursuant to the
election, a Fund would treat those taxes as dividends paid to its shareholders
and each shareholder would be required to (1) include in gross income, and treat
as paid by him, his share of the Fund's foreign taxes, (2) treat his share of
those taxes and of any dividend paid by the Fund that represents its income from
foreign and U.S. possessions sources (taking into account, in the case of a
Feeder Fund, its proportionate share of its corresponding Portfolio's income
from those sources) as his own income from those sources and (3) either deduct
the taxes deemed paid by him in computing his taxable income or, alternatively,
use the foregoing information in calculating the foreign tax credit against his
federal income tax. Each Fund will report to its shareholders shortly after each
taxable year their respective shares of the Fund's foreign taxes and income
(taking into account, in the case of a Feeder Fund, its proportionate share of
its corresponding Portfolio's income) from sources within foreign countries and
U.S. possessions if it makes this election. Pursuant to the Taxpayer Relief Act
of 1997 ("Tax Act"), individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Form 1099 and
all of whose foreign source of income is "qualified passive income" may elect
each year to be exempt from the extremely complicated foreign tax credit
limitation and will be able to claim a foreign tax credit without having to file
the detailed Form 1116 that otherwise is required.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Theme Portfolio may invest in the
stock of PFICs. A PFIC is a foreign corporation -- other than a "controlled
foreign corporation" (I.E., a foreign corporation in which, on any day during
its taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly or constructively, at least 10% of that
voting power) as to which the Theme Portfolio is a U.S. shareholder (effective
with respect to each Fund for their taxable year beginning November 1, 1998) --
that, in general, meets either of the following tests: (1) at least 75% of its
gross income is passive or (2) an average of at least 50% of its assets produce,
or are held for the production of, passive income. Under certain circumstances,
a Fund will be subject to federal income tax on a part (or, in the case of a
Feeder Fund, its proportionate share of a part) of any "excess distribution"
received by it (or, in the case of a Feeder Fund, by its corresponding
Portfolio) on the stock of a PFIC or of any gain on the Fund's (or, in the case
of a Feeder Fund, its corresponding Portfolio's) disposition of that stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent it
distributes that income to its shareholders.
If a Theme Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Theme Portfolio (or, in the case of a Portfolio, its
corresponding Feeder Fund) would be required to include in income each year its
pro rata share (taking into account, in the case of a Feeder Fund, its
proportionate share of its corresponding Portfolio's pro rata share) of the
QEF's ordinary earnings and net capital gain (I.E., the excess of net long-term
capital gain over net short-term capital loss) -- which most likely would have
to be distributed by the Theme Portfolio (or, in the case of a Portfolio, its
corresponding Feeder Fund) to satisfy the Distribution Requirement and avoid
imposition of the Excise Tax -- even if those earnings and gain were not
received thereby from the QEF. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
A holder of stock in any PFIC may elect to include in ordinary income for each
taxable year beginning after 1997 the excess, if any, of the fair market value
of the stock over the adjusted basis therein as of the end of that year.
Pursuant to the election, a deduction (as an ordinary, not capital, loss) also
will be allowed for the excess, if any, of the holder's adjusted basis in PFIC
stock over the fair market value thereof as of the taxable year-end, but only to
the extent of any net mark-to-market gains with respect to that stock included
in income for prior taxable years. The adjusted basis in each PFIC's stock
subject to the election will be adjusted to reflect the amounts of income
included and deductions taken thereunder. Regulations proposed in 1992 provided
a similar election with respect to the stock of certain PFICs.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Theme Portfolios'
use of hedging transactions, such as selling (writing) and purchasing options
and Futures and entering into Forward Contracts, involves complex rules that
will determine, for federal income tax purposes, the amount, character and
timing of recognition of the gains and losses a Theme Portfolio realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by a Theme
Statement of Additional Information Page 41
<PAGE>
AIM GLOBAL THEME FUNDS
Portfolio with respect to its business of investing in securities or foreign
currencies, will qualify as permissible income under the Income Requirement for
that Theme Portfolio (or, in the case of a Portfolio, its corresponding Feeder
Fund).
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Theme Portfolio at the end of its taxable
year generally will be deemed to have been sold at that time at market value for
federal income tax purposes. Sixty percent of any net gain or loss recognized on
these deemed sales, and 60% of any net gain or loss realized from any actual
sales of Section 1256 Contracts, will be treated as long-term capital gain or
loss, and the balance will be treated as short-term capital gain or loss. That
60% portion will qualify for the reduced maximum tax rates on noncorporate
taxpayers' net capital gain enacted by the Tax Act -- 20% (10% for taxpayers in
the 15% marginal tax bracket) for gain recognized on capital assets held for
more than 18 months -- instead of the 28% rate in effect before that
legislation, which now applies to gain recognized on capital assets held for
more than one year but not more than 18 months.
Section 988 of the Code also may apply to gains and losses from transactions in
foreign currencies, foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains and
losses). Each Section 988 gain or loss generally is computed separately and
treated as ordinary income or loss. In the case of overlap between sections 1256
and 988, special provisions determine the character and timing of any income,
gain or loss. Each Theme Portfolio attempts to monitor section 988 transactions
to minimize any adverse tax impact.
If a Theme Portfolio has an "appreciated financial position" -- generally, an
interest (including an interest through an option, Futures or Forward Contract
or short sale) with respect to any stock, debt instrument (other than "straight
debt") or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Theme Portfolio will be treated as having
made an actual sale thereof, with the result that gain will be recognized at
that time. A constructive sale generally consists of a short sale, an offsetting
notional principal contract or Futures or Forward Contract entered into by a
Theme Portfolio or a related person with respect to the same or substantially
similar property. In addition, if the appreciated financial position is itself a
short sale or such a contract, acquisition of the underlying property or
substantially similar property will be deemed a constructive sale.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds, their shareholders and the Portfolios.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
Statement of Additional Information Page 42
<PAGE>
AIM GLOBAL THEME FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
AIM was organized in 1976, and along with its subsidiaries, manages or advises
approximately 90 investment company 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. AIM is the sole
shareholder of the Funds' principal underwriter, AIM Distributors. 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 that has a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Funds' and Theme
Portfolios' assets. State Street is authorized to establish and has established
separate accounts in foreign currencies and to cause securities of the Theme
Portfolios to be held in separate accounts outside the United States in the
custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Trust's and Theme Portfolios' independent accountants are
conducts annual audits of the Portfolios' and the Funds'
financial statements, assists in the preparation of each Portfolio's and each
Fund's federal and state income tax returns and consults with the Trust and
Global Investment Portfolio as to matters of accounting, regulatory filings, and
federal and state income taxation.
The audited financial statements of the Trust included in this Statement of
Additional Information have been examined by , as stated
in their opinion appearing herein, and are included in reliance upon such
opinion given upon the authority of that firm as experts in accounting and
auditing.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations
extended to shareholders of private, for-profit corporations. There is a remote
possibility, however, that under certain circumstances shareholders of the Trust
may be held personally liable for the Trust's obligations. However, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or a trustee. The
Trust Agreement provides for indemnification from the Trust property for all
losses and expenses of any shareholder held personally liable for the Trust's
obligations. Thus, the risk of a shareholder incurring financial loss on account
of such liability is limited to circumstances in which the Trust itself would be
unable to meet its obligations and where the other party was held not to be
bound by the disclaimer.
NAMES
Prior to May 29, 1998, AIM Global Consumer Products and Services Fund operated
under the name of GT Global Consumer Products and Services Fund; AIM Global
Financial Services Fund operated under the name of GT Global Financial Services
Fund; AIM Global Health Care Fund operated under the name of GT Global Health
Care Fund; AIM Global Infrastructure Fund operated under the name of GT Global
Infrastructure Fund; AIM Global Resources Fund operated under the name of GT
Global Natural Resources Fund; and AIM Global Telecommunications Fund operated
under the name of GT Global Telecommunications Fund.
SPECIAL SERVICING AGREEMENT
Subject to receipt of an exemptive order from the SEC, the Funds will be parties
to a Special Servicing Agreement ("Agreement") among the Trust on behalf of the
Funds, AIM Series Trust on behalf of its sole series, AIM Global Trends Fund
("Global Trends Fund"), AIM, the Sub-adviser and AFS. The Agreement will provide
that, if the Trust's Board of Trustees determines that a Fund's share of the
aggregate expenses of Global Trends Fund is less than the estimated savings to
the Fund from the operation of Global Trends Fund, the Fund will bear those
expenses in proportion to the average daily value of its shares owned by Global
Trends Fund, provided that no Fund will bear such expenses in excess of the
estimated savings to it. Those savings are expected to result primarily from the
elimination of numerous separate shareholder accounts that are or would have
been invested directly in the Funds and the resulting reduction in shareholder
servicing costs. Although these cost savings are not certain, the estimated
savings to the Funds generated by the operation of Global Trends Fund are
expected to be sufficient to offset most, if not all, of the expenses incurred
by that Fund.
Statement of Additional Information Page 43
<PAGE>
AIM GLOBAL THEME FUNDS
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
P(1+T)n=ERV
<TABLE>
<S> <C> <C> <C>
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable maximum sales load is
deducted at the beginning of the 1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the 1, 5,
or 10 year periods (or fractional portion of such period).
</TABLE>
The standardized returns for the Class A and Class B shares of Health Care Fund
and Telecommunications Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
HEALTH HEALTH TELECOM- TELECOM-
CARE CARE MUNICATIONS MUNICATIONS
FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- ------------------------------------------------------------ --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Fiscal year ended Oct. 31, 1997............................. [22.27% 22.75% 12.11% 12.15%
Oct. 31, 1992 through Oct. 31, 1997......................... 15.24% n/a 13.88% n/a
April 1, 1993 (commencement of operations) through Oct. 31,
1997....................................................... n/a 20.09% n/a 12.09%
Jan. 27, 1992 (commencement of operations) through Oct. 31,
1997....................................................... n/a n/a 11.48% n/a
Aug. 7, 1989 (commencement of operations) through Oct. 31,
1997....................................................... 15.23% n/a n/a n/a]
</TABLE>
The standardized returns for the Class A and Class B shares of the Financial
Services Fund, Infrastructure Fund and Resources Fund, stated as average
annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL FINANCIAL INFRA- INFRA-
SERVICES SERVICES STRUCTURE STRUCTURE RESOURCES RESOURCES
FUND FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fiscal year ended Oct. 31, 1997............................. [23.74% 24.13% 4.18% 3.83% 16.81% 16.99%
May 31, 1994 (commencement of operations) through
Oct. 31, 1997.............................................. 13.70% 14.13% 8.30% 8.60% 18.64% 19.17%]
</TABLE>
The standardized returns for the Class A and Class B shares of the Consumer
Products and Services Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
CONSUMER PRODUCTS CONSUMER PRODUCTS
AND AND
SERVICES FUND SERVICES FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------ ----------------- -----------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997............................. [5.30% 4.95%
Dec. 30, 1994 (commencement of operations) to Oct. 31,
1997....................................................... 27.70% 28.59%]
</TABLE>
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
P(1+U)n=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>
Statement of Additional Information Page 44
<PAGE>
AIM GLOBAL THEME FUNDS
The average annual non-standardized returns for the Class A and Class B shares
of the Health Care Fund and Telecommunications Fund, stated as average
annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH HEALTH TELECOM- TELECOM-
CARE CARE MUNICATIONS MUNICATIONS
FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- ------------------------------------------------------------ --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Fiscal year ended Oct. 31, 1997............................. [28.36% 27.75% 17.70% 17.15%
Oct. 31, 1992 through Oct. 31, 1997......................... 16.37% n/a 14.99% n/a
April 1, 1993 (commencement of operations) through Oct. 31,
1997....................................................... n/a 20.32% n/a 12.38%
Jan. 27, 1992 (commencement of operations) through Oct. 31,
1997....................................................... n/a n/a 12.43% n/a
Aug. 7, 1989 (commencement of operations) through Oct. 31,
1997....................................................... 15.92% n/a n/a n/a]
</TABLE>
The average annual non-standardized returns for the Class A and Class B shares
of the Financial Services Fund, Infrastructure Fund and Resources Fund, stated
as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL FINANCIAL INFRA- INFRA-
SERVICES SERVICES STRUCTURE STRUCTURE RESOURCES RESOURCES
FUND FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fiscal year ended Oct. 31, 1997............................. [29.91% 29.13% 9.38% 8.83% 22.64% 21.99%
May 31, 1994 (commencement of operations) through Oct. 31,
1997....................................................... 15.33% 14.76% 9.85% 9.31% 20.34% 19.74%]
</TABLE>
The average annual non-standardized returns for the Class A and Class B shares
of the Consumer Products and Services Fund, stated as average annualized total
returns for the periods shown, were:
<TABLE>
<CAPTION>
CONSUMER CONSUMER
PRODUCTS PRODUCTS
AND AND
SERVICES SERVICES
FUND FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------ --------- ---------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997............................. [10.55% 9.95%
Dec. 30, 1994 (commencement of operations) to Oct. 31,
1997....................................................... 29.91% 29.25%]
</TABLE>
Cumulative total return across a stated period may be calculated as follows:
P(1+V)n=ERV
<TABLE>
<S> <C> <C> <C>
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a stated portion of, or none
of, the applicable maximum sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the stated
period.
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the Health Care Fund and
Telecommunications Fund, stated as aggregate total returns for the periods
shown, were:
<TABLE>
<CAPTION>
HEALTH HEALTH TELECOM- TELECOM-
CARE CARE MUNICATIONS MUNICATIONS
FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- ------------------------------------------------------------ --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
April 1, 1993 (commencement of operations) through Oct. 31,
1997....................................................... [n/a 133.44% n/a 70.76 %
Jan. 27, 1992 (commencement of operations) through Oct. 31,
1997....................................................... n/a n/a 96.32% n/a
Aug. 7, 1989 (commencement of operations) through Oct. 31,
1997....................................................... 237.37% n/a n/a n/a]
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the Financial Services Fund,
Infrastructure Fund and Resources Fund, stated as aggregate total returns for
the period shown were:
<TABLE>
<CAPTION>
FINANCIAL FINANCIAL INFRA- INFRA-
SERVICES SERVICES STRUCTURE STRUCTURE RESOURCES RESOURCES
FUND FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
May 31, 1994 (commencement of operations) through Oct. 31,
1997....................................................... [62.87% 60.13% 37.89% 35.59% 88.33% 85.14%]
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the Consumer Products and Services Fund,
stated as aggregate total returns for the period shown, were:
<TABLE>
<CAPTION>
CONSUMER PRODUCTS CONSUMER PRODUCTS
AND AND
SERVICES FUND SERVICES FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------ ----------------- -----------------
<S> <C> <C>
Dec. 30, 1994 (commencement of operations) to Oct. 31,
1997....................................................... [110.02% 107.02%]
</TABLE>
Statement of Additional Information Page 45
<PAGE>
AIM GLOBAL THEME FUNDS
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B shares of the Health Care Fund and Telecommunications
Fund, stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH HEALTH TELECOM- TELECOM-
CARE CARE MUNICATIONS MUNICATIONS
FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- ------------------------------------------------------------ --------- --------- ----------- ---------
<S> <C> <C> <C> <C>
April 1, 1993 (commencement of operations) through Oct. 31,
1997....................................................... [n/a 131.44% n/a 68.76 %
Jan. 27, 1992 (commencement of operations) through Oct. 31,
1997....................................................... n/a n/a 87.00% n/a
Aug. 7, 1989 (commencement of operations) through Oct. 31,
1997....................................................... 221.34% n/a n/a n/a]
</TABLE>
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B shares of the Financial Services Fund, Infrastructure
Fund and Resources Fund, stated as aggregate total returns for the periods shown
were:
<TABLE>
<CAPTION>
FINANCIAL FINANCIAL INFRA- INFRA-
SERVICES SERVICES STRUCTURE STRUCTURE RESOURCES RESOURCES
FUND FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
May 31, 1994 (commencement of operations) through Oct. 31,
1997....................................................... [55.13% 57.13% 31.34% 32.59% 79.38% 82.14%]
</TABLE>
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B shares of the Consumer Products and Services Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
CONSUMER PRODUCTS CONSUMER PRODUCTS
AND AND
SERVICES FUND SERVICES FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------ ----------------- -----------------
<S> <C> <C>
Dec. 30, 1994 (commencement of operations) to Oct. 31,
1997....................................................... [100.04% 104.02%]
</TABLE>
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and operating expenses of
each Fund, so that current or past yield or total return should not be
considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
PERFORMANCE INFORMATION
Total return and yield figures for the Funds are neither fixed nor guaranteed,
and no Fund's principal is insured. Performance quotations reflect historical
information and should not be considered representative of a Fund's performance
for any period in the future. Performance is a function of a number of factors
which can be expected to fluctuate. The Funds may provide performance
information in reports, sales literature and advertisements. The Funds may also,
from time to time, quote information about the Funds published or aired by
publications or other media entities which contain articles or segments relating
to investment results or other data about one or more of the Funds. Such
publications or media entities may include the following, among others:
Advertising Age
Barron's
Best's Review
Broker World
Business Week
Changing Times
Christian Science Monitor
Consumer Reports
Economist
EuroMoney
FACS of the Week
Financial Planning
Financial Product News
Financial World
Forbes
Fortune
Global Finance
Hartford Courant Inc.
Institutional Investor
Insurance Forum
Insurance Week
Investor's Daily
Journal of the American
Society of CLU & ChFC
Kiplinger Letter
Money
Mutual Fund Forecaster
Mutual Fund Magazine
Nation's Business
New York Times
Pension World
Pensions & Investments
Personal Investor
Financial Services Week
Philadelphia Inquirer
Smart Money
USA Today
U.S. News & World Report
Wall Street Journal
Washington Post
CNN
CNBC
PBS
Statement of Additional Information Page 46
<PAGE>
AIM GLOBAL THEME FUNDS
The Funds and AIM Distributors may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
each Fund with the following, or compare each Fund's performance to performance
data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services
(data and mutual fund rankings and comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and
Development (publications)
International Finance Corporation Emerging
Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Analytical Data Services, Inc. (data and
mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings
and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All Country
(AC) World Index
Morgan Stanley Capital International World
Indices
Morningstar, Inc. (data and mutual fund rankings
and comparisons)
NASDAQ
Organization for Economic Cooperation and
Development (publications)
Salomon Brothers Global Telecommunications
Index
Salomon Brothers World Government Bond
Index-Non-U.S.
Salomon Brothers World Government Bond
Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price
Index
Stangar
Wilshire Associaties
World Bank (publications and reports)
The World Bank Publication of Trends in
Developing Countries
Worldscope
Each Fund may also compare its performance to rates on Certificates of Deposit
and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or AIM
Distributors. Advertising for the Funds may from time to time include
discussions of general economic conditions and interest rates. Advertising for
the Funds may also include reference to the use of those Funds as part of an
individual's overall retirement investment program. From time to time, sales
literature and/or advertisements for any of the Funds may disclose (i) the
largest holdings in the Fund's portfolio, (ii) certain selling group members
and/or (iii) certain institutional shareholders.
From time to time, the Funds' sales literature and/or advertisements may discuss
generic topics pertaining to the mutual fund industry. This includes, but is not
limited to, literature addressing general information about mutual funds,
variable annuities, dollar-cost averaging, stocks, bonds, money markets,
certificates of deposit, retirement, retirement plans, asset allocation,
tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when comparing
a Fund's performance with other funds and other potential investments, investors
should note that the methods of computing performance of other potential
investments are not necessarily comparable to the methods employed by a Fund.
Statement of Additional Information Page 47
<PAGE>
AIM GLOBAL THEME FUNDS
GENERAL INFORMATION ABOUT THE THEME FUNDS AND THEME PORTFOLIOS
Each Theme Portfolio may invest worldwide across industries within the
Portfolio's area of concentration without national or regional restrictions. The
ability of each Theme Portfolio to invest worldwide may allow the portfolio
managers to select industries in different economic cycles and varying stages of
development, though there is no assurance that the managers will be successful
in this selection.
Each Theme Portfolio's area of concentration reflects the underlying theme of
the Portfolio. AIM Distributors believes that there are certain social,
political and economic trends that may benefit one or more industries within a
Theme Portfolio's area of concentration. Of course, there is no assurance that
any of the Funds will benefit as a result.
HEALTH CARE FUND
From time to time the Fund and AIM Distributors will quote information including
data regarding:
/ / Trading volume, number of listed companies and the largest companies of
the global health care industry
/ / Expenditures by various countries, regions and age groups on health care
/ / Population of countries, regions and age groups
/ / Natality and mortality rates in various regions, countries and age
groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New health care products and products seeking approval
/ / Health maintenance organizations (HMOs) and their enrollment growth
/ / Studies from, but not limited to, the American Medical Association
showing the effectiveness of using drugs to cure illness
/ / Medical technology and devices in use or in development
/ / Regulatory environment of health care industries
/ / Consolidation in the health care industries
The information quoted has not been independently verified by a Fund or AIM
Distributors and will be based on data provided that is believed to be reliable
and accurate from sources including the following:
/ / Research firms such as Mehta and Isaly which publishes PHARMACEUTICAL
PORTFOLIO RECOMMENDATIONS
/ / OECD and its publications such as the OECD HEALTH DATA, as supplemented
annually
/ / Morgan Stanley Capital International stock market industry indices such
as Health & Personal Care
/ / The World Bank and its publications such as THE WORLD DEVELOPMENT
REPORT, as supplemented annually
/ / IFC and publications such as the EMERGING STOCK MARKETS FACTBOOK
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRIES
The Fund and the Sub-adviser believe that certain market and demographic factors
merit an investor's consideration when making a health care investment.
Worldwide standards of living and life expectancy have increased at a
substantial rate. The Sub-adviser expects this growth, which works to the
general benefit of the global health care industry, to continue at a roughly
comparable rate in the future, although no assurances can be given in this
regard. Moreover, according to the Sub-adviser, the health care industry
historically has proven to be a relatively non-cyclical industry that continues
to provide goods and services to the public in periods of economic weakness as
well as economic strength.
The Sub-adviser believes that the anticipated increase in the world's elderly
population could increase demand for health care products and services. For
example, according to data compiled by the Sub-adviser, in Japan the number of
people age 65 and older is expected to grow over 100% by the year 2025; in
Germany, France and the U.S., the same age group should grow 40%. Similarly, the
U.S. Census Bureau predicts the number of Americans 85 and older to double in
the next 30 years. From time to time, the Fund and AIM Distributors will quote
information including, but not limited to, international data regarding
populations, birth rates, mortality rates, life expectancy, health care
expenditures, and gross domestic product vs. life expectancy. The information
quoted has not been independently verified by the Fund or AIM Distributors and
will be based on data that is believed to be reliable and accurate.
Statement of Additional Information Page 48
<PAGE>
AIM GLOBAL THEME FUNDS
TELECOMMUNICATIONS FUND
From time to time the Fund and AIM Distributors will quote information including
data regarding:
/ / Increased usage of new technologies such as, but not limited to,
cellular and wireless communications in emerging and established
countries around the world
/ / Supply and demand of telephone equipment and services
/ / Regulatory environment of telecommunications industries
/ / Revenue, price and usage of telecommunications products and services
/ / Privatization and/or deregulation of telecommunications companies
The information quoted has not been independently verified by the Fund or AIM
Distributors and will be based on data provided that is believed to be reliable
and accurate from sources including the following:
/ / Salomon Brothers World Equity Telecommunications Index, which includes
stock market data about the telecommunications industry in established
and developing markets
/ / OECD and other publications from its subsidiaries such as the
International Telecommunications Union
/ / Morgan Stanley Capital International stock market industry indices such
as Telecommunications, Broadcasting & Publishing and Data Processing &
Reproduction
/ / International Technology Consultants, a Washington D.C. based firm which
publishes reports such as EASTERN EUROPEAN & SOVIET TELECOM REPORT and
LATIN AMERICAN TELECOM REPORT
/ / Telegeography and other publications
DEREGULATION IN THE UNITED STATES
The United States has been the bellwether for deregulation of the telephone
industry. The divestiture of the Bell System from American Telephone and
Telegraph has produced competing companies in the United States. Such U.S.
market-driven competition has, for example, led to lower costs for consumers
which in turn led to greater consumer usage and to higher industrywide revenues.
The Sub-adviser expects this scenario to continue to benefit such companies in
the U.S. and to similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard.
CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and AIM Distributors will quote information including
data regarding:
/ / Trading volume, number of listed companies and the largest companies
located around the world in the consumer products and services
industries
/ / Expenditures, demand and consumption by various countries, regions,
income classes and age groups of consumer products and services
/ / Population of countries, regions and age groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New consumer products and services in the development or manufacturing
stages
/ / Income of various regions, countries and age groups
/ / Sales and sales growth of consumer products and services companies in
their own country and abroad
/ / Sales, supply and demand of consumer products and services
/ / Parent Companies and the products and services they distribute
/ / Regulatory environment of consumer products industries
The information quoted will not be independently verified by the Fund or AIM
Distributors and will be based on data provided that is believed to be reliable
and accurate from sources including the following:
/ / Consumer and trade groups
/ / Fortune magazine and other periodicals
/ / The World Bank and its publications
/ / The International Monetary Fund (IMF) and its publications
Statement of Additional Information Page 49
<PAGE>
AIM GLOBAL THEME FUNDS
/ / IFC and its publications
/ / OECD and its publications
INFRASTRUCTURE FUND
From time to time the Fund and AIM Distributors may quote information including:
/ / Supply and demand of telephone equipment and services, electricity,
water, transportation, construction materials and other
infrastructure-related products and services
/ / Regulatory environment of infrastructure industries
/ / Quantity and costs of current and projected infrastructure projects
/ / Privatization of industries and companies
/ / New technologies, products and services used in infrastructure
industries
/ / Infrastructure Finance Magazine and other periodicals
FINANCIAL SERVICES FUND
From time to time the Fund and AIM Distributors may quote information including:
/ / Supply and demand of financial services
/ / Regulatory environment of financial service industries
/ / Credit ratings of U.S. and non-U.S. banks
/ / New technologies, products and services used in the financial services
industries
/ / Consolidation in the financial services industries
RESOURCES FUND
From time to time the Fund and AIM Distributors may quote information including:
/ / Supply, demand and prices of natural resources
/ / Regulatory environment of natural resources
/ / Supply, demand and prices of products manufactured from natural
resources
/ / New technologies, products and services used in the natural resources
industries
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
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 edged." 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 risk appear somewhat
larger than the 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
some time in the future.
Statement of Additional Information Page 50
<PAGE>
AIM GLOBAL THEME FUNDS
Baa -- Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are 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 which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
Statement of Additional Information Page 51
<PAGE>
AIM GLOBAL THEME FUNDS
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds as of October 31, 1997 and for the
fiscal year then ended, and the unaudited financial statements as of April 30,
1998 and for the six months then ended, appear on the following pages.
Statement of Additional Information Page 52
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
CLASS A AND CLASS B SHARES OF
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
(SERIES PORTFOLIOS OF AIM INVESTMENT FUNDS)
11 Greenway Plaza
Suite 100
Houston, TX 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 FREE OF CHARGE 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 SEPTEMBER 8, 1998 RELATING TO THE AIM
GLOBAL GOVERNMENT INCOME FUND PROSPECTUS, THE AIM STRATEGIC INCOME FUND
PROSPECTUS, THE AIM GLOBAL HIGH INCOME FUND PROSPECTUS, AND THE AIM GLOBAL
GROWTH & INCOME FUND PROSPECTUS EACH DATED SEPTEMBER 8, 1998
Statement of Additional Information Page 1
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Introduction..................................................................................... 3
Investment Objectives and Policies............................................................... 4
Options, Futures and Currency Strategies......................................................... 9
Risk Factors..................................................................................... 19
Investment Limitations........................................................................... 24
Execution of Portfolio Transactions.............................................................. 29
Trustees and Executive Officers.................................................................. 31
Control Persons and Principal Holders of Securities.............................................. 33
Management....................................................................................... 34
Valuation of Fund Shares......................................................................... 40
How to Purchase and Redeem Shares................................................................ 41
Taxes............................................................................................ 43
Additional Information........................................................................... 47
Investment Results............................................................................... 48
Description of Debt Ratings...................................................................... 53
Financial Statements............................................................................. 55
</TABLE>
[LOGO]
Statement of Additional Information Page 2
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
INTRODUCTION
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of AIM Global Government Income Fund ("Government Income Fund"), AIM
Strategic Income Fund ("Strategic Income Fund"), AIM Global High Income Fund
("High Income Fund"), and AIM Global Growth & Income Fund ("Growth & Income
Fund") (each, a "Fund," and collectively, the "Funds"). Each Fund is a
non-diversified series of AIM Investment Funds (the "Trust"), a registered open-
end management investment company organized as a Delaware business trust.
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and INVESCO (NY), Inc. (the "Sub-adviser") serves as the
investment sub-adviser and sub-administrator for the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund and the Global High Income
Portfolio (the "Portfolio"). AIM and the Sub-adviser also serve as the
administrator and sub-administrator, respectively, of the High Income Fund.
The Trust is a series mutual fund. The rules and regulations of the United
States Securities and Exchange Commission (the "SEC") require all mutual funds
to furnish prospective investors certain information concerning the activities
of the fund being considered for investment. This information for Government
Income Fund is included in a Prospectus dated September 8, 1998, for Strategic
Income Fund is included in a separate Prospectus dated September 8, 1998, for
High Income Fund is included in a separate Prospectus dated September 8, 1998,
and for Growth & Income Fund is included in a separate Prospectus dated
September 8, 1998. Additional copies of the Prospectuses and this Statement of
Additional Information may be obtained without charge by writing the principal
distributor of the Funds' shares, A I M Distributors, Inc. ("AIM Distributors"),
P.O. Box 4739, Houston, TX 77210-4739 or by calling (800) 347-4246. Investors
must receive a Prospectus before they invest.
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
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 FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name G.T. Investment Funds, Inc., which
was organized as a Maryland corporation on October 29, 1987. The Trust was
reorganized on September 4, 1998 as a Delaware business trust, and is registered
with the SEC as a diversified open-end series management investment company. The
Trust currently consists of thirteen separate portfolios: each of the six Theme
Funds, AIM Global Government Income Fund, AIM Global High Income Fund, AIM
Strategic Income Fund, AIM Global Growth and Income Fund, AIM Emerging Markets
Fund, AIM Developing Markets Fund, and AIM Latin American Growth Fund. Each of
these funds has three separate classes: Class A, Class B and Advisor Class
shares. All historical financial and other information contained in this
Statement of Additional Information for periods prior to September 4, 1998, is
that of the series of G.T. Investment Funds, Inc.
This Statement of Additional Information relates solely to the Class A and Class
B shares of the Funds.
The term "majority of the outstanding shares" of the Trust, of a particular Fund
or of a particular class of a Fund means, respectively, the vote of the lesser
of (a) 67% or more of the shares of the Trust, such Fund or such class present
at a meeting of the Trust's shareholders, if the holders of more than 50% of the
outstanding shares of the Trust, such Fund or such class are present or
represented by proxy, or (b) more than 50% of the outstanding shares of the
Trust, such Fund or such class.
Statement of Additional Information Page 3
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
Class A, and Class B and Advisor Class shares of each Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees 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 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 Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
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
Trustees of the Trust. In such event, the remaining holders cannot elect any
trustees of the Trust.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
The Government Income Fund primarily seeks high current income and secondarily
seeks capital appreciation and protection of principal through active management
of the maturity structure and currency exposure of its portfolio. The Strategic
Income Fund and the High Income Fund primarily seek high current income and
secondarily seek capital appreciation. The High Income Fund seeks to achieve its
investment objectives by investing all of its investable assets in the
Portfolio, which is a non-diversified open-end management investment company
with investment objectives identical to those of the Fund. Whenever the phrase
"all of the High Income Fund's investable assets" is used herein and in the
Prospectus, it means that the only investment securities held by the High Income
Fund will be its interest in the Portfolio. The High Income Fund may withdraw
its investment in the Portfolio at any time, if the Board of Trustees of the
Trust determines that it is in the best interests of the Fund and its
shareholders to do so. Upon any such withdrawal, the High Income Fund's assets
would be invested in accordance with the investment policies of the Portfolio
described below and in the Prospectus. The investment objective of the Growth &
Income Fund is long-term capital appreciation together with current income. The
Growth & Income Fund seeks its objective by investing in a global portfolio of
both equity securities and debt obligations allocated among diverse
international markets.
INVESTMENT IN EMERGING MARKETS
The Portfolio seeks its objectives by investing, under normal circumstances, at
least 65% of its total assets in debt securities of issuers in emerging markets.
The Strategic Income Fund may invest up to 50% of its assets in debt securities
of issuers in emerging markets. The Strategic Income Fund and the Portfolio do
not consider the following countries to be emerging markets: Australia, Austria,
Belgium, Canada, Denmark, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom,
and United States.
In addition to the factors set forth in the Prospectus, the Sub-adviser will
also consider, when determining what countries constitute emerging markets,
data, analysis, and classification of countries published or disseminated by the
International Bank for Reconstruction and Development (commonly known as the
World Bank) and the International Finance Corporation.
SELECTION OF DEBT INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Government Income Fund, the Strategic
Income Fund, the Growth & Income Fund, and the Portfolio, the Sub-adviser
ordinarily considers the following factors: prospects for relative economic
growth among the different countries in which the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund, and the Portfolio may invest;
expected levels of inflation; government policies influencing business
conditions; the outlook for currency relationships; and the range of the
individual investment opportunities available to international investors.
Statement of Additional Information Page 4
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in the following types of money market instruments (i.e., debt
instruments with less than 12 months remaining until maturity) denominated in
U.S. dollars or other currencies: (a) obligations issued or guaranteed by the
U.S. or foreign governments, their agencies, instrumentalities or
municipalities; (b) obligations of international organizations designed or
supported by multiple foreign governmental entities to promote economic
reconstruction or development; (c) finance company obligations, corporate
commercial paper and other short-term commercial obligations: (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Government Income
Fund, the Strategic Income Fund and the Portfolio may not invest more than 25%
of their respective total assets in bank securities; (e) repurchase agreements
with respect to the foregoing; and (f) other substantially similar short-term
debt securities with comparable characteristics. Money market instruments in
which the Growth & Income Fund may invest include U.S. government securities,
high-grade commercial paper, bank certificates of deposit, bankers' acceptances
and repurchase agreements related to any of the foregoing. "High-grade
commercial paper" refers to commercial paper rated A-1 by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P"), or P-1 by Moody's Investors
Service, Inc. ("Moody's") or, if not rated, determined by the Sub-adviser to be
of comparable quality.
SELECTION OF EQUITY INVESTMENTS
With respect to Growth & Income Fund, for investment purposes, an issuer is
typically considered as located in a particular country if it (a) is
incorporated under the laws of or has its principal office in that country, or
(b) it normally derives 50% or more of its total revenue from business in that
country. However, these are not absolute requirements, and certain companies
incorporated in a particular country and considered by the Sub-adviser to be
located in that country may have substantial off-shore operations or
subsidiaries and/or export sales exceeding in size the assets or sales in that
country.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by the Government Income Fund,
the Strategic Income Fund, the Growth & Income Fund and the Portfolio presently
may be made only by acquiring shares of other investment companies (including
investment vehicles or companies advised by the Sub-adviser or its affiliates
("Affiliated Funds")) with local governmental approval to invest in those
countries. At such time as direct investment in these countries is allowed, the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio anticipate investing directly in these markets. The Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund and the
Portfolio may also invest in the securities of closed-end investment companies
within the limits of the Investment Company Act of 1940, as amended ("1940
Act"). These limitations currently provide that, in part, a Fund or the
Portfolio may purchase shares of another investment company unless (a) such a
purchase would cause the Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund or the Portfolio to own in the aggregate more than 3% of
the total outstanding voting securities of the investment company or (b) such a
purchase would cause the Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund or the Portfolio to have more than 5% of its total assets
invested in the investment company or more than 10% of its aggregate assets
invested in an aggregate of all such investment companies. The foregoing
limitations do not apply to the investment by the High Income Fund in the
Portfolio. Investment in investment companies may involve the payment of
substantial premiums above the value of such companies' portfolio securities.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio do not intend to invest in such investment companies unless,
in the judgment of the Sub-adviser, the potential benefits of such investments
justify the payment of any applicable premiums. The return on such securities
will be reduced by operating expenses of such companies including payments to
the investment managers of those investment companies. With respect to
investments in Affiliated Funds, the Sub-adviser waives its advisory fee to the
extent that such fees are based on assets of a Fund invested in Affiliated
Funds.
DEPOSITARY RECEIPTS
The Growth & Income Fund may hold equity securities of foreign issuers in the
form of American Depositary Receipts ("ADRs"), American Depositary Shares
("ADSs"), Global Depositary Receipts ("GDRs") and European Depositary Receipts
("EDRs"), or other securities convertible into securities of eligible issuers.
These securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. ADRs and ADSs typically are issued
by an American bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depositary Receipts ("CDRs"), are issued in Europe typically
by foreign banks and trust companies and evidence ownership of either foreign or
domestic securities. GDRs are similar to EDRs and are designed for use in
several international financial markets. Generally, ADRs and ADSs in registered
form
Statement of Additional Information Page 5
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
are designed for use in United States securities markets and EDRs in bearer form
are designed for use in European securities markets. For purposes of the Fund's
investment policies, the Fund's investments in ADRs, ADSs, GDRs and EDRs will be
deemed to be investments in the equity securities representing securities of
foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
SAMURAI AND YANKEE BONDS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai
bonds"), and may invest in dollar-denominated bonds sold in the United States by
non-U.S. issuers ("Yankee bonds"). It is the policy of the Government Income
Fund, the Strategic Income Fund and the Portfolio to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Government Income Fund, the Strategic
Income Fund, the Growth & Income Fund or the Portfolio in connection with other
securities or separately and provide a Fund or the Portfolio with the right to
purchase at a later date other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio may make
secured loans of portfolio securities amounting to not more than 30% of its
total assets. Securities loans are made to broker/dealers or institutional
investors pursuant to agreements requiring that the loans continuously be
secured by collateral at least equal at all times to the value of the securities
lent plus any accrued interest, "marked to market" on a daily basis. The
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio may pay reasonable administrative and custodial fees in connection
with loans of its securities. While the securities loan is outstanding, the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio will continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. The Government Income
Fund, the Strategic Income Fund, the Growth & Income Fund and the Portfolio each
will have a right to call each loan and obtain the securities within the stated
settlement period. The Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund and the Portfolio will not have the right to vote equity
securities while they are lent, but each may call in a loan in anticipation of
any important vote. Loans will be made only to firms deemed by the Sub-adviser
to be of good standing and will not be made unless, in the judgment of the
Sub-adviser, the consideration to be earned from such loans would justify the
risk.
Statement of Additional Information Page 6
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Strategic Income Fund's, the Growth & Income Fund's and
the Portfolio's investment policies with respect to bank obligations,
obligations of foreign branches of U.S. banks and of foreign banks are
obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Strategic Income Fund, the
Growth & Income Fund and the Portfolio to investment risks that are different in
some respects from those of investments in obligations of domestic issuers.
Although the Strategic Income Fund, the Growth & Income Fund and the Portfolio
typically will acquire obligations issued and supported by the credit of U.S. or
foreign banks having total assets at the time of purchase in excess of $1
billion, this $1 billion figure is not an investment policy or restriction of
the Strategic Income Fund, the Growth & Income Fund or the Portfolio. For the
purposes of calculation with respect to the $1 billion figure, the assets of a
bank will be deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio buys a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Government Income Fund,
the Strategic Income Fund, the Growth & Income Fund or Portfolio if the other
party to the repurchase agreement becomes bankrupt, the Government Income Fund,
the Strategic Income Fund, the Growth & Income Fund and the Portfolio intend to
enter into repurchase agreements only with banks and broker/dealers believed by
the Sub-adviser to present minimal credit risks in accordance with guidelines
approved by the Trust's or the Portfolio's Board of Trustees. The Sub-adviser
reviews and monitors the creditworthiness of such institutions under the Board's
general supervision.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio will invest only in repurchase agreements collateralized at
all times in an amount at least equal to the repurchase price plus accrued
interest. To the extent that the proceeds from any sale of such collateral upon
a default in the obligation to repurchase were less than the repurchase price,
the Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
or the Portfolio would suffer a loss. If the financial institution which is
party to the repurchase agreement petitions for bankruptcy or otherwise becomes
subject to bankruptcy or other liquidation proceedings there may be restrictions
on the Government Income Fund, the Strategic Income Fund, the Growth & Income
Fund's or the Portfolio's ability to sell the collateral and the Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund or the
Portfolio could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, the Government Income Fund, the Strategic Income Fund, the Growth & Income
Fund and the Portfolio intend to comply with provisions under such Code that
would allow the immediate resale of such collateral. The Government Income Fund
and the Growth & Income Fund will not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the value of
each Fund's total assets would be invested in such repurchase agreements and
other illiquid investments and securities for which no readily available market
exists. There is no limitation on the amount of the Growth & Income Fund's
assets that may be subject to repurchase agreements at any time.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's and the Portfolio's borrowings will not exceed 33 1/3% of the Fund's or
the Portfolio's respective total assets, i.e., the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund's or the Portfolio's respective
total assets at all times will equal at least 300% of the amount of outstanding
borrowings. If market fluctuations in the value of the Government Income Fund's,
the Strategic Income Fund's, the Growth & Income Fund's or the Portfolio's
holdings or other factors cause the ratio of the Government Income Fund's, the
Strategic Income Fund's, the Growth & Income Fund's or the Portfolio's total
assets to outstanding borrowings to fall below 300%, within three days
(excluding Sundays and holidays) of such event the respective Fund or the
Portfolio may be required to sell portfolio securities to restore the 300% asset
coverage, even though from an investment standpoint such sales might be
disadvantageous. The Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund and the Portfolio each may borrow up to 5% of its
respective total assets for
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
temporary or emergency purposes other than to meet redemptions. Any borrowing by
the Government Income Fund, the Strategic Income Fund the Growth & Income Fund
or the Portfolio may cause greater fluctuation in the value of its shares than
would be the case if the Fund or the Portfolio did not borrow.
The Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's and the Portfolio's fundamental investment limitations permit them to
borrow money for leveraging purposes. The Government Income Fund and the Growth
& Income Fund, however, currently are prohibited, pursuant to a non-fundamental
investment policy, from borrowing money in order to purchase securities.
Nevertheless, this policy may be changed in the future by a vote of a majority
of the Trust's Board of Trustees. The Strategic Income Fund and the Portfolio
may borrow for leveraging purposes. If the Strategic Income Fund or the
Portfolio employs leverage, it would be subject to certain additional risks. Use
of leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the Strategic Income Fund's or the
Portfolio's net asset value. When the income and gains on securities purchased
with the proceeds of borrowings exceed the costs of such borrowings, the
Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's or the Portfolio's earnings or net asset value will increase faster than
otherwise would be the case; conversely, if such income and gains fail to exceed
such costs, the Fund's or the Portfolio's earnings or net asset value would
decline faster than would otherwise be the case.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio may enter into reverse repurchase agreements. A reverse
repurchase agreement is a borrowing transaction in which the Government Income
Fund, the Strategic Income Fund, the Growth & Income Fund or the Portfolio
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price, which includes an interest component. The
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio also may engage in "roll" borrowing transactions which involve the
Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's or the Portfolio's sale of Government National Mortgage Association
certificates or other securities together with a commitment (for which the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund or
the Portfolio may receive a fee) to purchase similar, but not identical,
securities at a future date. The Government Income Fund, the Strategic Income
Fund, the Growth & Income Fund and the Portfolio will segregate with a
custodian, cash or liquid securities in an amount sufficient to cover its
obligations under "roll" transactions and reverse repurchase agreements with
broker/dealers. No segregation is required for reverse repurchase agreements
with banks.
SHORT SALES
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio may make short sales of securities, although they have no
current intention of doing so. A short sale is a transaction in which a Fund or
the Portfolio sells a security in anticipation that the market price of that
security will decline. The Government Income Fund, the Strategic Income Fund,
the Growth & Income Fund and the Portfolio may make short sales as a form of
hedging to offset potential declines in long positions in securities it owns, or
anticipates acquiring, and in order to maintain portfolio flexibility. The
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio only may make short sales "against the box." In this type of short
sale, at the time of the sale, the Fund or the Portfolio owns the security it
has sold short or has the immediate and unconditional right to acquire the
identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund or the
Portfolio will deposit in a separate account with its custodian an equal amount
of the securities sold short or securities convertible into or exchangeable for
such securities at no cost. The Government Income Fund, the Strategic Income
Fund, the Growth & Income Fund or the Portfolio could close out a short position
by purchasing and delivering an equal amount of the securities sold short,
rather than by delivering securities already held by the Fund or the Portfolio,
because the Fund or the Portfolio might want to continue to receive interest and
dividend payments on securities in its portfolio that are convertible into the
securities sold short.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio might make a short sale "against the box" in order to hedge
against market risks when the Sub-adviser believes that the price of a
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
security may decline, causing a decline in the value of a security owned by the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund or
the Portfolio or a security convertible into or exchangeable for such security.
In such case, any future losses in the Government Income Fund's, the Strategic
Income Fund's, the Growth & Income Fund's or the Portfolio's long position
should be reduced by a gain in the short position. Conversely, any gain in the
long position should be reduced by a loss in the short position. The extent to
which such gains or losses in the long position are reduced will depend upon the
amount of the securities sold short relative to the amount of the securities the
Fund or the Portfolio owns, either directly or indirectly, and, in the case
where a Fund or the Portfolio owns convertible securities, changes in the
investment values or conversion premiums of such securities. There will be
certain additional transaction costs associated with short sales "against the
box," but a Fund or the Portfolio will endeavor to offset these costs with
income from the investment of the cash proceeds of short sales.
- --------------------------------------------------------------------------------
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Sub-adviser's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While the Sub-adviser is experienced in
the use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if the Government Income
Fund, the Strategic Income Fund, the Growth & Income Fund or the Portfolio
entered into a short hedge because the Sub-adviser projected a decline in
the price of a security in the Fund's or the Portfolio's portfolio, and the
price of that security increased instead, the gain from that increase might
by wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by
more than the increase in the price of the security, the Government Income
Fund, the Strategic Income Fund, the Growth & Income Fund or the Portfolio
could suffer a loss. In either such case, the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio would have
been in a better position had it not hedged at all.
(4) As described below, the Government Income Fund, the Strategic Income
Fund, the Growth & Income Fund or the Portfolio might be required to
maintain assets as "cover," maintain segregated accounts or make margin
payments when it takes positions in instruments involving obligations to
third parties (I.E., instruments other than purchased options). If a Fund or
the Portfolio were unable to close out its positions in such instruments, it
might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. The requirements might
impair the Fund's ability or the Portfolio's ability to sell a portfolio
security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund or the Portfolio sell a
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
portfolio security at a disadvantageous time. The Fund's or the Portfolio's
ability to close out a position in an instrument prior to expiration or
maturity depends on the existence of a liquid secondary market or, in the
absence of such a market, the ability and willingness of the other party to
the transaction ("contra party") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed
out at a time and price that is favorable to the Fund or the Portfolio.
WRITING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio may write (sell) call options on securities, indices and
currencies. Call options generally will be written on securities and currencies
that, in the opinion of the Sub-adviser are not expected to make any major price
moves in the near future but that, over the long term, are deemed to be
attractive investments for the Government Income Fund, the Strategic Income
Fund, the Growth & Income Fund and the Portfolio.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with a
Fund's or the Portfolio's investment objectives. When writing a call option, the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund or
the Portfolio, in return for the premium, gives up the opportunity for profit
from a price increase in the underlying security or currency above the exercise
price, and retains the risk of loss should the price of the security or currency
decline. Unlike one who owns securities or currencies not subject to an option,
a Fund or the Portfolio has no control over when it may be required to sell the
underlying securities or currencies, since most options may be exercised at any
time prior to the option's expiration. If a call option that a Fund or the
Portfolio has written expires, the Fund or the Portfolio will realize a gain in
the amount of the premium; however, such gain may be offset by a decline in the
market value of the underlying security or currency during the option period. If
the call option is exercised, the Fund or the Portfolio will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund and the Portfolio do not
consider a security or currency covered by a call option to be "pledged" as that
term is used in the Government Income Fund's, the Strategic Income Fund's, the
Growth & Income Fund's and the Portfolio's fundamental investment policies that
limit the pledging or mortgaging of their assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund or the Portfolio will
be obligated to sell the security or currency at less than its market value.
The premium that the Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund or the Portfolio receives for writing a call option is
deemed to constitute the market value of an option. The premium a Fund or the
Portfolio will receive from writing a call option will reflect, among other
things, the current market price of the underlying investment, the relationship
of the exercise price to such market price, the historical price volatility of
the underlying investment, and the length of the option period. In determining
whether a particular call option should be written, the Sub-adviser will
consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Government Income
Fund, the Strategic Income Fund, the Growth & Income Fund or the Portfolio to
write another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
Statement of Additional Information Page 10
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity normally are higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, a Fund or the Portfolio may purchase an
underlying security or currency for delivery in accordance with the exercise of
an option, rather than delivering such security or currency from its portfolio.
In such cases, additional costs will be incurred.
A Fund or the Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by a Fund or the Portfolio.
WRITING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio may write put options on securities, indices and currencies. A
put option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at anytime until (American Style) or on (European Style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
A Fund or the Portfolio generally would write put options in circumstances where
the Sub-adviser wishes to purchase the underlying security or currency for the
Fund's or the Portfolio's portfolio at a price lower than the current market
price of the security or currency. In such event, the Fund or the Portfolio
would write a put option at an exercise price that, reduced by the premium
received on the option, reflects the lower price it is willing to pay. Since the
Fund or the Portfolio also would receive interest on debt securities or
currencies maintained to cover the exercise price of the option, this technique
could be used to enhance current return during periods of market uncertainty.
The risk in such a transaction would be that the market price of the underlying
security or currency would decline below the exercise price less the premium
received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund or the Portfolio
will be obligated to purchase the security or currency at greater than its
market value.
PURCHASING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio may purchase put options on securities, indices and
currencies. As the holder of a put option, the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio would have the
right to sell the underlying security or currency at the exercise price at any
time until (American Style or on (European Style) the expiration date. The
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund or
the Portfolio may enter into closing sale transactions with respect to such
options, exercise them or permit them to expire.
A Fund or the Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Fund or the Portfolio as a hedging
technique in order to protect against an anticipated decline in the value of the
security or currency. Such hedge protection is provided only during the life of
the put option when the Fund or the Portfolio, as the holder of the put option,
is able to sell the underlying security or currency at the put exercise price
regardless of any decline in the underlying security's market price or
currency's exchange value. The premium paid for the put option and any
transaction costs would reduce any profit otherwise available for distribution
when the security or currency eventually is sold.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio also may purchase put options at a time when that Fund or the
Portfolio does not own the underlying security or currency. By purchasing put
options on a security or currency it does not own, a Fund or the Portfolio seeks
to benefit from a decline in the market price of the underlying security or
currency. If the put option is not sold when it has remaining value, and if the
market price of the underlying security or currency remains equal to or greater
than the exercise price during the life of the put option, the Fund or the
Portfolio will lose its entire investment in the put option. In order for the
purchase of a put
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
option to be profitable, the market price of the underlying security or currency
must decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
or the Portfolio may purchase call options on securities, indices and
currencies. As the holder of a call option, a Fund or the Portfolio would have
the right to purchase the underlying security or currency at the exercise price
at any time until (American Style) or on (European Style) the expiration date. A
Fund or the Portfolio may enter into closing sale transactions with respect to
such options, exercise them or permit them to expire.
Call options may be purchased by a Fund or the Portfolio for the purpose of
acquiring the underlying security or currency for its portfolio. Utilized in
this fashion, the purchase of call options would enable the Fund or the
Portfolio to acquire the security or currency at the exercise price of the call
option plus the premium paid. At times, the net cost of acquiring the security
or currency in this manner may be less than the cost of acquiring the security
or currency directly. This technique also may be useful to a Fund or the
Portfolio in purchasing a large block of securities that would be more difficult
to acquire by direct market purchases. So long as it holds such a call option,
rather than the underlying security or currency itself, a Fund or the Portfolio
is partially protected from any unexpected decline in the market price of the
underlying security or currency and, in such event, could allow the call option
to expire, incurring a loss only to the extent of the premium paid for the
option.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio also may purchase call options on underlying securities or
currencies it owns to avoid realizing losses that would result in a reduction of
a Fund's or the Portfolio's current return. For example, where a Fund or the
Portfolio has written a call option on an underlying security or currency having
a current market value below the price at which it purchased the security or
currency, an increase in the market price could result in the exercise of the
call option written by the Fund or the Portfolio and the realization of a loss
on the underlying security or currency. Accordingly, the Fund or the Portfolio
could purchase a call option on the same underlying security or currency, which
could be exercised to fulfill the Fund's or the Portfolio's delivery obligations
under its written call (if it is exercised). This strategy could allow the Fund
or the Portfolio to avoid selling the portfolio security or currency at a time
when it has an unrealized loss; however, the Fund or the Portfolio would have to
pay a premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's or the Portfolio's total assets at the time of purchase.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
or the Portfolio may attempt to accomplish objectives similar to those involved
in using Forward Contracts by purchasing put or call options on currencies. A
put option gives a Fund or the Portfolio as purchaser the right (but not the
obligation) to sell a specified amount of currency at the exercise price at any
time until (American Style) or on (European Style) the expiration of the option.
A call option gives a Fund or the Portfolio as purchaser the right (but not the
obligation) to purchase a specified amount of currency at the exercise price at
any time until (American Style) or on (European Style) the expiration of the
option. A Fund or the Portfolio might purchase a currency put option, for
example, to protect itself against a decline in the dollar value of a currency
in which it holds or anticipates holding securities. If the currency's value
should decline against the dollar, the loss in currency value should be offset,
in whole or in part, by an increase in the value of the put. If the value of the
currency instead should rise against the dollar, any gain to the Fund or the
Portfolio would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the dollar of a currency in which
the Fund or the Portfolio anticipates purchasing securities.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation), and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. The Funds and the Portfolio will not purchase an OTC option unless the
Fund or the Portfolio believes that daily valuations for such options are
readily obtainable. OTC options differ from exchange-traded options in that OTC
options are transacted with dealers directly and not through a clearing
corporation (which guarantees performance). Consequently, there is a risk of
non-performance by the dealer. Since no exchange is involved, OTC options are
valued on the basis of the average of the last bid prices obtained from dealers,
unless a
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quotation from only one dealer is available, in which case only that dealer's
price will be used. In the case of OTC options, there can be no assurance that a
liquid secondary market will exist for any particular option at any specific
time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
A Fund or the Portfolio may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written by
the Fund or the Portfolio. The assets used as cover for OTC options written by a
Fund or the Portfolio will be considered illiquid unless the OTC options are
sold to qualified dealers who agree that the Fund or the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by a
formula set forth in the option agreement. The cover for an OTC option written
subject to this procedure would be considered illiquid only to the extent that
the maximum repurchase price under the formula exceeds the intrinsic value of
the option.
A Fund's or the Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. Each Fund
and the Portfolio intends to purchase or write only those exchange-traded
options for which there appears to be a liquid secondary market. However, there
can be no assurance that such a market will exist at any particular time.
Closing transactions can be made for OTC options only by negotiating directly
with the contra party or by a transaction in the secondary market if any such
market exists. Although each Fund and the Portfolio will enter into OTC options
only with contra parties that are expected to be capable of entering into
closing transactions with the Fund or the Portfolio, there is no assurance that
the Fund or the Portfolio will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the extent of insolvency
of the contra party, the Fund or the Portfolio might be unable to close out an
OTC option position at any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund or the Portfolio
writes a call on an index, it receives a premium and agrees that, prior to the
expiration date, the purchaser of the call, upon exercise of the call, will
receive from the Fund or the Portfolio an amount of cash if the closing level of
the index upon which the call is based is greater than the exercise price of the
call. The amount of cash is equal to the difference between the closing price of
the index and the exercise price of the call times a specified multiple (the
"multiplier"), which determines the total dollar value for each point of such
difference. When a Fund or the Portfolio buys a call on an index, it pays a
premium and has the same rights as to such call as are indicated above. When a
Fund or the Portfolio buys a put on an index, it pays a premium and has the
right, prior to the expiration date, to require the seller of the put, upon the
Fund's or the Portfolio's exercise of the put, to deliver to the Fund or the
Portfolio an amount of cash if the closing level of the index upon which the put
is based is less than the exercise price of the put, which amount of cash is
determined by the multiplier, as described above for calls. When a Fund or the
Portfolio writes a put on an index, it receives a premium and the purchaser has
the right, prior to the expiration date, to require the Fund or the Portfolio to
deliver to it an amount of cash equal to the difference between the closing
level of the index and the exercise price times the multiplier, if the closing
level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund or the
Portfolio writes a call on an index it cannot provide in advance for its
potential settlement obligations by acquiring and holding the underlying
securities. A Fund or the Portfolio can offset some of the risk of writing a
call index option position by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, a Fund or the
Portfolio cannot, as a practical matter, acquire and hold a portfolio containing
exactly the same securities as underlie the index and, as a result, bears a risk
that the value of the securities held will vary from the value of the index.
Even if a Fund or the Portfolio could assemble a securities portfolio that
exactly reproduced the composition of the underlying index, it still would not
be fully covered from a risk standpoint because of the "timing risk" inherent in
writing index options. When an index option is exercised, the amount of cash
that the holder is entitled to receive is determined by the difference between
the exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Fund or the Portfolio, as the
call writer, will not know that it has been assigned until the next business day
at the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying
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security, it can satisfy its settlement obligations by simply delivering it, and
the risk that its value may have declined since the exercise date is borne by
the exercising holder. In contrast, even if the writer of an index call holds
securities that exactly match the composition of the underlying index, it will
not be able to satisfy its assignment obligations by delivering those securities
against payment of the exercise price. Instead, it will be required to pay cash
in an amount based on the closing index value on the exercise date; and by the
time it learns that it has been assigned, the index may have declined, with a
corresponding decline in the value of its securities portfolio. This "timing
risk" is an inherent limitation on the ability of index call writers to cover
their risk exposure by holding securities positions.
If a Fund or the Portfolio purchases an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Fund or the Portfolio will be
required to pay the difference between the closing index value and the exercise
price of the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
or the Portfolio may enter into interest rate or currency futures contracts
("Futures" or "Futures Contracts") as a hedge against changes in prevailing
levels of interest rates or currency exchange rates in order to establish more
definitely the effective return on securities or currencies held or intended to
be acquired by the Fund or the Portfolio. The Government Income Fund's, the
Strategic Income Fund's, the Growth & Income Fund's or the Portfolio's hedging
may include sales of Futures as an offset against the effect of expected
increases in interest rates or decreases in currency exchange rates, and
purchases of Futures as an offset against the effect of expected declines in
interest rates or increases in currency exchange rates. The Growth & Income Fund
may also enter into stock index Futures Contracts as a hedge against changes in
stock prices and the Government Income Fund, the Strategic Income Fund and the
Portfolio may enter into Futures Contracts on indices of debt securities.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio only will enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading thereon in the United States
are regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Fund's or the Portfolio's exposure to interest rate and
currency exchange rate fluctuations, a Fund or the Portfolio may be able to
hedge exposure more effectively and at a lower cost through using Futures
Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (debt
security or currency) for a specified price at a designated date, time and
place. An index Futures Contract provides for the delivery, at a designated
date, time and place, of an amount of cash equal to a specified dollar amount
times the difference between the index value at the close of trading on the
contract and the price at which the Futures Contract is originally struck; no
physical delivery of the securities comprising the index is made. Brokerage fees
are incurred when a Futures Contract is bought or sold, and margin deposits must
be maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio realizes a
gain; if it is more, the Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund or the Portfolio realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund or the
Portfolio realizes a gain; if it is less, the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio realizes a
loss. The transaction costs also must be included in these calculations. There
can be no assurance, however, that a Fund or the Portfolio will be able to enter
into an offsetting transaction with respect to a particular Futures Contract at
a particular time. If a Fund or the Portfolio is not able to enter into an
offsetting transaction, the Fund or the Portfolio will continue to be required
to maintain the margin deposits on the Futures Contract.
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As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund or the
Portfolio.
The Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's and the Portfolio's Futures transactions will be entered into for hedging
purposes only; that is, Futures Contracts will be sold to protect against a
decline in the price of securities or currencies that the Fund or the Portfolio
owns, or Futures Contracts will be purchased to protect the Fund or the
Portfolio against an increase in the price of securities or currencies it has
committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Government Income Fund, the Strategic Income Fund, the Growth &
Income Fund or the Portfolio in order to initiate Futures trading and to
maintain the Fund's or the Portfolio's open positions in Futures Contracts. A
margin deposit made when the Futures Contract is entered into ("initial margin")
is intended to assure a Fund's or the Portfolio's performance under the Futures
Contract. The margin required for a particular Futures Contract is set by the
exchange on which the Futures Contract is traded, and may be modified
significantly from time to time by the exchange during the term of the Futures
Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund or the Portfolio entered into the
Futures Contract will be made on a daily basis as the price of the underlying
security, currency or index fluctuates making the Futures Contract more or less
valuable, a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest and currency rates, which in turn are affected by fiscal and
monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Fund's or the
Portfolio's portfolio being hedged. The degree of imperfection of correlation
depends upon circumstances such as: variations in speculative market demand for
Futures and for securities or currencies, including technical influences in
Futures trading; and differences between the financial instruments being hedged
and the instruments underlying the standard Futures Contracts available for
trading. A decision of whether, when, and how to hedge involves skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and option on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund or the Portfolio were unable to liquidate a Futures or option on
Futures position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The Fund or the
Portfolio would continue to be subject to market risk with respect to the
position. In addition, except in the case of purchased options, the
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Fund or the Portfolio would continue to be required to make daily variation
margin payments and might be required to maintain the position being hedged by
the Future or option or to maintain cash or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, 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 is exercised on the
last trading day 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 level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund or the Portfolio writes an option on a Futures Contract, it will be
required to deposit initial and variation margin pursuant to requirements
similar to those applicable to Futures Contracts. Premiums received from the
writing of an option on a Futures Contract are included in the initial margin
deposit.
A Fund or the Portfolio may seek to close out an option position by selling an
option covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund or the Portfolio enters into Futures Contracts,
options on Futures Contracts and options on foreign currencies traded on a
CFTC-regulated exchange, in each case other than for BONA FIDE hedging purposes
(as defined by the CFTC), the aggregate initial margin and premiums required to
establish those positions (excluding the amount by which options are
"in-the-money") will not exceed 5% of the liquidation value of a Fund's or the
Portfolio's portfolio, after taking into account unrealized profits and
unrealized losses on any contracts the Fund or the Portfolio has entered into.
In general, a call option on a Futures Contract is "in-the-money" if the value
of the underlying Futures Contract exceeds the strike, I.E., exercise, price of
the call; a put option on a Futures Contract is "in-the-money" if the value of
the underlying Futures Contract is exceeded by the strike price of the put. This
guideline may be modified by the Trust's or the Portfolio's Board of Trustees,
as applicable, without a shareholder vote. This limitation does not limit the
percentage of a Fund's or the Portfolio's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, generally arranged with a commercial bank
or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. The
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio either may accept or make delivery of the
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currency at the maturity of the Forward Contract. A Fund or the Portfolio may
also, if its contra party agrees, prior to maturity, enter into a closing
transaction involving the purchase or sale of an offsetting contract.
A Fund or the Portfolio engages in forward currency transactions in anticipation
of, or to protect itself against, fluctuations in exchange rates. A Fund or the
Portfolio might sell a particular foreign currency forward, for example, when it
holds bonds denominated in a foreign currency but anticipates, and seeks to be
protected against, a decline in the currency against the U.S. dollar. Similarly,
a Fund or the Portfolio might sell the U.S. dollar forward when it holds bonds
denominated in U.S. dollars but anticipates, and seeks to be protected against,
a decline in the U.S. dollar relative to other currencies. Further, the Funds or
the Portfolio might purchase a currency forward to "lock in" the price of
securities denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund or the Portfolio will enter into such Forward Contracts
with major U.S. or foreign banks and securities or currency dealers in
accordance with guidelines approved by the Trust's or the Portfolio's Board of
Trustees, as applicable.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
or the Portfolio may enter into Forward Contracts either with respect to
specific transactions or with respect to the overall investment of the Fund or
the Portfolio. The precise matching of the Forward Contract amounts and the
value of specific securities generally will not be possible because the future
value of such securities in foreign currencies will change as a consequence of
market movements in the value of those securities between the date the Forward
Contract is entered into and the date it matures. Accordingly, it may be
necessary for the Fund or the Portfolio to purchase additional foreign currency
on the spot (I.E., cash) market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency the
Fund or the Portfolio is obligated to deliver and if a decision is made to sell
the security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency the Fund or
the Portfolio is obligated to deliver. The projection of short-term currency
market movements is extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be predicted accurately,
causing the Fund or the Portfolio to sustain losses on these contracts and
transaction costs.
At or before the maturity of a Forward Contract requiring the Fund or the
Portfolio to sell a currency, the Fund or the Portfolio either may sell a
portfolio security and use the sale proceeds to make delivery of the currency or
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to which the Fund or the
Portfolio will obtain, on the same maturity date, the same amount of the
currency that it is obligated to deliver. Similarly, the Fund or the Portfolio
may close out a Forward Contract requiring it to purchase a specified currency
by entering into a second contract, if its contra party agrees, entitling it to
sell the same amount of the same currency on the maturity date of the first
contract. The Fund or the Portfolio would realize a gain or loss as a result of
entering into such an offsetting Forward Contract under either circumstance to
the extent the exchange rate or rates between the currencies involved moved
between the execution dates of the first contract and the offsetting contract.
The cost to a Fund or the Portfolio of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because Forward Contracts usually are
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities the Fund or the Portfolio owns or intends to acquire, but
it does establish a rate of exchange in advance. In addition, while Forward
Contracts limit the risk of loss due to a decline in the value of the hedged
currencies, they also limit any potential gain that might result should the
value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund or the Portfolio may use options on foreign currencies, Futures on
foreign currencies, options on Futures on foreign currencies and Forward
Contracts to hedge against movements in the values of the foreign currencies in
which the Fund's or the Portfolio's securities are denominated. Such currency
hedges can protect against price movements in a security that a Fund or the
Portfolio owns or intends to acquire that are attributable to changes in the
value of the currency in which it is denominated. Such hedges do not, however,
protect against price movements in the securities that are attributable to other
causes.
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A Fund or the Portfolio might seek to hedge against changes in the value of a
particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Fund or the Portfolio may hedge
against price movements in that currency by entering into a contract on another
currency or basket of currencies, the values of which the Sub-adviser believes
will have a positive correlation to the value of the currency being hedged. The
risk that movements in the price of the contract will not correlate perfectly
with movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund or the Portfolio could be disadvantaged by dealing in the odd
lot market (generally consisting of transactions of less than $1 million) for
the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Fund or the Portfolio might be required to accept
or make delivery of the underlying foreign currency in accordance with any U.S.
or foreign regulations regarding the maintenance of foreign banking arrangements
by U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options purchased by a Fund or the Portfolio) expose the Fund or the Portfolio
to an obligation to another party. A Fund or the Portfolio will not enter into
any such transactions unless it owns either (1) an offsetting ("covered")
position in securities, currencies, or other options, Forward Contracts or
Futures Contracts, or (2) cash, receivables and short-term debt securities with
a value sufficient at all times to cover its potential obligations not covered
as provided in (1) above. Each Fund and the Portfolio will comply with SEC
guidelines regarding cover for these instruments and, if the guidelines so
require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Fund's or the Portfolio's assets are used for cover or segregated accounts,
it could affect portfolio management or the Fund's or the Portfolio's ability to
meet redemption requests or other current obligations.
INTEREST RATE AND CURRENCY SWAPS
The Strategic Income Fund and the Portfolio usually will enter into interest
rate swaps on a net basis, that is, the two payment streams are netted out in a
cash settlement on the payment date or dates specified in the instrument, with
the Strategic Income Fund or the Portfolio receiving or paying, as the case may
be, only the net amount of the two payments. The net amount of the excess, if
any, of each of the Strategic Income Fund's and the Portfolio's obligations over
its entitlements with respect to each swap will be accrued on a daily basis and
an amount of cash or liquid securities having an aggregate net asset value at
least equal to the accrued excess will be maintained in an account by a
custodian that satisfies the requirements of the 1940 Act. The Strategic Income
Fund and the Portfolio will also establish and maintain such segregated accounts
with respect to its total obligations under any swaps that are not entered into
on a net basis and with respect to any caps or floors that are written by that
Fund or the Portfolio. The Sub-adviser, the Strategic Income Fund and the
Portfolio believe that swaps, caps and floors do not constitute senior
securities under the 1940 Act and, accordingly, will not treat them as being
subject to the Fund's and the Portfolio's borrowing restrictions. The Strategic
Income Fund and the Portfolio will not enter into any swap, cap, floor, collar
or other derivative transaction unless, at the time of entering into the
transaction, the unsecured long-term debt rating of the counterparty combined
with any credit enhancements is rated at least A by Moody's or S&P, or has an
equivalent rating from a nationally recognized statistical
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AIM GLOBAL GROWTH & INCOME FUND
rating organization or is determined to be of equivalent credit quality by the
Sub-adviser. If a counterparty defaults, the Strategic Income Fund or the
Portfolio may have contractual remedies pursuant to the agreements related to
the transactions. The swap market has grown substantially in recent years, with
a large number of banks and investment banking firms acting both as principals
and as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Caps, floors and collars are more recent
innovations for which standardized documentation has not yet been fully
developed and, for that reason, they are less liquid than swaps.
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RISK FACTORS
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ILLIQUID SECURITIES
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio each may invest up to 15% of net assets in illiquid
securities. Securities may be considered illiquid if a Fund or the Portfolio
cannot reasonably expect within seven days to receive approximately the amount
at which the Fund or the Portfolio values such securities. The sale of illiquid
securities, if they can be sold at all, generally will require more time and
result in higher brokerage charges or dealer discounts and other selling
expenses than will the sale of liquid securities, such as securities eligible
for trading on U.S. securities exchanges or in the over-the-counter markets.
Moreover, restricted securities, which may be illiquid for purposes of this
limitation often sell, if at all, at a price lower than similar securities that
are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, each Fund and the Portfolio may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time a Fund or the Portfolio
may be permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, a Fund or
the Portfolio might obtain a less favorable price than prevailed when it decided
to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund or the Portfolio, however, could affect adversely the marketability of
such portfolio securities and a Fund or the Portfolio might be unable to dispose
of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Trust's or the
Portfolio's Board of Trustees has the ultimate responsibility for determining
whether specific securities, including restricted securities eligible for resale
to qualified institutional buyers pursuant to Rule 144A under the 1933 Act, are
liquid or illiquid. The Board has delegated the
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function of making day-to-day determinations of liquidity to the Sub-adviser in
accordance with procedures approved by the Board. The Sub-adviser takes into
account a number of factors in reaching liquidity decisions, including: (i) the
frequency of trading in the security; (ii) the number of dealers that make
quotes for the security; (iii) the number of dealers that have undertaken to
make a market in the security; (iv) the number of other potential purchasers;
and (v) the nature of the security and how trading is effected (e.g., the time
needed to sell the security, how offers are solicited and the mechanics of
transfer). The Sub-adviser will monitor the liquidity of securities held by each
Fund and the Portfolio and report periodically on such decisions to the Trust's
or the Portfolio's Board of Trustees. Moreover, as noted in the Prospectus,
certain securities, such as those subject to registration restrictions of more
than seven days, will generally be treated as illiquid. If the liquidity
percentage restriction of a Fund or the Portfolio is satisfied at the time of
investment, a later increase in the percentage of illiquid securities held by a
Fund or the Portfolio resulting from a change in market value or assets will not
constitute a violation of that restriction. If as a result of a change in market
value or assets, the percentage of illiquid securities held by the Fund or
Portfolio increases above the applicable limit, the Sub-adviser will take
appropriate steps to bring the aggregate amount of illiquid assets back within
the prescribed limitations as soon as reasonably practicable, taking into
account the effect of any disposition on the Fund or the Portfolio.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, either a Fund or the Portfolio could lose its
entire investment in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Fund or the Portfolio may invest may have groups that advocate radical religious
or revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for widespread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of a Fund's or the Portfolio's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which a Fund or the
Portfolio invests and adversely affect the value of the Fund's or the
Portfolio's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Government Income Fund,
the Strategic Income Fund, the Growth & Income Fund or the Portfolio. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the cost and expenses of a Fund or the Portfolio.
For example, certain countries require prior governmental approval before
investments by foreign persons may be made, or may limit the amount of
investment by foreign persons in a particular company, or limit the investment
by foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
for the repatriation of investment income, capital or the proceeds of securities
sales by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
restrictions on foreign capital remittances abroad. The Government Income Fund,
the Strategic Income Fund, the Growth & Income Fund or the Portfolio could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the foreign securities held by the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund or
the Portfolio will not be registered with the SEC or regulators of any foreign
country, nor will the issuers thereof be subject to the SEC's reporting
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AIM GLOBAL GROWTH & INCOME FUND
requirements. Thus, there will be less available information concerning most
foreign issuers of securities held by the Government Income Fund, the Strategic
Income Fund, the Growth & Income Fund and the Portfolio than is available
concerning U.S. issuers. In instances where the financial statements of an
issuer are not deemed to reflect accurately the financial situation of the
issuer, the Sub-adviser will take appropriate steps to evaluate the proposed
investment, which may include on-site inspection of the issuer, interviews with
its management and consultations with accountants, bankers and other
specialists. There is substantially less publicly available information about
foreign companies than there are reports and ratings published about U.S.
companies and the U.S. Government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because the Funds and the Portfolio, under normal
circumstances, will invest substantial portions of their total assets in the
securities of foreign issuers which are denominated in foreign currencies, the
strength or weakness of the U.S. dollar against such foreign currencies will
account for part of each Fund's and the Portfolio's investment performance. A
decline in the value of any particular currency against the U.S. dollar will
cause a decline in the U.S. dollar value of each Fund's and the Portfolio's
holdings of securities and cash denominated in such currency and, therefore,
will cause an overall decline in their respective net asset values and any net
investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Funds. Moreover, if the value
of the foreign currencies in which a Fund or the Portfolio receives its income
declines relative to the U.S. dollar between the receipt of the income and the
making of Fund distributions, the Fund or the Portfolio may be required to
liquidate securities in order to make distributions if the Fund or the Portfolio
has insufficient cash in U.S. dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and the pace of business activity in the other countries, and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Funds and the Portfolio value their assets daily in terms of U.S.
dollars, they do not intend to convert holdings of foreign currencies into U.S.
dollars on a daily basis. The Funds and the Portfolio will do so from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference ("spread") between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to sell
a foreign currency to a Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the U.S., and
foreign securities transactions usually are subject to fixed commissions, which
generally are higher than negotiated commissions on U.S. transactions. In
addition, foreign securities transactions may be subject to difficulties
associated with the settlement of such transactions. Delays in settlement could
result in temporary periods when assets of a Fund or the Portfolio are
uninvested and no return is earned thereon. The inability of a Fund or the
Portfolio to make intended security purchases due to settlement problems could
cause it to miss attractive opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to a Fund or
the Portfolio due to subsequent declines in value of the portfolio security or,
if the Fund or the Portfolio has entered into a contract to sell the security,
could result in possible liability to the purchaser. The Sub-adviser will
consider such difficulties when determining the allocation of each Fund's or the
Portfolio's assets, although the Sub-adviser does not believe that such
difficulties will have a material adverse effect on the Funds' or the
Portfolio's portfolio trading activities.
The Funds and the Portfolio may use foreign custodians, which may involve risks
in addition to those related to the use of U.S. custodians. Such risks include
uncertainties relating to: (i) determining and monitoring the financial
strength, reputation and standing of the foreign custodian; (ii) maintaining
appropriate safeguards to protect the Funds' and the Portfolio's investments and
(iii) possible difficulties in obtaining and enforcing judgments against such
custodians.
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AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
WITHHOLDING TAXES. Each Fund's and the Portfolio's net investment income
from foreign issuers may be subject to withholding taxes by the foreign issuer's
country, thereby reducing the Fund's and the Portfolio's income or delaying the
receipt of income where those taxes may be recaptured. See "Taxes."
CONCENTRATION. To the extent a Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, such Portfolio may be subject to greater risks and may experience greater
volatility than a fund that is more broadly diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. The countries
that are members of the European Economic Community ("Common Market") (Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain, and the United Kingdom) eliminated certain import tariffs and
quotas and other trade barriers with respect to one another over the past
several years. The Sub-adviser believes that this deregulation should improve
the prospects for economic growth in many Western European countries. Among
other things, the deregulation could enable companies domiciled in one country
to avail themselves of lower labor costs existing in other countries. In
addition, this deregulation could benefit companies domiciled in one country by
opening additional markets for their goods and services in other countries.
Since, however, it is not clear what the exact form or effect of these Common
Market reforms will be on business in Western Europe, it is impossible to
predict the long-term impact of the implementation of these programs on the
securities owned by a Fund.
SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
United States securities markets, and should be considered highly speculative.
Such risks include: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends, and on a fund's ability to exchange local currencies for U.S.
dollars; (7) political instability and social unrest and violence; (8) the risk
that the governments of Russia and Eastern European countries may decide not to
continue to support the economic reform programs implemented recently and could
follow radically different political and/or economic policies to the detriment
of investors, including non-market-oriented policies such as the support of
certain industries at the expense of other sectors or investors, or a return to
the centrally planned economy that existed when such countries had a communist
form of government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING JAPAN. Japan's economic growth has declined
significantly since 1990. The general government position has deteriorated as a
result of weakening economic growth and stimulative measures taken to support
economic activity and to restore financial stability. Although the decline in
interest rates and fiscal stimulation packages have helped to contain
recessionary forces, uncertainties remain. Japan is also heavily dependent upon
international trade, so its economy is especially sensitive to trade barriers
and disputes. Japan has had difficult relations with its trading partners,
particularly the United States, where the trade imbalance is the greatest. It is
possible that trade sanctions and other protectionist measures could impact
Japan adversely in both the short and the long term.
The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially in the U.S. In general, however, reported net income in Japan is
understated relative to U.S. accounting standards and this is one reason why
price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the U.S., both of
which factors tend to result in lower discount rates and higher price-earnings
ratios in Japan than in the U.S.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are not always equally
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enforced. In addition, Japan's banking industry is undergoing problems related
to bad loans and declining values in real estate.
SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies of Pacific
region countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made periodically in certain of such
currencies. Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea. In
addition, the Funds may invest in Hong Kong, which reverted to Chinese
Administration on July 1, 1997. Investments in Hong Kong may be subject to
expropriation, national, nationalization or confiscation, in which case a Fund
could lose its entire investment in Hong Kong. In addition, the reversion of
Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a
risk of possible loss of investor confidence in Hong Kong's currency, stock
market and assets.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. The Strategic Income
Fund, the Growth & Income Fund and the Portfolio may invest in debt securities
in emerging markets. Investing in securities in emerging countries may entail
greater risks than investing in debt securities in developed countries.
Similarly, for Growth & Income Fund, investing in the equity securities of
companies in emerging markets entails additional risks. These risks affecting
debt and equity investments in emerging markets include (i) less social,
political and economic stability; (ii) the small current size of the markets for
such securities and the currently low or nonexistent volume of trading, which
result in a lack of liquidity and in greater price volatility; (iii) certain
national policies which may restrict the Funds' and the Portfolio's investment
opportunities, including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) foreign taxation; and (v) the
absence of developed structures governing private or foreign investment or
allowing for judicial redress for injury to private property.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.
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AIM GLOBAL GROWTH & INCOME FUND
INVESTMENT LIMITATIONS
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Each Fund and the Portfolio has adopted the following investment limitations as
fundamental policies which may not be changed without approval by a majority of
the outstanding shares of the Fund or Portfolio, as applicable. Whenever the
High Income Fund is requested to vote on a change in the investment limitations
of the Portfolio, the Fund will hold a meeting of its shareholders and will cast
its votes as instructed by its shareholders.
GOVERNMENT INCOME FUND
The Government Income Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-based
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies of the Government Income Fund are not
fundamental policies and may be changed by vote of the Trust's Board of Trustees
without shareholder approval. The Fund may not:
(1) Borrow money to purchase securities or borrow money except for
temporary or emergency purposes. While borrowings exceed 5% of the Fund's
total assets, the Fund will not make any additional investments;
(2) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
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AIM GLOBAL GROWTH & INCOME FUND
(3) Purchase securities on margin, provided that the Fund may obtain
short-term credits as may be necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments;
(4) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts;
(5) Purchase securities for which there is no readily available market,
or enter into repurchase agreements or purchase time deposits maturing in
more than seven days, or purchase OTC options or hold assets set aside to
cover OTC options written by the Fund, if immediately after and as a result,
the value of such securities would exceed, in the aggregate, 15% of the
Fund's net assets; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
STRATEGIC INCOME FUND
The Strategic Income Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-based
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
Statement of Additional Information Page 25
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The following investment policies of the Strategic Income Fund are not
fundamental policies and may be changed by vote of the Trust's Board of Trustees
without shareholder approval. The Fund may not:
(1) Invest more than 15% of its total assets in illiquid securities;
(2) Borrow money to purchase securities and will not invest in
securities of an issuer if the investment would cause the Fund to own more
than 10% of any class of securities of any one issuer (provided, however,
that the Fund may invest all of its investable assets in an open-end
management investment company with substantially the same investment
objectives, policies, and limitations as the Fund.);
(3) Invest more than 10% of its total assets in shares of other
investment companies and invest more than 5% of its total assets in any one
investment company or acquire more than 3% of the outstanding voting
securities of any one investment company (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives, policies, and
limitations as the Fund);
(4) Purchase securities on margin, provided that the Fund may obtain
short-term credits as may be necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments;
(5) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts;
or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
HIGH INCOME FUND AND THE PORTFOLIO
The High Income Fund and the Portfolio each may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-based
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(5) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan; or
(6) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes.
Statement of Additional Information Page 26
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
For purposes of the Fund's and the Portfolio's concentration policy contained in
limitation (1) above, they intend to comply with the SEC staff positions that
securities issued or guaranteed as to principal and interest by any single
foreign government or any supranational organizations in the aggregate are
considered to be securities of issuers in the same industry.
The following investment policies of the High Income Fund and the Portfolio are
not fundamental policies and may be changed by vote of the Trust's Board of
Trustees or the Portfolio's Board of Trustees without shareholder approval. The
Fund and the Portfolio each may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund or the Portfolio to own more than 10% of any class of securities of any
one issuer (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(2) Invest in companies for the purpose of exercising control or
management (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(3) Enter into a futures contract, an option on a futures contract or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for BONA FIDE hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's or the Portfolio's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund or the Portfolio has entered into;
(4) Invest more than 10% of its total assets in shares of other
investment companies and invest more than 5% of its total assets in any one
investment company or acquire more than 3% of the outstanding voting
securities of any one investment company (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives as the Fund);
(5) Purchase securities on margin, provided that the Fund may obtain
short-term credits as may be necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
GROWTH & INCOME FUND
Growth & Income Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-based
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
Statement of Additional Information Page 27
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 3/4% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial operations and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Growth & Income Fund are not fundamental
policies and may be changed by vote of the Trust without shareholder approval.
The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(3) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(4) Borrow money except for temporary or emergency purposes (other than
to meet redemptions). While borrowings exceed 5% of the Fund's total assets,
the Fund will not make any additional investments;
(5) Purchase securities on margin, provided that the Fund may obtain
short-term credits as may be necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments;
(6) Purchase securities for which there is no readily available market,
or enter into repurchase agreements or purchase time deposits maturing in
more than seven days, or purchase OTC options or hold assets set aside to
cover OTC options written by the Fund, if immediately after and as a result,
the value of such securities would exceed, in the aggregate, 15% of the
Fund's net assets; or
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to each Fund's Prospectus for further information about
each Fund's respective investment objectives, which may not be changed without
the approval of shareholders and the Portfolio's investment objectives, which
may be changed without the approval of investors in the Portfolio, and other
investment policies and techniques, which may be changed without shareholder
approval.
Statement of Additional Information Page 28
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Trust's and the Portfolio's Board of
Trustees, the Sub-adviser is responsible for the execution of the Government
Income Fund's, the Strategic Income Fund's, the Growth & Income Fund's and the
Portfolio's portfolio transactions and the selection of broker/dealers that
execute such transactions on behalf of these Funds and the Portfolio. In
executing transactions, the Sub-adviser seeks the best net results for the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although the
Sub-adviser generally seeks reasonably competitive commission rates and spreads,
payment of the lowest commission or spread is not necessarily consistent with
the best net results. While the Funds and the Portfolio may engage in soft
dollar arrangements for research services, as described below, neither the Funds
nor the Portfolio has any obligation to deal with any broker/dealer or group of
broker/dealers in the execution of portfolio transactions.
Debt securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
government securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions.
Consistent with the interests of the Funds and the Portfolio, the Sub-adviser
may select brokers to execute the Funds' and the Portfolio's portfolio
transactions on the basis of the research and brokerage services they provide to
the Sub-adviser for its use in managing the Funds and the Portfolio and its
other advisory accounts. Such services may include furnishing analyses, reports
and information concerning issuers, industries, securities, geographic regions,
economic factors and trends, portfolio strategy, and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Research and brokerage services
received from such brokers are in addition to, and not in lieu of, the services
required to be performed by the Sub-adviser under investment management and
administration contracts. A commission paid to such brokers may be higher than
that which another qualified broker would have charged for effecting the same
transaction, provided that the Sub-adviser determines in good faith that such
commission is reasonable in terms either of that particular transaction or the
overall responsibility of the Sub-adviser to the Funds and the Portfolio and its
other clients and that the total commissions paid by the Funds and the Portfolio
will be reasonable in relation to the benefits received by the Funds and the
Portfolio over the long term. Research services may also be received from
dealers who execute Fund transactions in OTC markets.
The Sub-adviser may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Funds or the Portfolio toward payment of the Funds'
or the Portfolio's expenses, such as transfer agent and custodian fees.
Investment decisions for each Fund and the Portfolio and for other investment
accounts managed by the Sub-adviser are made independently of each other in
light of differing conditions. However, the same investment decision
occasionally may be made for two or more of such accounts, including one or both
Funds and the Portfolio. In such cases, simultaneous transactions may occur.
Purchases or sales are then allocated as to price or amount in a manner deemed
fair and equitable to all accounts involved. While in some cases this practice
could have a detrimental effect upon the price or value of the security as far
as the Funds and the Portfolio are concerned, in other cases the Sub-adviser
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Funds and the Portfolio.
Under a policy adopted by the Trust's and the Portfolio's Board of Trustees, and
subject to the policy of obtaining the best net results, the Sub-adviser may
consider a broker/dealer's sale of the shares of the Funds and the other funds
for which AIM or the Sub-adviser serves as investment manager in selecting
brokers and dealers for the execution of portfolio
Statement of Additional Information Page 29
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Funds and such
other funds.
Each Fund and the Portfolio contemplates purchasing most foreign equity
securities in over-the-counter markets or stock exchanges located in the
countries in which the respective principal offices of the issuers of the
various securities are located, if that is the best available market. The fixed
commissions paid in connection with most such foreign stock transactions
generally are higher than negotiated commissions on United States transactions.
There generally is less government supervision and regulation of foreign stock
exchanges and brokers than in the United States. Foreign security settlements
may in some instances be subject to delays and related administrative
uncertainties.
Foreign equity securities may be held by a Fund and the Portfolio in the form of
American Depository Receipts ("ADRs"), American Depository Shares ("ADSs"),
Continental Depository Receipts ("CDRs") or European Depository Receipts
("EDRs") or securities convertible into foreign equity securities. ADRs, ADSs,
CDRs and EDRs may be listed on stock exchanges, or traded in the OTC markets in
the United States or Europe, as the case may be. ADRs, like other securities
traded in the United States, will be subject to negotiated commission rates. The
foreign and domestic debt securities and money market instruments in which the
Funds and the Portfolio may invest generally are traded in the OTC markets.
The Funds and the Portfolio contemplate that, consistent with the policy of
obtaining the best net results, brokerage transactions may be conducted through
certain companies that are affiliates of AIM and the Sub-adviser. The Company's
Board of Trustees has adopted procedures in conformity with Rule 17e-1 under the
1940 Act to ensure that all brokerage commissions paid to such affiliates are
reasonable and fair in the context of the market in which they are operating.
Any such transactions will be effected and related compensation paid only in
accordance with applicable SEC regulations. For the fiscal years ended October
31, 1997, 1996 and 1995, the Portfolio paid aggregate brokerage commissions of
$0, $86,600 and $0, respectively. For the fiscal years ended October 31, 1997,
1996 and 1995, the Government Income Fund paid aggregate brokerage commissions
of $4,987, $24,663 and $0, respectively. For the fiscal years ended October 31,
1997, 1996 and 1995, the Strategic Income Fund paid aggregate brokerage
commissions of $6,177, $85,404 and $0, respectively. For the fiscal years ended
October 31, 1997, 1996, and 1995, the Growth & Income Fund paid aggregate
brokerage commissions of $463,307, $257,953 and $318,958, respectively. For the
fiscal years ended October 31, 1996 and 1997, the Growth & Income Fund paid to
LGT Bank in Liechtenstein, AG, which was an "affiliated" broker, aggregate
brokerage commissions of $16,898 and $12,262, respectively, for transactions
involving purchases and sales of portfolio securities which represented 6.55%
and 2.65%, respectively, of the total brokerage commissions paid by the Fund and
5.69% and 2.94%, respectively, of the aggregate dollar amount of transactions
involving payment of commissions by the Fund.
PORTFOLIO TRADING AND TURNOVER
Each Fund and the Portfolio engages in portfolio trading when the Sub-adviser
concludes that the sale of a security owned by a Fund and the Portfolio and/or
the purchase of another security of better value can enhance principal and/or
increase income. A security may be sold to avoid any prospective decline in
market value, or a security may be purchased in anticipation of a market rise.
Consistent with each Fund's and the Portfolio's investment objectives, a
security also may be sold and a comparable security purchased coincidentally in
order to take advantage of what is believed to be a disparity in the normal
yield and price relationship between the two securities. Although the Funds and
the Portfolio generally do not intend to trade for short-term profits, the
securities in each Fund's and the Portfolio's portfolio will be sold whenever
the Sub-adviser believes it is appropriate to do so, without regard to the
length of time a particular security may have been held. Portfolio turnover is
calculated by dividing the lesser of sales or purchases of portfolio securities
by each Fund's or the Portfolio's average month-end portfolio value, excluding
short-term investments. Higher portfolio turnover involves correspondingly
greater brokerage commissions and other transaction costs that a Fund or the
Portfolio will bear directly, and could result in the realization of net capital
gains that would be taxable when distributed to shareholders. The portfolio
turnover rates for the Government Income Fund, Strategic Income Fund, Growth &
Income Fund and the Portfolio the last two fiscal years were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCT. 31, 1997 OCT. 31, 1996
--------------- ---------------
<S> <C> <C>
Government Income Fund...................................................................... 241% 268%
Strategic Income Fund....................................................................... 149% 177%
High Income Portfolio....................................................................... 214% 290%
Growth & Income Fund........................................................................ 50% 39%
</TABLE>
Statement of Additional Information Page 30
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
TRUSTEES AND
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Trust's and the Portfolio's Trustees and Executive Officers are listed
below. Unless otherwise indicated, the address of each Executive Officer is 11
Greenway Plaza, Suite 100, Houston, Texas 77046.
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 40 President, GT Global, Inc. since 1995; Director, GT Global since 1991; Senior
Trustee, Chairman of the Board and President Vice President and Director of Sales and Marketing, GT Global from May 1992 to
50 California Street April 1995; Vice President and Director of Marketing, GT Global from 1987 to
San Francisco, CA 94111 1992; Director, Liechtenstein Global Trust AG (holding company of the various
international GT companies) Advisory Board from January 1996 to May 1998;
Director, G.T. Global Insurance Agency ("G.T. Insurance") since 1996; President
and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
and Director, Sales and Marketing, G.T. Insurance from April 1995 to November
1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992 to 1993;
and Trustee, each of the other investment companies registered under the 1940
Act that is sub-advised or sub-administered by the Sub-adviser.
C. Derek Anderson, 57 President, Plantagenet Capital Management, LLC (an investment partnership);
Trustee Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director,
Suite 400 PremiumWear, Inc. (formerly Munsingwear, Inc.) (a casual apparel company);
San Francisco, CA 94104 Director, "R" Homes, Inc. and various other companies; and Trustee, each of the
other investment companies registered under the 1940 Act that is sub-advised or
sub-administered by the Sub-adviser.
Frank S. Bayley, 58 Partner, law firm of Baker & McKenzie; Director and Chairman, C.D. Stimson
Trustee Company (a private investment company); and Trustee, each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is sub-advised or sub-
Suite 2400 administered by the Sub-adviser.
San Francisco, CA 94111
Arthur C. Patterson, 54 Managing Partner, Accel Partners (a venture capital firm); Director, Viasoft and
Trustee PageMart, Inc. (both public software companies) and several other privately held
428 University Avenue software and communications companies; and Trustee, each of the other investment
Palo Alto, CA 94301 companies registered under the 1940 Act that is sub-advised or sub-administered
by the Sub-adviser.
Ruth H. Quigley, 63 Private investor; President, Quigley Friedlander & Co., Inc. (a financial
Trustee advisory services firm) from 1984 to 1986; and Trustee, each of the other
1055 California Street investment companies registered under the 1940 Act that is sub-advised or sub-
San Francisco, CA 94108 administered by the Sub-adviser.
</TABLE>
- --------------
* Mr. Guilfoyle is an "interested person" of the Trust as defined by the 1940
Act due to his affiliation with the Sub-adviser.
Statement of Additional Information Page 31
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
John J. Arthur+, 53 Director, Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice
Vice President President and Treasurer, A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company.
Kenneth W. Chancey, 53 Senior Vice President -- Mutual Fund Accounting, the Sub-adviser since 1997;
Vice President and Principal Accounting Vice President -- Mutual Fund Accounting, the Sub-adviser from 1992 to 1997.
Officer
50 California Street
San Francisco, CA 94111
Melville B. Cox, 54 Vice President and Chief Compliance Officer, A I M Advisors, Inc., A I M Capital
Vice President Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund
Management Company.
Gary T. Crum, 50 Director and President, A I M Capital Management, Inc.; Director and Senior Vice
Vice President President, A I M Management Group Inc. and A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP PLC.
Robert H Graham, 51 Director, President and Chief Executive Officer, A I M Management Group Inc.;
Vice President Director and President, A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company; and Director, AMVESCAP PLC.
Helge K. Lee, 52 Chief Legal and Compliance Officer -- North America, the Sub-adviser since
Vice President and Secretary October 1997; Secretary and Chief Legal and Compliance Officer, INVESCO (NY)
50 California Street Asset Management, Inc., INVESCO (NY), Inc., GT Global Investor Services, Inc.
San Francisco, CA 94111 and G.T. Insurance since August 1997; Secretary and Chief Legal and Compliance
Officer, GT Global from August 1997 to April 1998; Executive Vice President of
the Asset Management Division of Liechtenstein Global Trust AG, from October
1996 to May 1998; Senior Vice President, General Counsel and Secretary of
INVESCO (NY) Asset Management, Inc., INVESCO (NY), Inc., GT Global, GT Global
Investor Services, Inc. and G.T. Insurance from May 1994 to October 1996; and
Senior Vice President, General Counsel and Secretary of Strong/Corneliuson
Management, Inc. and Secretary of each of the Strong Funds from October 1991 to
May 1994.
Carol F. Relihan+, 43 Director, Senior Vice President, General Counsel and Secretary, A I M Advisors,
Vice President Inc.; Vice President, General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel, Fund Management Company;
Vice President and General Counsel, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and A I M Distributors, Inc.
Dana R. Sutton, 39 Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice
Vice President and Assistant President and Assistant Treasurer, Fund Management Company.
Treasurer
</TABLE>
- ------------------
+ Mr. Arthur and Ms. Relihan are married to each other.
Statement of Additional Information Page 32
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The Board of Trustees has a Nominating and Audit Committee, composed of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and its
funds and recommending firms to serve as independent auditors of the Trust. Each
of the Trustees and Officers of the Trust is also a Trustee and Officer of AIM
Investment Portfolios, AIM Floating Rate Fund, AIM Series Trust, AIM Growth
Series, AIM Eastern Europe Fund, GT Global Variable Investment Trust, GT Global
Variable Investment Series, Global Investment Portfolio, Floating Rate Portfolio
and Growth Portfolio, which also are registered investment companies advised by
AIM and sub-advised by the Sub-adviser. All of the Trust's Trustees also serve
as directors or trustees of some or all of the other investment companies
managed, administered or advised by AIM. All of the Trust's executive officers
hold similar offices with some or all of the other investment companies managed,
administered or advised by AIM. Each Trustee who is not a trustee, officer or
employee of the Sub-adviser or any affiliated company is paid aggregate fees of
$5,000 a year, plus $300 per Fund for each meeting of the Board attended, and
reimbursed travel and other expenses incurred in connection with attendance at
such meetings. Other Trustees and Officers receive no compensation or expense
reimbursement from the Trust. For the fiscal year ended October 31, 1997, Mr.
Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not trustees,
officers, or employees of the Sub-adviser or any affiliated company, received
total compensation of $38,650, $38,650, $27,850 and $38,650, respectively, from
the Trust for their services as Trustees. For the fiscal year ended October 31,
1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not
trustees, officers or employees of the Sub-adviser or any other affiliated
company, received total compensation of $117,304, $114,386, $88,350 and
$111,688, respectively, from the investment companies managed or administered by
AIM and sub-advised or sub-advised by the Sub-adviser for which he or she serves
as a Trustee. Fees and expenses disbursed to the Trustees contained no accrued
or payable pension or retirement benefits. As of June 26, 1998, the Officers and
Trustees and their families as a group owned in the aggregate beneficially or of
record less than 1% of the outstanding shares of the Funds or of all the Trust's
series in the aggregate.
- --------------------------------------------------------------------------------
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
To the best knowledge of the Trust, the names and addresses of the holders of 5%
or more of the outstanding shares of any class of each Fund's equity securities
as of June 26, 1998, and the percentage of the outstanding shares held by such
holders are set forth below.
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ------------------------ -------------------------------------------------------- ----------- ------------
Government Income Fund G.T. Capital Holdings, Inc. 15.24% -0-
-- Advisor Class SERP II FBO
Account 326-38-5445 P-S
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
<S> <C> <C> <C>
G.T. Capital Holdings, Inc. 401(k) FBO 13.37% -0-
Account 326-38-5445
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
</TABLE>
Statement of Additional Information Page 33
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ------------------------ -------------------------------------------------------- ----------- ------------
G.T. Capital Holdings, Inc. 401(k) FBO 10.05% -0-
Account 545914793
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
<S> <C> <C> <C>
Strategic Income Fund -- G.T. Capital Holdings, Inc. 401(k) FBO 5.16% -0-
Advisor Class Account 105341352
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
NFSC FEBO # AEL-841692 5.07% -0-
NFSC/FMTC IRA
FBO Frances M. Resca
31 Louise Road
Braintree, Massachusetts 02184-5901
High Income Fund -- G.T. Capital Holdings, Inc. 23.28% -0-
Advisor Class SERP Deferred Compensation
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Ellen Hoke
IBAK & Co. 15.53% -0-
P.O. Box 1700
102 South Clinton
Iowa City, Iowa 52250-4024
Growth & Income Fund -- G.T. Capital Holdings, Inc. 26.97% -0-
Advisor Class SERP Deferred Compensation
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Ellen Hoke
</TABLE>
- --------------
*The Trust has no knowledge as to whether all or any portion of the shares owned
of record are also owned beneficially.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
AIM serves as the Government Income Fund's, the Strategic Income Fund's and the
Growth & Income Fund's investment manager and administrator under an investment
management and administration contract between the Trust and AIM ("Trust
Management Contract"). The Sub-adviser serves as the Portfolio's sub-adviser and
sub-administrator under a sub-advisory and sub-administration Agreement between
AIM and the Sub-adviser ("Portfolio Management Sub-Contract," and together with
the Portfolio Management Contract, the "Portfolio Management Contracts"). AIM
serves as the Portfolio's investment manager and administrator under an
Investment Management and Administration Contract between the Portfolio and AIM
("Portfolio Management Contract") (collectively, "Management Contracts"). The
Sub-adviser serves as sub-administrator to each Feeder Fund under a
sub-administration contract between AIM and the Sub-adviser ("Administration
Sub-Contract," and together with the Administration Contract, the
"Administration Contracts"). AIM serves as the High Income Fund's administrator
under an Administration Contract ("Administration Contract")
Statement of Additional Information Page 34
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
between the Trust and AIM. The Sub-adviser serves as the sub-adviser and
sub-administrator to the Government Income Fund, the Strategic Income Fund and
the Growth & Income Fund under a sub-advisory and sub-administration contract
between AIM and the Sub-adviser ("Sub-Management Contract," and together with
the Management Contract, the "Management Contracts"). The Administration
Contracts will not be deemed advisory contracts, as defined under the 1940 Act.
As investment managers and administrators, AIM and the Sub-adviser make all
investment decisions for the Government Income Fund, the Strategic Income Fund,
the Growth & Income Fund and the Portfolio and as administrators, AIM and the
Sub-adviser administer each Fund's and the Portfolio's affairs. Among other
things, AIM and the Sub-adviser furnish the services and pay the compensation
and travel expenses of persons who perform the executive, administrative,
clerical and bookkeeping functions of the Trust, the Funds, and the Portfolio
and provide suitable office space, necessary small office equipment and
utilities.
The Management Contracts may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Trust's or the Portfolio's Board of Trustees, as applicable, or by the vote of a
majority of the Fund's or the Portfolio's outstanding voting securities (as
defined in the 1940 Act), and (ii) a majority of Trustees who are not parties to
the Management Contracts or the Administration Contracts or "interested persons"
of any such party (as defined in the 1940 Act), cast in person at a meeting
called for the specific purpose of voting on such approval. The Management
Contracts provide that with respect to the Government Income Fund, the Strategic
Income Fund, the Growth & Income Fund and the Portfolio, and the Administration
Contracts provide that with respect to the High Income Fund, either the Trust,
the Portfolio or each of AIM or the Sub-adviser may terminate the Contracts
without penalty upon sixty days' written notice to the other party. The
Management Contracts and the Administration Contracts terminate automatically in
the event of their assignment (as defined in the 1940 Act).
In each of the last three fiscal years the Government Income Fund paid
investment management and administration fees to the Sub-adviser in the
following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 2,403,043
1996....................................................................................................... 3,672,503
1995....................................................................................................... 4,946,971
</TABLE>
In each of the last three fiscal years the Strategic Income Fund paid investment
management and administration fees to the Sub-adviser in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 3,474,804
1996....................................................................................................... 3,807,689
1995....................................................................................................... 4,293,053
</TABLE>
In each of the last three fiscal years the Growth & Income Fund paid investment
management and administration fees to the Sub-adviser in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 6,900,695
1996....................................................................................................... 6,282,438
1995....................................................................................................... 6,301,399
</TABLE>
In each of the last three fiscal years the High Income Portfolio paid investment
management and administration fees to the Sub-adviser in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 2,971,167
1996....................................................................................................... 3,014,924
1995....................................................................................................... 2,411,786
</TABLE>
In each of the last three fiscal years the High Income Fund paid administration
fees to the Sub-adviser in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 1,136,471
1996....................................................................................................... 1,015,220
1995....................................................................................................... 860,884
</TABLE>
Statement of Additional Information Page 35
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
THE DISTRIBUTION PLANS
THE CLASS A PLAN. The Trust has adopted a Master Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act relating to the Class A shares of the Funds (the
"Class A Plan"). The Class A Plan provides that the Class A shares pay 0.35% per
annum of their average daily net assets as compensation to AIM Distributors for
the purpose of financing any activity which is primarily intended to result in
the sale of Class A shares. Of such amounts, each Fund pays a service fee of
0.25% of the average daily net assets attributable to Class A shares to selected
dealers and other institutions which furnish continuing personal shareholder
services to their customers who purchase and own Class A shares. Activities
appropriate for financing under the Class A Plan include, but are not limited
to, the following: printing of prospectuses and statements of additional
information and reports for other than existing shareholders; overhead;
preparation and distribution of advertising material and sales literature;
expenses of organizing and conducting sales seminars; supplemental payments to
dealers and other institutions such as asset-based sales charges or as payments
of service fees under shareholder service arrangements; and costs of
administering the Class A Plan.
THE CLASS B PLAN. The Trust has also adopted a Master Distribution Plan pursuant
to Rule 12b-1 under the 1940 Act relating to Class B shares of the Funds (the
"Class B Plan", and collectively with the Class A Plan, the "Plans"). Under the
Class B Plan, each Fund pays 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, each Fund pays a service fee of 0.25% of the average daily net assets
attributable to Class B shares to selected dealers and other institutions which
furnish continuing personal shareholder services to their customers who purchase
and own Class B shares. Amounts paid in accordance with the Class B Plan may be
used to finance any activity primarily intended to result in the sale of Class B
shares, including but not limited to printing of prospectuses and statements of
additional information and reports for other than existing shareholders;
overhead; preparation and distribution of advertising material and sales
literature; expenses of organizing and conducting sales seminars; supplemental
payments to dealers and other institutions such as asset-based sales charges or
as payments of service fees under shareholder service arrangements; and costs of
administering the Class B Plan. AIM Distributors may transfer and sell its
rights to payments under the Class B Plan in order to finance distribution
expenditures in respect of Class B shares.
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 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 the several special investment plans offered in connection
with the purchase of the Funds' shares; assisting in the establishment and
maintenance of customer accounts and records and in the processing of purchase
and redemption transactions; investing dividends and any capital gains
distributions automatically in the Funds' 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; 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 Fund shares; 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.
Financial intermediaries and any other person entitled to receive compensation
for selling Fund shares may receive different compensation for selling shares of
one particular class over another.
Statement of Additional Information Page 36
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
Under a Shareholder Service Agreement, each Fund agrees to pay periodically fees
to selected dealers and other institutions who render the foregoing services to
their customers. The fees payable under a Shareholder Service Agreement
generally will be calculated at the end of each payment period for each business
day of the 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 such Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc. ("NASD"). The
Plans conform to rules of the NASD by limiting payments made to dealers and
other financial institutions who provide continuing personal shareholder
services to their customers who purchase and own shares of the Funds to no more
than 0.25% per annum of the average daily net assets of the Funds attributable
to the customers of such dealers or financial institutions, and by imposing a
cap on the total sales charges, including asset based sales charges, that may be
paid by the Funds and their respective classes.
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.
Prior to June 1, 1998, the Trust had adopted a different Rule 12b-1, that
operated as a "reimbursement-type" plan (the "Prior Plan"). The information
provided below relates to payments made under the Prior Plan, which provided for
payments to GT Global Inc., the distributor of the Funds at the time the Prior
Plan was in effect.
For the fiscal year ended December 31, 1997, each Fund paid the following
amounts under the Prior Plan:
<TABLE>
<CAPTION>
% OF CLASS
AVERAGE DAILY
NET ASSETS
--------------------
CLASS A CLASS B CLASS A CLASS B
-------------- -------------- --------- ---------
<S> <C> <C> <C> <C>
Government Income Fund......................................... $ -- $ -- --% --%
Strategic Income Fund.......................................... $ -- $ -- --% --%
High Income Fund............................................... $ -- $ -- --% --%
Growth & Income Fund........................................... $ -- $ -- --% --%
</TABLE>
Actual fees by category paid by each Fund with regard to the Class A shares
during the year ended December 31, 1997 follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH GROWTH &
INCOME FUND INCOME FUND INCOME FUND INCOME FUND
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Advertising.............................................. $ -- $ -- $ -- $ --
Printing and mailing prospectuses, semi-annual reports
and annual reports (other than to current
shareholders)........................................... $ -- $ -- $ -- $ --
Seminars................................................. $ -- $ -- $ -- $ --
Compensation to Underwriters to partially offset other
marketing expenses...................................... $ -- $ -- $ -- $ --
Compensation to Dealers including finder's fees.......... $ -- $ -- $ -- $ --
Compensation to Sales Personnel.......................... $ -- $ -- $ -- $ --
Annual Report Total...................................... $ -- $ -- $ -- $ --
</TABLE>
Statement of Additional Information Page 37
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
Actual fees by category paid by each Fund with regard to the Class B Shares
during the year ended December 31, 1997 as follows:
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH GROWTH &
INCOME FUND INCOME FUND INCOME FUND INCOME FUND
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS B
Advertising.............................................. $ -- $ -- $ -- $ --
Printing and mailing prospectuses, semi-annual reports
and annual reports (other than to current
shareholders)........................................... $ -- $ -- $ -- $ --
Seminars................................................. $ -- $ -- $ -- $ --
Compensation to Underwriters to partially offset upfront
dealer commissions and other marketing costs............ $ -- $ -- $ -- $ --
Compensation to Dealers.................................. $ -- $ -- $ -- $ --
Compensation to Sales Personnel.......................... $ -- $ -- $ -- $ --
Annual Report Total...................................... $ -- $ -- $ -- $ --
</TABLE>
The Plans require AIM Distributors to provide the Board of Trustees at least
quarterly with a written report of the amounts expended pursuant to the Plans
and the purposes for which such expenditures were made. The Board of Trustees
reviews these reports in connection with their decisions with respect to the
Plans.
As required by Rule 12b-1, the Plans and related forms of Shareholder Service
Agreements were approved by the Board of Trustees, including a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust and who have no direct or indirect financial interest in the operation of
the Plans or in any agreements related to the Plans ("Qualified Trustees"). In
approving the Plans in accordance with the requirements of Rule 12b-1, the
Trustees considered various factors and determined that there is a reasonable
likelihood that the Plans would benefit each class of each Fund and their
respective shareholders.
The Plans do not obligate the Funds to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Plans. Thus, even if AIM Distributors' actual expenses exceed the fee payable to
AIM Distributors thereunder at any given time, the Funds will not be obligated
to pay more than that fee. If AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee.
Unless terminated earlier in accordance with their terms, the Plans continue in
effect until [June 30, 1999] and each year thereafter, as long as such
continuance is specifically approved at least annually by the Board of Trustees,
including a majority of the Qualified Trustees.
The Plans may be terminated by the vote of a majority of the Independent
Trustees, or, with respect to a particular class, by the vote of a majority of
the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution expenses
paid by the applicable class requires shareholder approval; otherwise, it may be
amended by the Trustees, including a majority of the Qualified Trustees, by
votes cast in person at a meeting called for the purpose of voting upon such
amendment. As long as the Plans are in effect, the selection or nomination of
the Qualified Trustees is committed to the discretion of the Qualified Trustees.
In the event the Class A Plan is amended in a manner which the Board of Trustees
determines would materially increase the charges paid under the Class A Plan,
the Class B shares of the Funds will no longer convert into Class A shares of
the same Funds unless the Class B shares, voting separately, approve such
amendment. If the Class B shareholders do not approve such amendment, the Board
of Trustees will (i) create a new class of shares of the Funds which is
identical in all material respects to the Class A shares as they existed prior
to the implementation of the amendment and (ii) ensure that the existing Class B
shares of the Funds will be exchanged or converted into such new class of shares
no later than the date the Class B shares were scheduled to convert into Class A
shares.
The principal differences between the Class A Plan, on the one hand, and the
Class B Plan, on the other hand, are: (i) the Class A Plan allows payment to AIM
Distributors or to dealers or financial institutions of up to 0.35% of average
daily net assets of the Class A shares of each Fund, as compared to 1.00% of
such assets of each Fund's Class B shares; (ii) the Class B
Statement of Additional Information Page 38
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
Plan obligates the Class B shares to continue to make payments to AIM
Distributors following termination of the Class B shares Distribution Agreement
with respect to Class B shares sold by or attributable to the distribution
efforts of AIM Distributors unless there has been a complete termination of the
Class B Plan (as defined in such Plan) and (iii) the Class B Plan expressly
authorizes AIM Distributors to assign, transfer or pledge its rights to payments
pursuant to the Class B Plan.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of the
Funds' shares is set forth in the Prospectus under the headings "How to Purchase
Shares" and "Terms and Conditions of Purchase of the AIM Funds." A Master
Distribution Agreement with AIM Distributors relating to the Class A and Class B
shares of the Funds was approved by the Board of Directors on Trustees
, 1998. Both such Master Distribution Agreements are hereinafter
collectively referred to as the "Distribution Agreements."
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 Fund), 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 Fund's 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 shares of the Funds at the time of
such sales. Payments with respect to Class B shares will equal 4.0% 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 anticipates that it will
require a number of years to recoup from Class B Plan payments the sales
commissions paid to dealers and institutions in connection with sales of Class B
shares. In the future, if multiple distributors serve a Fund, each such
distributor (or its assignee or transferee) would receive a share of the
payments under the Class B Plan based on the portion of the Fund's Class B
shares sold by or attributable to the distribution efforts of that distributor.
The Trust (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 Distribution
Agreement does not affect the obligation of the Funds and their Class B
shareholders to pay contingent deferred sales charges.
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 GT Global, Inc.,
the Trust's distributor prior to June 1, 1998, for the fiscal year ended
December 31, 1997.
<TABLE>
<CAPTION>
1997
--------------------------------
SALES AMOUNT
CHARGES RETAINED
---------------- --------------
<S> <C> <C>
Government Income Fund................................................................ $ -- $ --
Strategic Income Fund................................................................. $ -- $ --
High Income Fund...................................................................... $ -- $ --
Growth & Income Fund.................................................................. $ -- $ --
</TABLE>
Statement of Additional Information Page 39
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The following chart reflects the contingent deferred sales charges paid by Class
A and Class B shareholders for the fiscal year ended December 31, 1997, for
Class A and Class B shares:
<TABLE>
<CAPTION>
1997
------------
<S> <C>
Class A................................................................................................... $ --
Class B................................................................................................... $ --
</TABLE>
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agency and Service Agreement between the Trust and A I M Fund
Services, Inc. ("AFS"), a registered transfer agent and wholly-owned subsidiary
of AIM, provides that AFS will perform certain shareholder services for the
Funds for a fee per account serviced. The Transfer Agency and Service Agreement
provides that AFS will receive a per account fee plus out-of-pocket expenses to
process orders for purchases, redemptions and exchanges or shares; prepare and
transmit payments for dividends and distributions declared by the Funds;
maintain shareholder accounts and provide shareholders with information
regarding the Funds and their accounts. The Transfer Agency and Service
Agreement became effective on September 8, 1998. The Sub-adviser also serves as
each Fund's pricing and accounting agent. As of October 31, 1997, October 31,
1996 and October 31, 1995, the Fund paid accounting services fees to the
Sub-adviser of Government Income Fund, Strategic Income Fund, High Income Fund
and Growth & Income Fund $85,149, $127,205, $40,218 and $183,323; $123,309,
$131,517, $34,980 and $162,035; and $116,607, $101,697, $22,563 and $40,735,
respectively.
EXPENSES OF THE FUNDS AND THE PORTFOLIO
Each Fund and the Portfolio pays all expenses not assumed by AIM, the
Sub-adviser, AIM Distributors and other agents. These expenses include, in
addition to the advisory, distribution, transfer agency, pricing and accounting
agent and brokerage fees discussed above, legal and audit expenses, custodian
fees, trustees' fees, organizational fees, fidelity bond and other insurance
premiums, taxes, extraordinary expenses and the expenses of reports and
prospectuses sent to existing investors. The allocation of general Trust
expenses and expenses shared by the Funds and other funds organized as series of
the Trust are allocated on a basis deemed fair and equitable, which may be based
on the relative net assets of the Funds or the nature of the services performed
and relative applicability to each Fund. Expenditures, including costs incurred
in connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of each Fund's and the Portfolio's expenses to its
relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
each Fund and the Portfolio generally are higher than the comparable expenses of
such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
The net asset value per share of each Fund or Portfolio is normally determined
daily as of the close of trading of the New York Stock Exchange ("NYSE")
(generally 4:00 p.m. Eastern time) on each business day of the Fund or
Portfolio. 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 or Portfolio is
determined as of the close of the NYSE on such day. Net asset value per share is
determined by dividing the value of the equity securities, cash and other assets
(including interest accrued but not collected) attributable to a particular
class, less all its liabilities (including accrued expenses and dividends
payable) attributable to that class, by the total number of shares outstanding
of that class. Determination of each Fund's or Portfolio's net asset value per
share is made in accordance with generally accepted accounting principles.
Each equity security held is valued at its last sales price on the exchange
where the security is principally traded or, lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked prices
on that day. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued at
the mean between the last bid and asked prices based upon quotes furnished by
market makers for
Statement of Additional Information Page 40
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
such securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date or absent a last sales
price, at the mean between the closing bid and asked prices on that day. Debt
securities are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such as
institution-size trading in similar groups of securities, developments related
to special securities, yield, quality, coupon rate, maturity, type of issue,
individual trading characteristics and other market data. Securities for which
market quotations are not readily available or are questionable are valued at
fair market value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued on the
basis of amortized cost. For purposes of determining net asset value per share,
futures and options contracts generally will be valued 15 minutes after the
close of trading of the NYSE.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of each Fund's or Portfolio's shares are
determined at such times. Foreign currency exchange rates are also generally
determined prior the close of the NYSE. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the times at
which such values are determined and the close of the NYSE which will not be
reflected in the computation of a Fund's or Portfolio's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as determined
in good faith by or under the supervision of the Board of Trustees of the Funds
and the Portfolio.
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HOW TO PURCHASE AND
REDEEM SHARES
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A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the headings "How to Purchase
Shares," "Terms and Conditions of Purchases of the AIM Funds" and "Special
Plans."
The sales charge normally deducted on purchases of Class A shares is used to
compensate AIM Distributors and participating dealers for their expenses
incurred in connections with the distribution of the Funds' Class A shares.
Since there is little expenses 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' best interests that such persons, and
certain other persons whose purchases result in relatively low expenses of
distribution, 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 set forth in the Funds'
Prospectuses. In addition, the Funds offer programs such as Right of
Accumulation and Letter of Intent, which are described in the Prospectuses, that
are designed to permit investors to aggregate purchases of different funds, or
separate purchases over time, in order to qualify for a lower sales charge rate.
See "Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges" in the Prospectuses.
Class B shares will automatically convert into Class A shares of the same Fund
eight years following the end of the calendar month in which a purchase was
made. For the purpose of calculating the holding period required for conversion
of Class B shares, the initial issuance of Class B shares shall mean (i) the
date on which such Class B shares were issued, or (ii) for Class B shares
obtained through an exchange, or a series of exchanges, the date on which the
original Class B shares were issued. For purposes of conversion to Class A,
Class B shares purchased through the reinvestment of dividends and other
distributions paid in respect of Class B shares will be held in a separate
sub-account. Each time any Class B shares in the shareholder's regular account
(other than those in the sub-account) convert to Class A, a pro rata portion of
the Class B shares in the sub-account will also convert to Class A. The portion
will be determined by the ratio that the shareholder's Class B shares converting
to Class A bears to the shareholder's total Class B shares not acquired through
dividends and other distributions.
Statement of Additional Information Page 41
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The availability of the conversion feature is subject to the continuing
availability of an opinion of counsel to the effect that the dividends and other
distributions paid on Class A and Class B shares will not result in
"preferential dividends" under the Internal Revenue Code and the conversion of
shares does not constitute a taxable event. If the conversion feature ceased to
be available, the Class B shares beyond the eighth year. AIM and the Sub-adviser
has no reason to believe that this condition for the availability of the
conversion feature will not be met.
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 invested in AIM 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
AIM 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.
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 the 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) a one-time reinvestment in Class B shares of a Fund within 180 days of a
prior redemption; (4) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in AIM 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
AIM Funds; (5) redemptions made in connection with participant-directed
exchanges between options in an employer-sponsored benefit plan; (6) redemptions
made for the purpose of providing cash to fund a loan to a participant in a
tax-qualified retirement plan; (7) 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; (8) 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 (9) 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.
For purposes of a Letter of Intent entered into prior to June 1, 1998, any
registered investment adviser, trust company or bank trust department which
exercises investment discretion and which intends within thirteen months to
invest $500,000 or more can be treated as a single purchaser, provided further
that such entity places all purchases and redemption orders. Such entities
should be prepared to establish their qualifications for such treatment.
Complete information concerning the method of exchanging shares of the Funds for
shares of the other AIM Funds is set forth in the Prospectuses under the heading
"Exchange Privilege."
Statement of Additional Information Page 42
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "How to Redeem Shares." 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 Funds at (800) 959-4246 and guarantee delivery of all
required documents in good order. A repurchase is effected at the net asset
value per share of the applicable Fund next determined after the repurchase
order is received. Such an arrangement is subject to timely receipt by A I M
Fund Services, Inc., the Funds' transfer agent, of all required documents in
good order. If such documents are not received within a reasonable time after
the order is placed, the order is subject to cancellation. While there is no
charge imposed by a Fund or by AIM Distributors (other than any applicable
contingent deferred sales charge) 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 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.
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TAXES
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TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
To continue to qualify for treatment as a regulated investment company ("RIC")
under the Code, each Fund must distribute to its shareholders for each taxable
year at least 90% of its investment company taxable income (consisting generally
of net investment income, net short-term capital gain and net gains from certain
foreign currency transactions) ("Distribution Requirement") and must meet
several additional requirements. With respect to each Fund, these requirements
include the following: (1) the Fund must derive at least 90% of its gross income
each taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. government securities, securities of
other RICs and other securities, with these other securities limited, in respect
of any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets and that does not represent more than 10% of the issuer's
outstanding voting securities; and (3) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its total assets may be
invested in securities (other than U.S. government securities or the securities
of other RICs) of any one issuer. The High Income Fund, as an investor in the
Portfolio, is deemed to own a proportionate share of the Portfolio's assets, and
to earn a proportionate share of the Portfolio's income, for purposes of
determining whether that Fund satisfies the requirements described above to
qualify as a RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See "Taxation of Certain Investment Activities" below for a discussion of the
tax consequences to the High Income Fund of hedging transactions engaged in, and
investments in passive foreign investment companies ("PFICs") and other foreign
securities by, the Portfolio.
TAXATION OF THE PORTFOLIO -- GENERAL
The Portfolio is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership." As a result, the Portfolio is not subject
to federal income tax; instead, the High Income Fund, as an investor in the
Portfolio, is required to take into account in determining its federal income
tax liability its share of the Portfolio's income, gains, losses,
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
deductions and credits, without regard to whether it has received any cash
distributions from the Portfolio. The Portfolio also is not subject to Delaware
income or franchise tax.
Because, as noted above, the High Income Fund is deemed to own a proportionate
share of the Portfolio's assets, and to earn a proportionate share of the
Portfolio's income, for purposes of determining whether that Fund satisfies the
requirements to qualify as a RIC, the Portfolio intends to conduct its
operations so that the High Income Fund will be able to continue to satisfy all
those requirements.
Distributions to the High Income Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in that Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds that
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of that
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. The High Income Fund's basis for its interest in the
Portfolio generally will equal the amount of cash and the basis of any property
that Fund invests in the Portfolio, increased by that Fund's share of the
Portfolio's net income and gains and decreased by (a) the amount of cash and the
basis of any property the Portfolio distributes to that Fund and (b) that Fund's
share of the Portfolio's losses.
TAXATION OF CERTAIN INVESTMENT ACTIVITIES
For purposes of the following discussion, "Investor Funds" means the Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund and the
Portfolio.
FOREIGN TAXES. Interest and dividends received by an Investor Fund, and
gains realized thereby, may be subject to income, withholding or other taxes
imposed by foreign countries and U.S. possessions ("foreign taxes") that would
reduce the yield and/or total return on its securities. Tax conventions between
certain countries and the United States may reduce or eliminate foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of an
Investor Fund's total assets (taking into account, in the case of the High
Income Fund, its proportionate share of the Portfolio's assets) at the close of
its taxable year consists of securities of foreign corporations, the Fund will
be eligible to, and may, file an election with the Internal Revenue Service that
will enable its shareholders, in effect, to receive the benefit of the foreign
tax credit with respect to any foreign taxes paid by it (taking into account, in
the case of the High Income Fund, its proportionate share of any foreign taxes
paid by the Portfolio) (a "Fund's foreign taxes"). Pursuant to the election, an
Investor Fund would treat those taxes as dividends paid to its shareholders and
each shareholder would be required to (1) include in gross income, and treat as
paid by him, his proportionate share of the Fund's foreign taxes, (2) treat his
share of those taxes and of any dividend paid by the Fund that represents its
income from foreign and U.S. possessions sources (taking into account, in the
case of the High Income Fund, its proportionate share of the Portfolio's income
from those sources) as his own income from those sources and (3) either deduct
the taxes deemed paid by him in computing his taxable income or, alternatively,
use the foregoing information in calculating the foreign tax credit against his
federal income tax. Each Investor Fund will report to its shareholders shortly
after each taxable year their respective shares of the Fund's foreign taxes and
income (taking into account, in the case of the High Income Fund, its
proportionate share of the Portfolio's income) from sources within foreign
countries and U.S. possessions if it makes this election. Pursuant to the
Taxpayer Relief Act of 1997 ("Tax Act"), individuals who have no more than $300
($600 for married persons filing jointly) of creditable foreign taxes included
on Form 1099 and all of whose foreign source income is "qualified passive
income" may elect each year to be exempt from the extremely complicated foreign
tax credit limitation and will be able to claim a foreign tax credit without
having to file the detailed Form 1116 that otherwise is required.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Investor Fund may invest in the
stock of PFICs. A PFIC is a foreign corporation -- other than a "controlled
foreign corporation" (I.E., a foreign corporation in which, on any day during
its taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly or constructively, at least 10% of that
voting power) as to which the Investor Fund is a U.S. shareholder (effective
with respect to each Investor Fund for its taxable year beginning November 1,
1998) -- that, in general, meets either of the following tests: (1) at least 75%
of its gross income is passive or (2) an average of at least 50% of its assets
produce, or are held for the production of, passive income. Under certain
circumstances, an Investor Fund will be subject to federal income tax on a part
(or, in the case of the High Income Fund, its proportionate share of a part) of
any "excess
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AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
distribution" received by it (or, in the case of the High Income Fund, by the
Portfolio) on the stock of a PFIC or of any gain on the Fund's (or, in the case
of the High Income Fund, the Portfolio's) disposition of that stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent it
distributes that income to its shareholders.
If an Investor Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Investor Fund (or, in the case of the Portfolio, the
High Income Fund) would be required to include in income each year its pro rata
share (taking into account, in the case of the High Income Fund, its
proportionate share of the Portfolio's pro rata share) of the QEF's ordinary
earnings and net capital gain (I.E., the excess of net long-term capital gain
over net short-term capital loss) -- which most likely would have to be
distributed by the Investor Fund (or, in the case of the Portfolio, the High
Income Fund) to satisfy the Distribution Requirement and avoid imposition of the
Excise Tax -- even if those earnings and gain were not received thereby from the
QEF. In most instances it will be very difficult, if not impossible, to make
this election because of certain requirements thereof.
Effective for its taxable year beginning November 1, 1998, each Investor Fund
may elect to "mark to market" its stock in any PFIC. "Marking-to-market," in
this context, means including in ordinary income each taxable year the excess,
if any, of the fair market value of the stock over an Investor Fund's adjusted
basis therein as of the end of that year. Pursuant to the election, an Investor
Fund also will be allowed to deduct (as an ordinary, not capital, loss) the
excess, if any, of its adjusted basis in PFIC stock over the fair market value
thereof as of the taxable year-end, but only to the extent of any net
mark-to-market gains with respect to that stock included in income by the Fund
for prior taxable years. An Investor Fund's adjusted basis in each PFIC's stock
subject to the election will be adjusted to reflect the amounts of income
included and deductions taken thereunder. Regulations proposed in 1992 provided
a similar election with respect to the stock of certain PFICs.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Investors Funds' use
of hedging transactions, such as selling (writing) and purchasing options and
Futures Contracts and entering into Forward Contracts, involves complex rules
that will determine, for federal income tax purposes, the amount, character and
timing of recognition of the gains and losses an Investor Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by an Investor Fund with respect
to its business of investing in securities or foreign currencies, will qualify
as permissible income under the Income Requirement for that Investor Fund (or,
in the case of the Portfolio, the High Income Fund).
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by an Investor Fund at the end of its taxable year
generally will be deemed to have been sold at that time at market value for
federal income tax purposes. Sixty percent of any net gain or loss recognized on
these deemed sales, and 60% of any net gain or loss realized from any actual
sales of Section 1256 Contracts, will be treated as long-term capital gain or
loss, and the balance will be treated as short-term capital gain or loss. That
60% portion will qualify for the reduced maximum tax rates on noncorporate
taxpayers' net capital gain enacted by the Tax Act -- 20% (10% for taxpayers in
the 15% marginal tax bracket) for gain recognized on capital assets held for
more than 18 months -- instead of the 28% rate in effect before that
legislation, which now applies to gain recognized on capital assets held for
more than one year but not more than 18 months.
Section 988 of the Code also may apply to gains and losses from transactions in
foreign currencies, foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains and
losses). Each Section 988 gain or loss generally is computed separately and
treated as ordinary income or loss. In the case of overlap between sections 1256
and 988, special provisions determine the character and timing of any income,
gain or loss. Each Investor Fund attempts to monitor section 988 transactions to
minimize any adverse tax impact.
If an Investor Fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, Futures or Forward Contract
or short sale) with respect to any stock, debt instrument (other than "straight
debt") or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Fund will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that time.
A constructive sale generally consists of a short sale, an offsetting notional
principal contract or Futures or Forward Contract entered into by an Investor
Fund or a related person with respect to the
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AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
same or substantially similar property. In addition, if the appreciated
financial position is itself a short sale or such a contract, acquisition of the
underlying property or substantially similar property will be deemed a
constructive sale.
The Strategic Income Fund and the Portfolio each may acquire zero coupon or
other securities issued with original issue discount ("OID"). As a holder of
those securities, that Fund and the Portfolio (and, through it, the High Income
Fund) each must include in its income the portion of the OID that accrues on the
securities during the taxable year, even if no corresponding payment on them is
received during the year. Similarly, the Strategic Income Fund and the Portfolio
each must include in its gross income securities it receives as "interest" on
payment-in-kind securities. Because each Fund annually must distribute
substantially all of its investment company taxable income, including any OID
and other non-cash income, to satisfy the Distribution Requirement and avoid
imposition of the Excise Tax, the Strategic Income Fund or the High Income Fund,
or both, may be required in a particular year to distribute as a dividend an
amount that is greater than the total amount of cash it actually receives (or,
in the case of the High Income Fund, its share of the total amount of cash the
Portfolio actually receives). Those distributions will be made from the Fund's
(or, in the case of the High Income Fund, its, or its share of the Portfolio's)
cash assets or, if necessary, from the proceeds of sales of portfolio
securities. Such Fund may (directly or through the Portfolio) realize capital
gains or losses from those sales, which would increase or decrease its
investment company taxable income and/or net capital gain.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Growth & Income Fund's investment company
taxable income (whether paid in cash or reinvested in additional shares) may be
eligible for the dividends-received deduction allowed to corporations. The
eligible portion may not exceed the aggregate dividends received by that Fund
from U.S. corporations. However, dividends received by a corporate shareholder
and deducted by it pursuant to the dividends-received deduction are subject
indirectly to the federal alternative minimum tax. The Funds other than the
Growth & Income Fund are not expected to pay dividends eligible for that
deduction.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds, their shareholders and the Portfolio.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
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AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
ADDITIONAL INFORMATION
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AIM was organized in 1976, and along with its subsidiaries, manages or advises
approximately 90 investment company 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. AIM is the sole
shareholder of the Funds' principal underwriter, AIM Distributors. 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 that has a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 02110, acts as custodian of each Fund's and the Portfolio's assets.
State Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Funds and the Portfolio to be
held in separate accounts outside the United States in the custody of non-U.S.
banks.
INDEPENDENT ACCOUNTANTS
The Funds' and the Portfolio's independent accountants are .
conducts audits of each Fund's and the Portfolio's financial
statements, assists in the preparation of the Funds' and the Portfolio's federal
and state income tax returns and consults with the Company, the Funds and the
Portfolio as to matters of accounting, regulatory filings, and federal and state
income taxation.
The audited financial statements of the Funds and the Portfolio included in this
Statement of Additional Information have been examined by , as
stated in their opinion appearing herein and are included in reliance upon such
opinion given upon the authority of that firm as experts in accounting and
auditing.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations
extended to shareholders of private, for-profit corporations. There is a remote
possibility, however, that under certain circumstances shareholders of the Trust
may be held personally liable for the Trust's obligations. However, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or a trustee. The
Trust Agreement provides for indemnification from the Trust property for all
losses and expenses of any shareholder held personally liable for the Trust's
obligations. Thus, the risk of a shareholder incurring financial loss on account
of such liability is limited to circumstances in which the Trust itself would be
unable to meet its obligations and where the other party was held not to be
bound by the disclaimer.
NAMES
Prior to May 29, 1998, AIM Global High Income Fund operated under the name of GT
Global High Income Fund; AIM Strategic Income Fund operated under the name of GT
Global Strategic Income Fund; AIM Global Government Income Fund operated under
the name of GT Global Government Income Fund; and AIM Global Growth & Income
Fund operated under the name of GT Global Growth & Income Fund.
Statement of Additional Information Page 47
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
P(1+T)to the power of n=ERV
<TABLE>
<S> <C> <C>
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable maximum sales load is deducted at the
beginning of the 1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the 1, 5, or 10 year
periods (or fractional portion of such period).
</TABLE>
The standardized returns for the Class A and Class B shares of the Strategic
Income Fund, Government Income Fund, High Income Fund and Growth & Income Fund,
stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC GOVERNMENT GOVERNMENT HIGH HIGH
INCOME INCOME INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- -------------------------------------------------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fiscal year ended Oct. 31, 1997................... [4.21% 3.70% (0.20)% (0.93)% 9.03% 8.77%
Oct. 31, 1992 through Oct. 31, 1997............... 10.14% 10.25% 5.34% 5.36% 15.93% 16.08%
Oct. 22, 1992 (commencement of operations) through
Oct. 31, 1997.................................... n/a 10.11% n/a 5.41% 15.85% 16.10%
March 29, 1988 (commencement of operations)
through Oct. 31, 1997............................ 9.01% n/a 6.52% n/a n/a n/a]
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND
INCOME FUND INCOME FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997............................................................. [12.46% 13.28%
Oct. 31, 1992 through Oct. 31, 1997......................................................... 12.49% 12.81%
Oct. 22, 1992 (commencement of operations) through Oct. 31, 1997............................ n/a 12.82%
Sept. 25, 1990 (commencement of operations) through Oct. 31, 1997........................... 11.82% n/a]
</TABLE>
NON-STANDARDIZED RETURNS
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
P(1+U)to the power of n=ERV
<TABLE>
<S> <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>
Statement of Additional Information Page 48
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The average annual non-standardized returns for the Class A and Class B shares
of the Strategic Income Fund, Government Income Fund, High Income Fund and
Growth & Income Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC GOVERNMENT GOVERNMENT HIGH HIGH
INCOME INCOME INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- -------------------------------------------------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fiscal year ended Oct. 31, 1997................... [9.40% 8.70% 4.78% 4.00% 14.46% 13.77%
Oct. 31, 1992 through Oct. 31, 1997............... 11.21% 10.52% 6.37% 5.64% 17.07% 16.30%
Oct. 22, 1992 (commencement of operations) through
Oct. 31, 1997.................................... n/a 10.25% n/a 5.55% 16.98% 16.21%
March 29, 1988 (commencement of operations)
through Oct. 31, 1997............................ 9.56% n/a 7.07% n/a n/a n/a]
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND
INCOME FUND INCOME FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997............................................................. [19.01% 18.28%
Oct. 31, 1992 through Oct. 31, 1997......................................................... 13.77% 13.05%
Oct. 22, 1992 (commencement of operations) through Oct. 31, 1997............................ n/a 12.94%
Sept. 25, 1990 (commencement of operations) through Oct. 31, 1997........................... 12.72% n/a]
</TABLE>
Cumulative total return across a stated period may be calculated as follows:
P(1+V)to the power of n=ERV
<TABLE>
<S> <C> <C>
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a stated portion of, or none of, the
applicable maximum sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the stated period.
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the Strategic Income Fund, Government
Income Fund, High Income Fund and Growth & Income Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC GOVERNMENT GOVERNMENT HIGH HIGH
INCOME INCOME INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- -------------------------------------------------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Oct. 22, 1992 (commencement of operations) through
Oct. 31, 1997.................................... [n/a 63.28% n/a 31.19% 119.88% 112.76%
March 29, 1988 (commencement of operations)
through Oct. 31, 1997............................ 140.06% n/a 92.49% n/a n/a n/a]
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND
INCOME FUND INCOME FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Oct. 22, 1992 (commencement of operations) through Oct. 31, 1997............................ [n/a 84.31%
Sept. 25, 1990 (commencement of operations) through Oct. 31, 1997........................... 133.95% n/a]
</TABLE>
Statement of Additional Information Page 49
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B shares of the Strategic Income Fund, Government Income
Fund, High Income Fund and Growth & Income Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC GOVERNMENT GOVERNMENT HIGH HIGH
INCOME INCOME INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- -------------------------------------------------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Oct. 22, 1992 (commencement of operations) through
Oct. 31, 1997.................................... [n/a 62.28% n/a 30.32% 109.43% 111.76%
March 29, 1988 (commencement of operations)
through Oct. 31, 1997............................ 128.66% n/a 83.35% n/a n/a n/a]
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND
INCOME FUND INCOME FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Oct. 22, 1992 (commencement of operations) through Oct. 31, 1997............................ [n/a 83.31%
Sept. 25, 1990 (commencement of operations) through Oct. 31, 1997........................... 121.08% n/a]
</TABLE>
YIELD
YIELD QUOTATIONS
The standard formula for calculating yield for each Fund, as described in the
Prospectus, is as follows:
YIELD = 2[((a-b)/(c x d) + 1)to the power of 6-1]
<TABLE>
<S> <C> <C>
Where a = dividends and interest earned during a stated 30-day period. For purposes of this
calculation, dividends are accrued rather than recorded on the ex-dividend date. Interest
earned under this formula must generally be calculated based on the yield to maturity of
each obligation (or, if more appropriate, based on yield to call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during the period.
d = the maximum offering price per share on the last day of the period.
</TABLE>
The Yields of the Class A shares of the Strategic Income Fund, Government Income
Fund and the High Income Fund for the one-month period ended October 31, 1996
were 6.58%, 6.23% and 7.29%, respectively. The current yields of the Class B
shares of Strategic Income Fund, Government Income Fund and High Income Fund for
the one-month period ended October 31, 1996 were 6.23%, 5.87% and 7.00%,
respectively.
Statement of Additional Information Page 50
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
PERFORMANCE INFORMATION
Total return and yield figures for the Funds are neither fixed nor guaranteed,
and no Fund's principal is insured. Performance quotations reflect historical
information and should not be considered representative of a Fund's performance
for any period in the future. Performance is a function of a number of factors
which can be expected to fluctuate. The Funds may provide performance
information in reports, sales literature and advertisements. The Funds may also,
from time to time, quote information about the Funds published or aired by
publications or other media entities which contain articles or segments relating
to investment results or other data about one or more of the Funds. Such
publications or media entities may include the following, among others:
Advertising Age
Barron's
Best's Review
Broker World
Business Week
Changing Times
Christian Science Monitor
Consumer Reports
Economist
EuroMoney
FACS of the Week
Financial Planning
Financial Product News
Financial World
Forbes
Fortune
Global Finance
Hartford Courant Inc.
Institutional Investor
Insurance Forum
Insurance Week
Investor's Daily
Journal of the American
Society of CLU & ChFC
Kiplinger Letter
Money
Mutual Fund Forecaster
Mutual Fund Magazine
Nation's Business
New York Times
Pension World
Pensions & Investments
Personal Investor
Financial Services Week
Philadelphia Inquirer
Smart Money
USA Today
U.S. News & World Report
Wall Street Journal
Washington Post
CNN
CNBC
PBS
Statement of Additional Information Page 51
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The Funds and AIM Distributors may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
each Fund with the following, or compare each Fund's performance to performance
data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services
(data and mutual fund rankings and comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and
Development (publications)
International Finance Corporation Emerging
Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Analytical Data Services, Inc. (data and
mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings
and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All Country
(AC) World Index
Morgan Stanley Capital International World
Indices
Morningstar, Inc. (data and mutual fund rankings
and comparisons)
NASDAQ
Organization for Economic Cooperation and
Development (publications)
Salomon Brothers Global Telecommunications
Index
Salomon Brothers World Government Bond
Index-Non-U.S.
Salomon Brothers World Government Bond Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price
Index
Stangar
Wilshire Associaties
World Bank (publications and reports)
The World Bank Publication of Trends in
Developing Countries
Worldscope
Each Fund may also compare its performance to rates on Certificates of Deposit
and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or AIM
Distributors. Advertising for the Funds may from time to time include
discussions of general economic conditions and interest rates. Advertising for
the Funds may also include reference to the use of those Funds as part of an
individual's overall retirement investment program. From time to time, sales
literature and/or advertisements for any of the Funds may disclose (i) the
largest holdings in the Fund's portfolio, (ii) certain selling group members
and/or (iii) certain institutional shareholders.
From time to time, the Funds' sales literature and/or advertisements may discuss
generic topics pertaining to the mutual fund industry. This includes, but is not
limited to, literature addressing general information about mutual funds,
variable annuities, dollar-cost averaging, stocks, bonds, money markets,
certificates of deposit, retirement, retirement plans, asset allocation,
tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when comparing
a Fund's performance with other funds and other potential investments, investors
should note that the methods of computing performance of other potential
investments are not necessarily comparable to the methods employed by a Fund.
Statement of Additional Information Page 52
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. rates the debt securities issued by various
entities from "Aaa" to "C". Investment grade ratings are the first four
categories:
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 edged." 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 risk appear somewhat
larger than the 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
some time 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.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are 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 which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Statement of Additional Information Page 53
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc., rates the
securities debt of various entities in categories ranging from "AAA" to "D"
according to quality. Investment grade ratings are the first four categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative
Statement of Additional Information Page 54
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
capitalization structure with moderate reliance on debt and ample asset
protection; broad margins in earnings coverage of fixed financial charges and
high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issues rated
Prime-2 have a strong ability for repayment of senior short-term debt
obligations. This normally will be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage ratios, while
sound, may be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds as of October 31, 1997 and for the
fiscal year then ended, and the unaudited financial statements as of April 30,
1998 and for the six months then ended, appear on the following pages.
Statement of Additional Information Page 55
<PAGE>
<TABLE>
<S> <C>
STATEMENT OF
ADDITIONAL INFORMATION
</TABLE>
ADVISOR CLASS SHARES OF
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
(SERIES PORTFOLIOS OF A I M INVESTMENT FUNDS)
11 Greenway Plaza
Suite 100
Houston, TX 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 FREE
OF CHARGE 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 SEPTEMBER 8, 1998
RELATING TO THE AIM DEVELOPING MARKETS FUND: ADVISOR CLASS PROSPECTUS,
THE AIM EMERGING MARKETS FUND: ADVISOR CLASS PROSPECTUS AND THE AIM LATIN
AMERICAN GROWTH FUND: ADVISOR CLASS PROSPECTUS EACH DATED SEPTEMBER 8, 1998
Statement of Additional Information Page 1
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Introduction............................................................................................................. 3
Investment Objectives and Policies....................................................................................... 4
Options, Futures and Currency Strategies................................................................................. 11
Risk Factors............................................................................................................. 19
Investment Limitations................................................................................................... 26
Execution of Portfolio Transactions...................................................................................... 29
Trustees and Executive Officers.......................................................................................... 32
Control Persons and Principal Holders of Securities...................................................................... 34
Management............................................................................................................... 36
Valuation of Fund Shares................................................................................................. 37
How to Purchase and Redeem Shares........................................................................................ 38
Taxes.................................................................................................................... 39
Additional Information................................................................................................... 42
Investment Results....................................................................................................... 43
Description of Debt Ratings.............................................................................................. 46
Financial Statements..................................................................................................... 48
</TABLE>
[LOGO]
Statement of Additional Information Page 2
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
INTRODUCTION
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This Statement of Additional Information relates to the Advisor Class shares of
AIM Developing Markets Fund ("Developing Markets Fund"), AIM Emerging Markets
Fund ("Emerging Markets Fund"), and AIM Latin American Growth Fund ("Latin
American Fund") (each, a "Fund," and collectively, the "Funds"). Developing
Markets Fund and Latin American Fund each is a non-diversified, and Emerging
Markets Fund is a diversified, series of AIM Investment Funds (the "Trust"), a
registered open-end management investment company organized as a Delaware
business trust. On October 31, 1997, the Developing Markets Fund, which had no
prior operating history, acquired the assets and assumed the liabilities of G.T.
Global Developing Markets Fund, Inc. (the "Predecessor Fund"), a closed-end
investment company.
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and INVESCO (NY), Inc. (the "Sub-adviser") serves as the
investment sub-adviser and sub-administrator for the Funds.
The Trust is a series mutual fund. The rules and regulations of the United
States Securities and Exchange Commission (the "SEC") require all mutual funds
to furnish prospective investors certain information concerning the activities
of the fund being considered for investment. This information for Developing
Markets Fund is included in a separate Prospectus dated September 8, 1998, for
Emerging Markets Fund is included in a separate Prospectus dated September 8,
1998 and for Latin American Fund is included in a separate Prospectus dated
September 8, 1998. Additional copies of the Prospectuses and this Statement of
Additional Information may be obtained without charge by writing the principal
distributor of the Funds' shares, A I M Distributors, Inc. ("AIM Distributors"),
P.O. Box 4739, Houston, TX 77210-4739 or by calling (800) 347-4246. Investors
must receive a Prospectus before they invest.
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
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 FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name G.T. Investment Funds, Inc., which
was organized as a Maryland corporation on October 29, 1987. The Trust was
reorganized on September 4, 1998 as a Delaware business trust, and is registered
with the SEC as a diversified open-end series management investment company. The
Trust currently consists of thirteen separate portfolios, AIM Global Financial
Services Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund, AIM
Global Consumer Products and Services Fund, AIM Global Healthcare Fund, AIM
Global Telecommunications Fund, AIM Global Government Income Fund, AIM Global
High Income Fund, AIM Strategic Income Fund, AIM Global Growth and Income Fund,
AIM Emerging Markets Fund, AIM Developing Markets Fund, and AIM Latin American
Growth Fund. Each of these funds has three separate classes: Class A, Class B
and Advisor Class shares. All historical financial and other information
contained in this Statement of Additional Information for periods prior to
September 4, 1998, is that of the series of G.T. Investment Funds, Inc. (renamed
AIM Investment Funds, Inc.)
This Statement of Additional Information relates solely to the Advisor Class
shares of the Fund.
The term "majority of the outstanding shares" of the Trust, a particular Fund or
a particular class of a Fund means, respectively, the vote of the lesser of (a)
67% or more of the shares of the Trust, such Fund or such class present at a
meeting of the Trust's shareholders, if the holders of more than 50% of the
outstanding shares of the Trust, such Fund or such class are present or
represented by proxy, or (b) more than 50% of the outstanding shares of the
Trust, such Fund or such class.
Statement of Additional Information Page 3
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Class A, Class B and Advisor Class shares of each Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees 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 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 Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
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
Trustees of the Trust. In such event, the remaining holders cannot elect any
trustees of the Trust.
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INVESTMENT OBJECTIVES AND
POLICIES
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INVESTMENT OBJECTIVES
DEVELOPING MARKETS FUND. The primary investment objective of Developing
Markets Fund is long-term capital appreciation. Its secondary investment
objective is income, to the extent consistent with seeking capital appreciation.
The Fund normally invests substantially all of its assets in issuers in the
developing (or "emerging") markets of Asia, Europe, Latin America and elsewhere.
The Fund does not consider the following countries to be emerging markets:
Australia, Austria, Belgium, Canada, Denmark, England, Finland, France, Germany,
Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden,
Switzerland and the United States.
EMERGING MARKETS FUND. The investment objective of Emerging Markets Fund is
long-term growth of capital. The Fund seeks this objective by investing, under
normal circumstances, at least 65% of its total assets in equity securities of
companies in emerging markets. The Fund does not consider the following
countries to be emerging markets: Australia, Austria, Belgium, Canada, Denmark,
England, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New
Zealand, Norway, Spain, Sweden, Switzerland and United States. The Fund normally
may invest up to 35% of its assets in a combination of (i) debt securities of
government or corporate issuers in emerging markets; (ii) equity and debt
securities of issuers in developed countries, including the United States; (iii)
securities of issuers in emerging markets not included in the list of emerging
markets set forth in the Fund's current Prospectus, if investing therein becomes
feasible and desirable subsequent to the date of the Fund's current Prospectus;
and (iv) cash and money market instruments.
In determining what countries constitute emerging markets with respect to
Developing Market Fund and Emerging Markets Fund, the Sub-adviser will consider,
among other things, data, analysis, and classification of countries published or
disseminated by the International Bank for Reconstruction and Development
(commonly known as the World Bank) and the International Finance Corporation
("IFC").
LATIN AMERICAN FUND. The investment objective of Latin American Fund is
capital appreciation. The Fund will normally invest at least 65% of its total
assets in securities of a broad range of Latin American issuers. Under current
market conditions, the Fund expects to invest primarily in equity and debt
securities issued by companies and governments in Mexico, Chile, Brazil and
Argentina. Though the Fund can normally invest up to 35% of its total assets in
U.S. securities, the Fund reserves the right to be primarily invested in U.S.
securities for temporary defensive purposes or pending investment of the
proceeds of the offering made hereby.
SELECTION OF EQUITY INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Funds, the Sub-adviser ordinarily
considers the following factors: prospects for relative economic growth among
the different countries in which a Fund may invest; expected levels of
inflation; government policies influencing business conditions; the outlook for
currency relationships; and the range of the individual investment opportunities
available to international investors.
Statement of Additional Information Page 4
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
In analyzing companies for investment by each Fund, the Sub-adviser ordinarily
looks for one or more of the following characteristics: an above-average
earnings growth per share; high return on invested capital; healthy balance
sheet; sound financial and accounting policies and overall financial strength;
strong competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strength of management; and
general operating characteristics which will enable the companies to compete
successfully in their respective marketplaces. In certain countries,
governmental restrictions and other limitations on investment may affect the
maximum percentage of equity ownership in any one company by the Funds. In
addition, in some instances only special classes of securities may be purchased
by foreigners and the market prices, liquidity and rights with respect to those
securities may vary from shares owned by nationals.
Although the Funds value their assets daily in terms of U.S. dollars, the Funds
do not intend to convert their holdings of foreign currencies into U.S. dollars
on a daily basis. The Funds will do so from time to time, and investors should
be aware of the costs of currency conversion. Although foreign exchange dealers
do not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Funds at one rate, while offering a lesser rate of exchange should a Fund desire
to sell that currency to the dealer.
There may be times when, in the opinion of the Sub-adviser, prevailing market,
economic or political conditions warrant reducing the proportion of each Fund's
assets invested in equity securities and increasing the proportion held in cash
or short-term obligations denominated in U.S. dollars or other currencies. A
portion of each Fund's assets may be held in U.S. dollars or short-term
interest-bearing dollar-denominated securities to provide for ongoing expenses
and redemptions.
The Funds may be prohibited under the Investment Company Act of 1940, as amended
("1940 Act"), from purchasing the securities of any foreign company that, in its
most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
countries, including those in Latin America, commercial banks act as securities
broker/dealers, investment advisers and underwriters or otherwise engage in
securities-related activities, which may limit the Fund's ability to hold
securities issued by such banks. The Fund has obtained an exemption from the
Securities and Exchange Commission ("SEC") to permit it to invest in certain of
these securities subject to certain restrictions.
For investment purposes, an issuer is typically considered as located in a
particular country if it (a) is incorporated under the laws of or has its
principal office in that country, or (b) it normally derives 50% or more of its
total revenue from business in that country. However, these are not absolute
requirements, and certain companies incorporated in a particular country and
considered by the Sub-adviser to be located in that country may have substantial
off-shore operations or subsidiaries and/or export sales exceeding in size the
assets or sales in that country.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Funds may invest in the securities of investment companies (including
investment vehicles or companies advised by the Sub-adviser or its affiliates
("Affiliated Funds")) within the limits of the 1940 Act. These limitations
currently provide that, in general, each Fund may purchase shares of a
closed-end investment company unless (a) such a purchase would cause the Fund to
own in the aggregate more than 3 percent of the total outstanding voting stock
of the investment company or (b) such a purchase would cause the Fund to have
more than 5 percent of its total assets invested in the investment company or
more than 10 percent of its total assets invested in an aggregate of all such
investment companies. Investment in such investment companies may also involve
the payment of substantial premiums above the value of such companies' portfolio
securities. The Funds do not intend to invest in such investment companies
unless, in the judgment of the Sub-adviser, the potential benefits of such
investments justify the payment of any applicable premiums. The return on such
securities will be reduced by operating expenses of such companies including
payments to the investment managers of those investment companies. With respect
to investments in Affiliated Funds, the Sub-adviser waives its advisory fee to
the extent that such fees are based on assets of the Fund invested in Affiliated
Funds.
Certain countries in which the Funds invest presently may be made only by
acquiring shares of other investment companies with local governmental approval
to invest in those countries. At such time as direct investment in those
countries is allowed, the Funds anticipate investing directly in those markets.
Statement of Additional Information Page 5
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
DEPOSITARY RECEIPTS
Each Fund may hold equity securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs"), Global
Depositary Receipts ("GDRs") and European Depositary Receipts ("EDRs"), or other
securities convertible into securities of eligible issuers. These securities may
not necessarily be denominated in the same currency as the securities for which
they may be exchanged. ADRs and ADSs typically are issued by an American bank or
trust company and evidence ownership of underlying securities issued by a
foreign corporation. EDRs, which are sometimes referred to as Continental
Depositary Receipts ("CDRs"), are issued in Europe typically by foreign banks
and trust companies and evidence ownership of either foreign or domestic
securities. GDRs are similar to EDRs and are designed for use in several
international financial markets. Generally, ADRs and ADSs in registered form are
designed for use in United States securities markets and EDRs in bearer form are
designed for use in European securities markets. For purposes of each Fund's
investment policies, a Fund's investments in ADRs, ADSs, GDRs and EDRs will be
deemed to be investments in the equity securities representing securities of
foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by each Fund in connection with other
securities or separately and provide a Fund with the right to purchase at a
later date other securities of the issuer. Warrants are securities permitting,
but not obligating, their holder to subscribe for other securities or
commodities. Warrants do not carry with them the right to dividends or voting
rights with respect to the securities that they entitle their holder to
purchase, and they do not represent any rights in the assets of the issuer. As a
result, warrants may be considered more speculative than certain other types of
investments. In addition, the value of a warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have value
if it is not exercised prior to its expiration date.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Funds may make secured loans
of portfolio securities amounting to not more than 30% (in the case of
Developing Markets Fund and Emerging Markets Fund) or 25% (in the case of Latin
American Fund) of its total assets. Securities loans are made to broker/dealers
or institutional investors pursuant to agreements requiring that the loans
continuously be secured by collateral at least equal at all times to the value
of the securities lent plus any accrued interest, "marked to market" on a daily
basis. The Funds may pay reasonable administrative and custodial fees in
connection with loans of its securities. While the securities loan is
outstanding with respect to a Fund, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities within
the stated settlement period. The Fund will not have the right to vote equity
securities while they are lent, but it may call in a loan in anticipation of any
important vote. Loans will be made only to firms deemed by the Sub-adviser to be
of good standing and will not be made unless, in the judgment of the
Sub-adviser, the consideration to be earned from such loans would justify the
risk.
Statement of Additional Information Page 6
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject a Fund to investment risks that are
different in some respects from those of investments in obligations of domestic
issuers. Although a Fund typically will acquire obligations issued and supported
by the credit of U.S. or foreign banks having total assets at the time of
purchase in excess of $1 billion, this $1 billion figure is not an investment
policy or restriction of any Fund. For the purposes of calculation with respect
to the $1 billion figure, the assets of a bank will be deemed to include the
assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to a Fund if the other party
to the repurchase agreement becomes bankrupt, the Funds intend to enter into
repurchase agreements only with banks and dealers believed by the Sub-adviser to
present minimum credit risks in accordance with guidelines established by the
Trust's Board of Trustees. The Sub-adviser will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
The Funds will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, a Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on a Fund's ability to
sell the collateral and the Fund could suffer a loss. However, with respect to
financial institutions whose bankruptcy or liquidation proceedings are subject
to the U.S. Bankruptcy Code, each Fund intends to comply with provisions under
the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of a Fund's assets that may be
subject to repurchase agreements at any given time. The Funds will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 15% (for Emerging Markets Fund and Developing Markets Fund) or
10% (for Latin American Fund) of the value of its net assets would be invested
in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
No Fund's borrowings will exceed 33 1/3% of the Fund's total assets, i.e., each
Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of a Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Fund also may borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. Any borrowing by a Fund may cause greater fluctuation in the value
of its shares than would be the case if the Fund did not borrow.
The Funds' fundamental investment limitations permit them to borrow money for
leveraging purposes. Developing Markets Fund, however, currently is prohibited,
pursuant to a non-fundamental investment policy, from borrowing money in order
to purchase securities. In addition, Emerging Markets Fund and Latin American
Fund currently are prohibited, pursuant to a non-fundamental investment policy,
from purchasing securities during times when outstanding borrowings represent
more than 5% of its assets. Nevertheless, this policy may be changed in the
future by a vote of a majority of the Trust's Board of Trustees. If a Fund
employs leverage in the future, it would be subject to certain additional risks.
Use of leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the Fund's net asset value. When the
income and gains on securities purchased with the proceeds of borrowings exceed
the costs of such borrowings, the Fund's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, the Fund's earnings or net asset value would
decline faster than would otherwise be the case.
Statement of Additional Information Page 7
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Each Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which a Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. Emerging Markets Fund also may engage in
"roll" borrowing transactions which involve the Fund's sale of Government
National Mortgage Association certificates or other securities together with a
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date. Each Fund will segregate with a
custodian, cash or liquid securities in an amount sufficient to cover its
obligations under "roll" transactions (for Emerging Markets Fund) and reverse
repurchase agreements with broker/dealers. No segregation is required for
reverse repurchase agreements with banks.
SHORT SALES
The Fund may make short sales of securities, although it has no current
intention of doing so. A short sale is a transaction in which the Fund sells a
security in anticipation that the market price of that security will decline.
The Fund may make short sales (i) as a form of hedging to offset potential
declines in long positions in securities it owns, or anticipates acquiring, and
(ii) in order to maintain portfolio flexibility.
When a Fund makes a short sale of a security it does not own, it must borrow the
security sold short and deliver it to the broker-dealer or other intermediary
through which it made the short sale. The Fund may have to pay a fee to borrow
particular securities and will often be obligated to pay over any payments
received on such borrowed securities.
A Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral deposited with the intermediary.
The Fund will also be required to deposit collateral with its custodian to the
extent, if any, necessary so that the value of both collateral deposits in the
aggregate is at all times equal to at least 100% of the current market value of
the security sold short. Depending on arrangements made with the intermediary
from which it borrowed the security regarding payment of any amounts received by
the Fund on such security, the Fund may not receive any payments (including
interest) on its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss is theoretically unlimited.
Neither Emerging Markets Fund nor Latin American Fund will make a short sale if,
after giving effect to such sale, the market value of the securities sold short
exceeds 25% of the value of its total assets or the Fund's aggregate short sales
of the securities of any one issuer exceed the lesser of 2% of the Fund's net
assets or 2% of the securities of any class of the issuer. Moreover, these Funds
may engage in short sales only with respect to securities listed on a national
securities exchange. These Funds may make short sales "against the box" without
respect to such limitations. In this type of short sale, at the time of the sale
the Fund owns the security it has sold short or has the immediate and
unconditional right to acquire at no additional cost the identical security.
Developing Markets Fund may only make short sales "against the box." The Fund
might make a short sale "against the box" in order to hedge against market risks
when the Sub-adviser believes that the price of a security may decline, causing
a decline in the value of a security owned by the Fund or a security convertible
into or exchangeable for such security. In such case, any future losses in the
Fund's long position should be reduced by a gain in the short position.
Conversely, any gain in the long position should be reduced by a loss in the
short position. The extent to which such gains or losses in the long position
are reduced will depend upon the amount of the securities sold short relative to
the amount of the securities the Fund owns, either directly or indirectly, and,
in the case where the Fund owns convertible securities, changes in the
investment values or conversion premiums of such securities. There will be
certain additional transaction costs associated with short sales "against the
box," but the Fund will endeavor to offset these costs with income from the
investment of the cash proceeds of short sales.
TEMPORARY DEFENSIVE STRATEGIES
The Funds may invest in the following types of money market instruments (i.e.,
debt instruments with less than 12 months remaining until maturity) denominated
in U.S. dollars or other currencies (in the case of Latin American Fund, the
currency of any Latin American country): (a) obligations issued or guaranteed by
the U.S. or foreign governments (in the case of Latin American Fund, the
government of any Latin American country), their agencies, instrumentalities or
municipalities; (b) obligations of international organizations designed or
supported by multiple foreign governmental
Statement of Additional Information Page 8
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
entities to promote economic reconstruction or development; (c) finance company
obligations, corporate commercial paper and other short-term commercial
obligations; (d) bank obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances); (e) repurchase agreements
with respect to the foregoing; and (f) other substantially similar short-term
debt securities with comparable characteristics.
The Funds may invest in commercial paper rated as low as A-3 by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or P-3 by Moody's
Investors Service, Inc. ("Moody's") or, if not rated, determined by the Manager
to be of comparable quality. Obligations rated A-3 and P-3 are considered by S&P
and Moody's, respectively, to have an acceptable capacity for timely repayment.
However, these securities may be more vulnerable to adverse effects of changes
in circumstances than obligations carrying higher designations.
SAMURAI AND YANKEE BONDS
Subject to its fundamental investment restrictions, Developing Markets Fund and
Emerging Markets Fund may invest in yen-denominated bonds sold in Japan by
non-Japanese issuers ("Samurai bonds"), and may invest in dollar-denominated
bonds sold in the United States by non-U.S. issuers ("Yankee bonds"). As
compared with bonds issued in their countries of domicile, such bond issues
normally carry a higher interest rate but are less actively traded. It is the
policy of each of these Funds to invest in Samurai or Yankee bond issues only
after taking into account considerations of quality and liquidity, as well as
yield. In the case of Emerging Markets Fund, these bonds would be issued by
governments which are members of the Organization for Economic Cooperation and
Development or have AAA ratings.
DEBT CONVERSIONS
Several Latin American countries have adopted debt conversion programs, pursuant
to which investors may use external debt of a country, directly or indirectly,
to make investments in local companies. The terms of the various programs vary
from country to country, although each program includes significant restrictions
on the application of the proceeds received in the conversion and on the
remittance of profits on the investment and of the invested capital. Latin
American Fund intends to acquire Sovereign Debt, as defined in the Prospectus,
to hold and trade in appropriate circumstances as described in the Prospectus,
as well as to participate in Latin American debt conversion programs. The
Sub-adviser will evaluate opportunities to enter into debt conversion
transactions as they arise but does not currently intend to invest more than 5%
of the Fund's assets in such programs.
PREMIUM SECURITIES
Developing Markets Fund may invest in income securities bearing coupon rates
higher than prevailing market rates. Such "premium" securities are typically
purchased at prices greater than the principal amounts payable on maturity. The
Fund will not amortize the premium paid for such securities in calculating its
net investment income. As a result, in such cases the purchase of such
securities provides the Fund a higher level of investment income distributable
to shareholders on a current basis than if the Fund purchased securities bearing
current market rates of interest. If securities purchased by the Fund at a
premium are called or sold prior to maturity, the Fund will realize a loss to
the extent the call or sale price is less than the purchase price. Additionally,
the Fund will realize a loss if it holds such securities to maturity.
INDEXED DEBT SECURITIES
Developing Markets Fund may invest in debt securities issued by banks and other
business entities not located in developing market countries that are indexed to
certain specific foreign currency exchange rates, interest rates or other
reference rates. The terms of such securities provide that their principal
amount is adjusted upwards or downwards (but ordinarily not below zero) at
maturity to reflect changes in the exchange rate between two currencies (or
other rates) while the obligations are outstanding. While such securities offer
the potential for an attractive rate of return, they also entail the risk of
loss of principal. New forms of such securities continue to be developed. The
Fund may invest in such securities to the extent consistent with its investment
objectives.
STRUCTURED INVESTMENTS
Developing Markets Fund may invest a portion of its assets in interests in
entities organized and operated solely for the purpose of restructuring the
investment characteristics of Sovereign Debt. This type of restructuring
involves the deposit with or purchase by an entity, such as a corporation or
trust, of specified instruments (such as commercial bank loans or Brady Bonds)
and the issuance by that entity of one or more classes of securities
("Structured Investments") backed by, or representing interests in, the
underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued Structured Investments to create securities
with different investment characteristics such as varying maturities, payment
priorities and interest rate provisions, and the extent of the payments made
with respect to Structured Investments is dependent on the extent of the cash
flow on the underlying instruments. Because Structured
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Investments of the type in which the Fund anticipates it will invest typically
involve no credit enhancement, their credit risk generally will be equivalent to
that of the underlying instruments.
Developing Markets Fund is permitted to invest in a class of Structured
Investments that is either subordinated or not subordinated to the right of
payment of another class. Subordinated Structured Investments typically have
higher yields and present greater risks than unsubordinated Structured
Investments.
Certain issuers of Structured Investments may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, Developing Markets Fund's
investment in these Structured Investments may be limited by the restrictions
contained in the 1940 Act described above under "Investment Objectives and
Policies -- Investments in Other Investment Companies." Structured Investments
are typically sold in private placement transactions, and there currently is no
active trading market for Structured Investments.
STRIPPED INCOME SECURITIES
Developing Markets Fund may invest a portion of its assets in stripped income
securities, which are obligations representing an interest in all or a portion
of the income or principal components of an underlying or related security, a
pool of securities or other assets. In the most extreme case, one class will
receive all of the interest (the interest only or "IO" class), while the other
class will receive all of the principal (the principal-only or "PO" class). The
market values of stripped income securities tend to be more volatile in response
to changes in interest rates than are conventional income securities.
FLOATING AND VARIABLE RATE INCOME SECURITIES
Developing Markets Fund may invest a portion of its assets in floating or
variable rate income securities. Income securities may provide for floating or
variable rate interest or dividend payments. The floating or variable rate may
be determined by reference to a known lending rate, such as a bank's prime rate,
a certificate of deposit rate or the London Inter Bank Offered Rate (LIBOR).
Alternatively, the rate may be determined through an auction or remarketing
process. The rate also may be indexed to changes in the values of interest rate
or securities indexes, currency exchange rates or other commodities. The amount
by which the rate paid on an income security may increase or decrease may be
subject to periodic or lifetime caps. Floating and variable rate income
securities include securities whose rates vary inversely with changes in market
rates of interest. Such securities may also pay a rate of interest determined by
applying a multiple to the variable rate. The extent of increases and decreases
in the value of securities whose rates vary inversely with changes in market
rates of interest generally will be larger than comparable changes in the value
of an equal principal amount of a fixed rate security having similar credit
quality, redemption provisions and maturity.
SWAPS, CAPS, FLOORS AND COLLARS
Developing Markets Fund may enter into interest rate, currency and index swaps
and may purchase or sell related caps, floors and collars and other derivative
instruments. The Fund expects to enter into these transactions primarily to
preserve a return or spread on a particular investment or portion of its
portfolio, to protect against currency fluctuations, as a technique for managing
the portfolio's duration (I.E., the price sensitivity to changes in interest
rates) or to protect against any increase in the price of securities the Fund
anticipates purchasing at a later date. The Fund intends to use these
transactions as hedges and will not sell interest rate caps, floors or collars
if it does not own securities or other instruments providing an income stream
roughly equivalent to what the Fund may be obligated to pay.
Interest rate swaps involve the exchange by Developing Markets Fund with another
party of their respective commitments to pay or receive interest (for example,
an exchange of floating rate payments for fixed rate payments) with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount based on changes in the values of the reference
indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a combination of a
cap and a floor that preserves a certain return within a predetermined range of
interest rates or values.
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Sub-adviser's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While the Sub-adviser is experienced in
the use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a
short hedge because the Sub-adviser projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might by wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (i.e.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. A Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Funds.
WRITING CALL OPTIONS
Each Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of the Sub-adviser are not expected to make any major price moves in the
near future but that, over the long term, are deemed to be attractive
investments for a Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Fund's investment objective. When writing a call option, a Fund, in return for
the premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, a Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that a Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Funds do not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Funds' policies that limit the pledging or mortgaging of their
assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund will be obligated to
sell the security or currency at less than its market value.
The premium that a Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium a Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, the Sub-adviser will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit a Fund to write another
call option on the underlying security or currency with either a different
exercise price, expiration date or both.
Each Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, a Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase transaction if the
cost of the transaction is less or more, respectively, than the premium received
from writing the option. Because increases in the market price of a call option
generally will reflect increases in the market price of the underlying security
or currency, any loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the underlying security or
currency owned by the Fund.
WRITING PUT OPTIONS
Each Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is identical substantially to that of call options.
A Fund generally would write put options in circumstances where the Sub-adviser
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to sell the security or currency at more than its market value.
PURCHASING PUT OPTIONS
Each Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, a Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
A Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. The premium paid for the put option and any
transaction costs would reduce any profit otherwise available for distribution
when the security or currency is eventually sold.
A Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Fund may purchase call options on securities, indices and currencies. As
the holder of a call option, a Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. A Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by a Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to a Fund in purchasing a large block of securities
that would be more difficult to acquire by direct market purchases. So long as
it holds such a call option, rather than the underlying security or currency
itself, the Fund is partially protected from any unexpected decline in the
market price of the underlying security or currency and, in such event, could
allow the call option to expire, incurring a loss only to the extent of the
premium paid for the option.
A Fund also may purchase call options on underlying securities or currencies it
owns to avoid realizing losses that would result in a reduction of its current
return. For example, where a Fund has written a call option on an underlying
security or currency having a current market value below the price at which it
purchased the security or currency, an increase in the market price could result
in the exercise of the call option written by the Fund and the realization of a
loss on the underlying security or currency. Accordingly, the Fund could
purchase a call option on the same underlying security or currency, which could
be exercised to fulfill the Fund's delivery obligations under its written call
(if it is exercised). This strategy could allow the Fund to avoid selling the
portfolio security or currency at a time when it has an unrealized loss;
however, the Fund would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of a Fund's
total assets at the time of purchase.
Each Fund may attempt to accomplish objectives similar to those involved in its
use of Forward Contracts by purchasing put or call options on currencies. A put
option gives a Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives a Fund as
purchaser the right (but not the obligation) to purchase a specified amount of
currency at the exercise price at any time until (American style) or on
(European style) the expiration date. A Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
anticipates holding securities. If the currency's value should decline against
the dollar, the loss in currency value should be offset, in whole or in part, by
an increase in the value of the put. If the value of the currency instead should
rise against the dollar, any gain to the Fund would be reduced by the premium it
had paid for the put option. A currency call option might be purchased, for
example, in anticipation of, or to protect against, a rise in the value against
the dollar of a currency in which a Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation), and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
A Fund may also sell OTC options and, in connection therewith, segregate assets
or cover its obligations with respect to OTC options written by the Fund. The
assets used as cover for OTC options written by the Fund will be considered
illiquid unless the OTC options are sold to qualified dealers who agree that the
Fund may repurchase any OTC option it writes at a maximum price to be calculated
by a formula set forth in the option agreement. The cover for an OTC option
written subject to this procedure would be considered illiquid only to the
extent that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.
A Fund's ability to establish and close out positions in exchange-listed options
depends on the existence of a liquid market. Each Fund intends to purchase or
write only those exchange-traded options for which there appears to be a liquid
secondary market. However, there can be no assurance that such a market will
exist at any particular time. Closing transactions can be made for OTC options
only by negotiating directly with the contra party or by a transaction in the
secondary market if any such market exists. Although each Fund will enter into
OTC options only with contra parties that are expected to be capable of entering
into closing transactions with the Fund, there is no assurance that the Funds
will in fact be able to close out an OTC option position at a favorable price
prior to expiration. In the event of insolvency of the contra party, a Fund
might be unable to close out an OTC option position at any time prior to its
expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When a Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When a Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When a Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, a Fund
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
cannot, as a practical matter, acquire and hold a portfolio containing exactly
the same securities as underlie the index and, as a result, bears a risk that
the value of the securities held will vary from the value of the index.
Even if a Fund could assemble a securities portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, a Fund, as the call writer, will not know that it has
been assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If a Fund purchases an index option and exercises it before the closing index
value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively, "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. A Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
A Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, a Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, a Fund realizes a gain; if it is
more, a Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, a Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that a Fund will be able to
enter into an offsetting
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AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
transaction with respect to a particular Futures Contract at a particular time.
If a Fund is not able to enter into an offsetting transaction, the Fund will
continue to be required to maintain the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
Each Fund's Futures transactions will be entered into for hedging purposes only;
that is, Futures Contracts will be sold to protect against a decline in the
price of securities or currencies that the Fund owns, or Futures Contracts will
be purchased to protect the Fund against an increase in the price of securities
or currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure a
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which a Fund entered into the Futures Contract will
be made on a daily basis as the price of the underlying security, currency or
index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Fund's portfolio being
hedged. The degree of imperfection of correlation depends upon circumstances
such as: variations in speculative market demand for Futures and for securities
or currencies, including technical influences in Futures trading; and
differences between the financial instruments being hedged and the instruments
underlying the standard Futures Contracts available for trading. A decision of
whether, when, and how to hedge involves skill and judgment, and even a
well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required
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AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
to make daily variation margin payments and might be required to maintain the
position being hedged by the Future or option or to maintain cash or securities
in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, 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 is exercised on the
last trading day 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 level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund writes an option on a Futures Contract, it will be required to deposit
initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is
"in-the-money"if the value of the underlying Futures Contract exceeds the
strike, i.e., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Trust's Board
of Trustees without a shareholder vote. This limitation does not limit the
percentage of the Fund's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. A Fund either may
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
A Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. A Fund might sell a
particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement and no commissions are charged at
any stage for trades. Each Fund will enter into such Forward Contracts with
major U.S. or foreign banks and securities or currency dealers in accordance
with the guidelines approved by the Trust's Board of Trustees.
Each Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing a Fund
to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, a Fund may
close out a Forward Contract requiring it to purchase a specified currency by
entering into a second contract, if its contra party agrees, entitling it to
sell the same amount of the same currency on the maturity date of the first
contract. The Fund would realize a gain or loss as a result of entering into
such an offsetting Forward Contract under either circumstance to the extent the
exchange rate or rates between the currencies involved moved between the
execution dates of the first contract and the offsetting contract.
The cost to a Fund of engaging in Forward Contracts varies with factors such as
the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities a Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
Each Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that a Fund owns or intends to acquire that are attributable to changes
in the value of the currency in which it is denominated. Such hedges do not,
however, protect against price movements in the securities that are attributable
to other causes.
A Fund might seek to hedge against changes in the value of a particular currency
when no Futures Contract, Forward Contract or option involving that currency is
available or one of such contracts is more expensive than certain other
contracts. In such cases, a Fund may hedge against price movements in that
currency by entering into a contract on another currency or basket of
currencies, the values of which the Sub-adviser believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts,
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
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AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options purchased by a Fund) expose the Fund to an obligation to another party.
No Fund will enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, currencies, or other options,
Forward Contracts or Futures Contracts, or (2) cash, receivables and short-term
debt securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Funds will comply with SEC
guidelines regarding cover for these instruments and, if the guidelines so
require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
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ILLIQUID SECURITIES
Developing Markets Fund and Emerging Markets Fund each may invest up to 15% of
its net assets, and Latin American Fund up to 10% of its net assets, in illiquid
securities. Securities may be considered illiquid if a Fund cannot reasonably
expect within seven days to sell the security for approximately the amount at
which the Fund values such securities. The sale of illiquid securities, if they
can be sold at all, generally will require more time and result in higher
brokerage charges or dealer discounts and other selling expenses than the sale
of liquid securities, such as securities eligible for trading on U.S. securities
exchanges or in the over-the-counter markets. Moreover, restricted securities
which may be illiquid for purposes of this limitation, often sell, if at all, at
a price lower than similar securities that are not subject to restrictions on
resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Statement of Additional Information Page 19
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Trust's Board of
Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to the Sub-adviser in accordance with
procedures approved by the Board. The Sub-adviser takes into account a number of
factors in reaching liquidity decisions, including (i) the frequency of trading
in the security, (ii) the number of dealers who make quotes for the security,
(iii) the number of dealers who have undertaken to make a market in the
security, (iv) the number of other potential purchasers and (v) the nature of
the security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). The
Sub-adviser monitors the liquidity of securities in each Fund's portfolio and
periodically reports such determinations to the Board. If the liquidity
percentage restriction of a Fund is satisfied at the time of investment, a later
increase in the percentage of illiquid securities held by the Fund resulting
from a change in market value or assets will not constitute a violation of that
restriction. If as a result of a change in market value or assets, the
percentage of illiquid securities held by a Fund increases above the applicable
limit, the Sub-adviser will take appropriate steps to bring the aggregate amount
of illiquid assets back within the prescribed limitations as soon as reasonably
practicable, taking into account the effect of any disposition on the Fund.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in emerging
markets, any change in the leadership or policies of the governments of those
countries or in the leadership or policies of any other government which
exercises a significant influence over those countries, may halt the expansion
of or reverse the liberalization of foreign investment policies now occurring
and thereby eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property similar to the property which
will be represented by the securities purchased by the Funds. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Funds will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Funds could lose their entire investment in
such countries. The Funds' investments would similarly be adversely affected by
exchange control regulation in any of those countries.
RELIGIOUS AND ETHNIC STABILITY. Certain countries in which the Funds may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of a Fund's investment in those countries. Instability may also
result from, among
Statement of Additional Information Page 20
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
other things, (i) authoritarian governments or military involvement in political
and economic decision-making, including changes in government through
extra-constitutional means, (ii) popular unrest associated with demands for
improved political, economic and social conditions and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which the Funds
invest and adversely affect the value of the Funds' assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Funds. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Funds. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. If there is a
deterioration in a country's balance of payments or for other reasons, a country
may impose restrictions on foreign capital remittances abroad. The Funds could
be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ in some cases significantly from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Funds will
not be registered with the SEC or regulators of any foreign country, nor will
the issuers thereof be subject to the SEC's reporting requirements. Thus, there
will be less available information concerning most foreign issuers of securities
held by the Funds than is available concerning U.S. issuers. In instances where
the financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, the Sub-adviser will take appropriate steps
to evaluate the proposed investment, which may include on-site inspection of the
issuer, interviews with its management and consultations with accountants,
bankers and other specialists. There is substantially less publicly available
information about foreign companies than there are reports and ratings published
about U.S. companies and the U.S. government. In addition, where public
information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities on foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on market manipulation, insider trading
rules, shareholder proxy requirements and timely disclosure of information. In
addition, for companies that keep accounting records in local currency,
inflation accounting rules in some Latin American countries require, for both
tax and accounting purposes, that certain assets and liabilities be restated on
the company's balance sheet in order to express items in terms of currency of
constant purchasing power. Inflation accounting may indirectly generate losses
or profits.
CURRENCY FLUCTUATIONS. Because the Funds, under normal circumstances, each
will invest a substantial portion of its total assets in the securities of
foreign issuers which are denominated in foreign currencies, the strength or
weakness of the U.S. dollar against such foreign currencies will account for
part of each Fund's investment performance. A decline in the value of any
particular currency against the U.S. dollar will cause a decline in the U.S.
dollar value of a Fund's holdings of securities and cash denominated in such
currency and, therefore, will cause an overall decline in the Fund's net asset
value and any net investment income and capital gains derived from such
securities to be distributed in U.S. dollars to shareholders of that Fund.
Moreover, if the value of the foreign currencies in which a Fund receives its
income falls relative to the U.S. dollar between receipt of the income and the
making of Fund distributions, the Fund may be required to liquidate securities
in order to make distributions if the Fund has insufficient cash in U.S. dollars
to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of business activity in certain other countries and the United
States, and other economic and financial conditions affecting the world economy.
Statement of Additional Information Page 21
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Although the Funds value their assets daily in terms of U.S. dollars, they do
not intend to convert their holdings of foreign currencies into U.S. dollars on
a daily basis. The Funds will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to a
Fund at one rate, while offering a lesser rate of exchange should a Fund desire
to sell that currency to the dealer.
Certain Latin American countries may have managed currencies which are
maintained at artificial levels to the U.S. dollar rather than at levels
determined by the market. This type of system can lead to sudden and large
adjustments in the currency which, in turn, can have a disruptive and negative
effect on foreign investors. For example, in late 1994 the value of the Mexican
peso lost more than one-third of its value relative to the dollar. Certain Latin
American countries also may restrict the free conversion of their currency into
foreign currencies, including the U.S. dollar. There is no significant foreign
exchange market for certain currencies and it would, as a result, be difficult
for the Funds to engage in foreign currency transactions designed to protect the
value of the Funds' interests in securities denominated in such currencies.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Funds are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive opportunities. Inability to dispose of a portfolio security due
to settlement problems either could result in losses to a Fund due to subsequent
declines in value of the portfolio security or, if the Fund has entered into a
contract to sell the security, could result in possible liability to the
purchaser. The Sub-adviser will consider such difficulties when determining the
allocation of the Funds' assets, although the Sub-adviser does not believe that
such difficulties will have a material adverse effect on the Funds' portfolio
trading activities.
Each Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian, (ii) maintaining appropriate safeguards
to protect a Fund's investments and (iii) possible difficulties in obtaining and
enforcing judgments against such custodians.
A high proportion of the shares of many Latin American companies may be held by
a limited number of persons, which may further limit the number of shares
available for investment by the Funds, particularly Latin American Fund. A
limited number of issuers in most, if not all, Latin American securities markets
may represent a disproportionately large percentage of market capitalization and
trading value. The limited liquidity of Latin American securities markets also
may affect a Fund's ability to acquire or dispose of securities at the price and
time it wishes to do so. In addition, certain Latin American securities markets,
including those of Argentina, Brazil, Chile and Mexico, are susceptible to being
influenced by large investors trading significant blocks of securities or by
large dispositions of securities resulting from the failure to meet margin calls
when due.
The high volatility of certain Latin American securities markets is evidenced by
dramatic movements in the Brazilian and Mexican markets in recent years. This
market volatility may result in greater volatility in a Fund's net asset value
than would be the case for companies investing in domestic securities. If a Fund
were to experience unexpected net redemptions, it could be forced to sell
securities in its portfolio without regard to investment merit, thereby
decreasing the asset base over which Fund expenses can be spread and possibly
reducing the Fund's rate of return.
WITHHOLDING TAXES. Each Fund's net investment income from securities of
foreign issuers may be subject to withholding taxes by the foreign issuer's
country, thereby reducing that income or delaying the receipt of income where
those taxes may be recaptured. See "Taxes."
CONCENTRATION. To the extent a Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, it may be subject to greater risks and may experience greater volatility
than a fund that is more broadly diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in equity
securities of companies in emerging markets may entail greater risks than
investing in equity securities in developed countries. These risks include (i)
less social, political
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
and economic stability; (ii) the small current size of the markets for such
securities and the currently low or nonexistent volume of trading, which result
in a lack of liquidity and in greater price volatility; (iii) certain national
policies which may restrict a Fund's investment opportunities, including
restrictions on investment in issuers or industries deemed sensitive to national
interests; (iv) foreign taxation; and (v) the absence of developed structures
governing private or foreign investment or allowing for judicial redress for
injury to private property.
Investing in the securities of companies in emerging markets, including the
markets of Latin America and certain Asian markets such as Taiwan, Malaysia and
Indonesia, may entail special risks relating to potential political and economic
instability and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment, convertibility into U.S.
dollars and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, a Fund
could lose its entire investment in any such country.
Emerging securities markets, such as the markets of Latin America, are
substantially smaller, less developed, less liquid and more volatile than the
major securities markets. The limited size of emerging securities markets and
limited trading value in issuers compared to the volume of trading in U.S.
securities could cause prices to be erratic for reasons apart from factors that
affect the quality of the securities. For example, limited market size may cause
prices to be unduly influenced by traders who control large positions. Adverse
publicity and investors' perceptions, whether or not based on fundamental
analysis, may decrease the value and liquidity of portfolio securities,
especially in these markets. In addition, securities traded in certain emerging
markets may be subject to risks due to the inexperience of financial
intermediaries, a lack of modern technology, the lack of a sufficient capital
base to expand business operations, and the possibility of permanent or
temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities there may
be share registration and delivery delays or failures.
Many emerging market countries, including markets in Latin America, have
experienced substantial, and in some periods extremely high, rates of inflation
for many years. This has, in turn, lead to high interest rates, extreme measures
by governments to keep inflation in check and a generally debilitating effect on
economic growth. Inflation and rapid fluctuations in inflation rates and
corresponding currency devaluations have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries, including markets in Latin America.
SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
U.S. securities markets and should be considered highly speculative. Such risks
include the following: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends, and on the ability of Developing Markets Fund and Emerging
Markets Fund to exchange local currencies for U.S. dollars; (7) political
instability and social unrest and violence; (8) the risk that the governments of
Russia and Eastern European countries may decide not to continue to support the
economic reform programs implemented recently and could follow radically
different political and/or economic policies to the detriment of investors,
including non-market-oriented policies such as the support of certain industries
at the expense of other sectors or investors, or a return to the centrally
planned economy that existed when such countries had a communist form of
government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies of Pacific
region countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made periodically in certain of such
currencies. Certain countries, such as India, face serious exchange constraints.
Statement of Additional Information Page 23
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Many of the Asia Pacific region countries may be subject to a greater degree of
social, political and economic instability than is the case in the United
States. Such instability may result from, among other things, the following: (i)
authoritarian governments or military involvement in political and economic
decision making, and changes in government through extra-constitutional means;
(ii) popular unrest associated with demands for improved political, economic and
social conditions; (iii) internal insurgencies; (iv) hostile relations with
neighboring countries; and (v) ethnic, religious and racial disaffection. Such
social, political and economic instability could significantly disrupt the
principal financial markets in which Developing Markets Fund and Emerging
Markets Fund invest and adversely affect the value of such Funds' assets. In
addition, asset expropriations or future confiscatory levels of taxation
possibly may affect the Funds.
Several of the Asia Pacific region countries have, or in the past have had,
hostile relationships with neighboring nations or have experienced internal
insurgency. Thailand has experienced border conflicts with Laos and Cambodia,
and India is engaged in border disputes with several of its neighbors, including
China and Pakistan. An uneasy truce exists between North Korea and South Korea,
and the recurrence of hostilities remains possible. Reunification of North Korea
and South Korea could have a detrimental effect on the economy of South Korea.
Also, China continues to claim sovereignty over Taiwan and recently has
conducted military maneuvers near Taiwan.
The economies of most of the Asia Pacific region countries are heavily dependent
upon international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners, principally the
United States, Japan, China and the European Community. The enactment by the
United States or other principal trading partners of protectionist trade
legislation, reduction of foreign investment in the local economies and general
declines in the international securities markets could have a significant
adverse effect upon the securities markets of the Asia Pacific region countries.
In addition, the economies of some of the Asia Pacific region countries,
Australia and Indonesia, for example, are vulnerable to weakness in world prices
for their commodity exports, including crude oil.
China recently assumed sovereignty over Hong Kong in July 1997. Although China
has committed by treaty to preserve the economic and social freedoms enjoyed in
Hong Kong for fifty years, the continuation of the current form of the economic
system in Hong Kong will depend on the actions of the government of China. In
addition, such assumption of sovereignty has increased sensitivity in Hong Kong
to political developments and statements by public figures in China. Business
confidence in Hong Kong, therefore, can be significantly affected by such
developments and statements, which in turn can affect markets and business
performance.
In addition, there is continuing risk that the Hong Kong dollar will be devalued
and a risk of possible loss of investor confidence in the Hong Kong markets and
dollar. However, factors exist that are likely to mitigate this risk. First,
China has stated its intention to implement a "one country, two systems" policy,
which would preserve monetary sovereignty and leave control in the hands of the
Hong Kong Monetary Authority ("HKMA").
Second, fixed rate parity with the U.S. dollar is seen as critical to
maintaining investors' confidence in the transition to Chinese rule, and,
therefore, it is anticipated that, if international investors lose confidence in
Hong Kong dollar assets, the HKMA would take steps to support the currency,
though the taking of such steps cannot be assured. Third, Hong Kong's and
China's sizable combined foreign exchange reserve may be used to support the
value of the Hong Kong dollar, provided that China does not appropriate such
reserves for other uses, which is not anticipated but cannot be assured.
Finally, China would be likely to experience significant adverse political and
economic consequences if confidence in the Hong Kong dollar and the territory
assets were to be endangered.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Statement of Additional Information Page 24
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.
It should be noted that some Latin American countries require governmental
approval for the repatriation of investment income, capital or the proceeds of
securities sales by foreign investors. For instance, at present, capital
invested directly in Chile cannot under most circumstances be repatriated for at
least one year. The Funds, particularly Latin American Fund, could be adversely
affected by delays in, or a refusal to grant, any required governmental approval
for repatriation, as well as by the application to it of other restrictions on
investments.
SOVEREIGN DEBT. Sovereign Debt generally offers high yields, reflecting not
only perceived credit risk, but also the need to compete with other local
investments in domestic financial markets. Certain Latin American countries are
among the largest debtors to commercial banks and foreign governments. A
sovereign debtor's willingness or ability to repay principal and interest due in
a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy towards
the International Monetary Fund and the political constraints to which a
sovereign debtor may be subject. Sovereign debtors may default on their
Sovereign Debt. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and others abroad
to reduce principal and interest arrearages on their debt. The commitment on the
part of these governments, agencies and others to make such disbursements may be
conditioned on a sovereign debtor's implementation of economic reforms and/or
economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
In recent years, some of the Latin American countries in which the Funds expect
to invest have encountered difficulties in servicing their Sovereign Debt. Some
of these countries have withheld payments of interest and/or principal of
Sovereign Debt. These difficulties have also led to agreements to restructure
external debt obligations -- in particular, commercial bank loans, typically by
rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. In the future, holders of
Sovereign Debt may be requested to participate in similar reschedulings of such
debt.
The ability of Latin American governments to make timely payments on their
Sovereign Debt is likely to be influenced strongly by a country's balance of
trade and its access to trade and other international credits. A country whose
exports are concentrated in a few commodities could be vulnerable to a decline
in the international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports. Such events could diminish a country's trade account
surplus, if any. To the extent that a country receives payment for its exports
in currencies other than hard currencies, its ability to make hard currency
payments could be affected.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing Sovereign Debt could adversely affect a Fund's investments.
The countries issuing such instruments are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their Sovereign Debt. While the Sub-adviser intends to manage each Fund's
portfolio in a manner that will minimize the exposure to such risks, there can
be no assurance that adverse political changes will not cause the Funds to
suffer losses of interest or principal on any of their holdings.
Periods of economic uncertainty may result in the volatility of market prices of
Sovereign Debt and in turn, a Fund's net asset value, to a greater extent than
the volatility inherent in domestic securities. The value of Sovereign Debt will
likely vary inversely with changes in prevailing interest rates, which are
subject to considerable variance in the international market. If a Fund were to
experience unexpected net redemptions, it may be forced to sell Sovereign Debt
in its portfolio without regard to investment merit, thereby decreasing its
asset base over which Fund expenses can be spread and possibly reducing its rate
of return.
Statement of Additional Information Page 25
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AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
DEVELOPING MARKETS FUND
Developing Markets Fund's investment objectives may not be changed without the
approval of a majority of its outstanding shares. In addition, Developing
Markets Fund has adopted the following fundamental investment limitations that
may not be changed without approval of a majority of its outstanding shares.
Developing Markets Fund may not:
(1) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of Developing Markets Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Fund may borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes;
(2) purchase any security if, as a result of that purchase, 25% or more
of Developing Markets Fund's total assets would be invested in securities of
issuers having their principal business activities in the same industry,
except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities;
(3) engage in the business of underwriting securities of other issuers,
except to the extent that Developing Markets Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(4) purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
Developing Markets Fund may exercise rights under agreements relating to
such securities, including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner;
(5) purchase or sell physical commodities, but Developing Markets Fund
may purchase, sell or enter into financial options and futures, forward and
spot currency contracts, swap transactions and other financial contracts or
derivative instruments; or
(6) make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan.
Notwithstanding any other investment policy, Developing Markets Fund may invest
all of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of the concentration policy of Developing Markets Fund contained in
limitation (2) above, the Fund intends to comply with the SEC staff position
that securities issued or guaranteed as to principal and interest by any one
single foreign government, or by all supranational organizations in the
aggregate, are considered to be securities of issuers in the same industry.
In addition, to comply with federal tax requirements for qualification as a
"regulated investment company" ("RIC"), Developing Markets Fund's investments
will be limited so that, at the close of each quarter of its taxable year, (a)
not more than 25% of the value of its total assets is invested in the securities
(other than U.S government securities or the securities of other RICs) of any
one issuer and (b) at least 50% of the value of its total assets is represented
by cash and cash items, U.S. government securities, securities of other RICs and
other securities, with these other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of its total assets
and that does not represent more than 10% of the issuer's outstanding voting
securities ("Diversification Requirements"). These tax-related limitations may
be
Statement of Additional Information Page 26
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
changed by the Company's Board of Trustees to the extent necessary to comply
with changes to applicable tax requirements.
The following investment policy of Developing Markets Fund is not a fundamental
policy and may be changed by vote of the Trust's Board of Trustees without
shareholder approval: Developing Markets Fund will not purchase securities on
margin, provided that the Fund may obtain short-term credits as may be necessary
for the clearance of purchases and sales of securities, and further provided
that the Fund may make margin deposits in connection with its use of financial
options and futures, forward and spot currency contracts, swap transactions and
other financial contracts or derivative instruments.
EMERGING MARKETS FUND
Emerging Markets Fund has adopted the following investment limitations as
fundamental policies which (unless otherwise noted) may not be changed without
approval of a majority of the outstanding shares of the Fund.
Emerging Markets Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of Emerging Markets Fund's total assets would be invested in securities of
issuers having their principal business activities in the same industry,
except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
Emerging Markets Fund may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner;
(3) Purchase or sell physical commodities, but Emerging Markets Fund may
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that Emerging Markets Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(5) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(6) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of Emerging Markets Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Fund may borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes; or
(7) Purchase securities of any one issuer if, as a result, more than 5%
of Emerging Markets Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the outstanding
voting securities of that issuer, except that up to 25% of the Fund's total
assets may be invested without regard to this limitation, and except that
this limitation does not apply to securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities or to securities issued
by other investment companies.
Notwithstanding any other investment policy, Emerging Markets Fund may invest
all of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of Emerging Markets Fund's concentration policy contained in
limitation (1) above, the Fund intends to comply with the SEC staff position
that securities issued or guaranteed as to principal and interest by any single
foreign government or any supranational organizations in the aggregate are
considered to be securities of issuers in the same industry.
Statement of Additional Information Page 27
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
The following operating policies of Emerging Markets Fund are not fundamental
policies and may be changed by vote of the Trust's Board of Trustees without
shareholder approval. Emerging Markets Fund may not:
(1) Invest in securities of an issuer if the investment would cause
Emerging Markets Fund to own more than 10% of any class of securities of any
one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of Emerging Markets Fund's portfolio, after
taking into account unrealized profits and unrealized losses on any
contracts the Fund has entered into;
(4) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of Emerging Markets Fund's
total assets, except that the Fund may purchase securities when outstanding
borrowings represent less than 5% of the Fund's assets;
(5) Purchase securities on margin, provided that Emerging Markets Fund
may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the Fund may
make margin deposits in connection with its use of financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to the Emerging Markets Fund's Prospectus for further
information with respect to Emerging Markets Fund's investment objective, which
may not be changed without the approval of the shareholders, and other
investment policies, techniques and limitations, which may be changed without
shareholder approval.
LATIN AMERICAN FUND
Latin American Fund has adopted the following investment limitations as
fundamental policies which (unless otherwise noted) may not be changed without
approval a majority of the outstanding shares of the Fund.
Latin American Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of Latin American Fund's total assets would be invested in securities of
issuers having their principal business activities in the same industry,
except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
Latin American Fund may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that Latin American Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of Latin American Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Fund may borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes; or
Statement of Additional Information Page 28
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
(6) Purchase or sell physical commodities, but Latin American Fund may
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments.
Notwithstanding any other investment policy, Latin American Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of Latin American Fund's concentration policy contained in
limitation (1), above, the Fund intends to comply with the SEC staff position
that securities issued or guaranteed as to principal and interest by any single
foreign government are considered to be securities of issuers in the same
industry.
The following operating policies of Latin American Fund are not fundamental
policies and may be changed by vote of the Trust's Board of Trustees without
shareholder approval. Latin American Fund may not:
(1) Invest in securities of an issuer if the investment would cause
Latin American Fund to own more than 10% of any class of securities of any
one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 10% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of Latin American Fund's portfolio, after taking
into account unrealized profits and unrealized losses on any contracts the
Fund has entered into;
(5) Make any additional investments while borrowings exceed 5% of Latin
American Fund's total assets;
(6) Purchase securities on margin, provided that Latin American Fund may
obtain short-term credits as may be necessary for the clearance of purchases
and sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Latin American Fund has the authority to invest up to 10% of its total assets in
shares of other investment companies pursuant to the 1940 Act. The Fund may not
invest more than 5% of its total assets in any one investment company or acquire
more than 3% of the outstanding voting securities of any one investment company.
Investors should refer to the Latin American Fund's Prospectus for further
information with respect to Latin American Fund's investment objective, which
may not be changed without the approval of the shareholders, and other
investment policies, techniques and limitations, which may be changed without
shareholder approval.
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Trust's Board of Trustees, the
Sub-adviser is responsible for the execution of each Fund's portfolio
transactions and the selection of broker/dealers who execute such transactions
on behalf of the Funds. In executing portfolio transactions, the Sub-adviser
seeks the best net results for each Fund, taking into account such factors as
the price (including the applicable brokerage commission or dealer spread), size
of the order, difficulty of execution and operational facilities of the firm
involved. Although the Sub-adviser generally seeks reasonably competitive
commission
Statement of Additional Information Page 29
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AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
rates and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Funds may engage in soft dollar
arrangements for research services, as described below, the Funds have no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
Debt securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
government securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions.
Consistent with the interests of each Fund, the Sub-adviser may select brokers
to execute a Fund's portfolio transactions, on the basis of the research and
brokerage services they provide to the Sub-adviser for its use in managing the
Fund and its other advisory accounts. Such services may include furnishing
analyses, reports and information concerning issuers, industries, securities,
geographic regions, economic factors and trends, portfolio strategy, and
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement). Research and
brokerage services received from such brokers are in addition to, and not in
lieu of, the services required to be performed by the Sub-adviser under the
investment management and administration contracts. A commission paid to such
brokers may be higher than that which another qualified broker would have
charged for effecting the same transaction, provided that the Sub-adviser
determines in good faith that such commission is reasonable in terms either of
that particular transaction or the overall responsibility of the Sub-adviser to
a Fund and its other clients and that the total commissions paid by that Fund
will be reasonable in relation to the benefits it received over the long term.
Research services may also be received from dealers who execute Fund
transactions in OTC markets.
The Sub-adviser may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by a Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for each Fund and for other investment accounts managed by
the Sub-adviser are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts including the Funds. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as a Fund is concerned, in other cases, the Sub-adviser
believes that coordination and the ability to participate in volume transactions
will be beneficial to that Fund.
Under a policy adopted by the Trust's Board of Trustees, and subject to the
policy of obtaining the best net results, the Sub-adviser may consider a
broker/dealer's sale of the shares of a Fund and the other funds for which AIM
or the Sub-adviser serves as investment manager in selecting brokers and dealers
for the execution of portfolio transactions. This policy does not imply a
commitment to execute portfolio transactions through all broker/dealers that
sell shares of the Funds and such other funds.
Each Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on U.S. transactions. There generally is less government
supervision and regulation of foreign stock exchanges and brokers than in the
United States. Foreign security settlements may in some instances be subject to
delays and related administrative uncertainties.
Foreign equity securities may be held by each Fund in the form of ADRs, ADSs,
EDRs, GDRs and CDRs or securities convertible into foreign equity securities.
ADRs, ADSs, EDRs, GDRs and CDRs may be listed on stock exchanges, or traded in
the OTC markets in the United States or Europe, as the case may be. ADRs, like
other securities traded in the United States, will be subject to negotiated
commission rates. The foreign and domestic debt securities and money market
instruments in which a Fund may invest generally are traded in the OTC markets.
Each Fund contemplates that, consistent with the policy of obtaining the best
net results, brokerage transactions may be conducted through certain companies
affiliated with AIM or Sub-adviser. The Trust's Board of Directors has adopted
procedures in conformity with Rule 17e-1 under the 1940 Act to ensure that all
brokerage commissions paid to such
Statement of Additional Information Page 30
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
affiliates are reasonable and fair in the context of the market in which they
are operating. Any such transactions will be effected and related compensation
paid only in accordance with applicable SEC regulations.
For the fiscal years ended December 31, 1997, 1996 and 1995, the Predecessor
Fund paid aggregate brokerage commissions of $2,212,022, $1,580,879 and
$1,311,090, respectively. For the fiscal years ended October 31, 1997, 1996 and
1995, Emerging Markets Fund paid aggregate brokerage commissions of $3,274,528,
$3,648,347 and $3,307,402, respectively. For the fiscal years ended October 31,
1997, 1996 and 1995, Latin American Fund paid aggregate brokerage commissions of
$2,719,660, $2,094,634 and $891,513, respectively.
PORTFOLIO TRADING AND TURNOVER
Each Fund engages in portfolio trading when the Sub-adviser has concluded that
the sale of a security owned by the Fund and/or the purchase of another security
of better value can enhance principal and/or increase income. A security may be
sold to avoid any prospective decline in market value, or a security may be
purchased in anticipation of a market rise. Consistent with each Fund's
investment objective, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although none of the Funds generally intends to trade for short-term profits,
the securities in a Fund's portfolio will be sold whenever management believes
it is appropriate to do so, without regard to the length of time a particular
security may have been held. Portfolio turnover rate is calculated by dividing
the lesser of sales or purchases of portfolio securities by a Fund's average
month-end portfolio values, excluding short-term investments. The portfolio
turnover rate will not be a limiting factor when the Sub-adviser deems portfolio
changes appropriate. Higher portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs that a Fund will bear directly
and may result in the realization of net capital gains that are taxable when
distributed to that Fund's shareholders. For the fiscal years ended December 31,
1997 and 1996, the Predecessor Fund's portfolio turnover rates were 184% and
138%, respectively. For the fiscal years ended October 31, 1997 and 1996,
Emerging Markets Fund's portfolio turnover rates were 150% and 104%,
respectively. Latin American Fund's portfolio turnover rates for the fiscal
years ended October 31, 1997 and 1996 were 130% and 101%, respectively.
Statement of Additional Information Page 31
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Trust's Trustees and Executive Officers are listed below. Unless otherwise
indicated, the address of each Executive Officer is 11 Greenway Plaza, Suite
100, Houston, Texas 77046.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 39 Mr. Guilfoyle is President, GT Global, Inc. ("GT Global") since 1995; Director,
Trustee, Chairman of the Board and President GT Global since 1991; Senior Vice President and Director of Sales and Marketing,
50 California Street GT Global from May 1992 to April 1995; Director, Liechtenstein Global Trust AG
San Francisco, CA 94111 (holding company of the various international LGT companies) Advisory Board
since January 1996; Director, G.T. Global Insurance Agency ("G.T. Insurance")
since 1996; President and Chief Executive Officer, G.T. Insurance since 1995;
Senior Vice President and Director, Sales and Marketing, G.T. Insurance from
April 1995 to November 1995; Senior Vice President, Retail Marketing, G.T.
Insurance from 1992 to 1993. Mr. Guilfoyle is also a trustee of each of the
other investment companies registered under the 1940 Act, that is sub-advised or
sub-administered by the Sub-adviser.
C. Derek Anderson, 57 Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment
Trustee partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment
220 Sansome Street banking firm); Director, Anderson Capital Management, Inc. since 1988; Director,
Suite 400 PremiumWear, Inc. (formerly Munsingwear, Inc.) (a casual apparel company) and
San Francisco, CA 94104 Director, "R" Homes, Inc. and various other companies. Mr. Anderson is also a
trustee of each of the other investment companies registered under the 1940 Act
that is sub-advised or sub-administered by the Sub-adviser.
Frank S. Bayley, 58 Mr. Bayley is a partner of the law firm of Baker & McKenzie, and serves as a
Trustee Director and Chairman of C.D. Stimson Company (a private investment company).
Two Embarcadero Center Mr. Bayley is also a trustee of each of the other investment companies
Suite 2400 registered under the 1940 Act that is sub-advised or sub- administered by the
San Francisco, CA 94111 Sub-adviser.
Arthur C. Patterson, 54 Mr. Patterson is Managing Partner of Accel Partners (a venture capital firm). He
Trustee also serves as a director of Viasoft and PageMart, Inc. (both public software
428 University Avenue companies), as well as several other privately held software and communications
Palo Alto, CA 94301 companies. Mr. Patterson is also a trustee of each of the other investment
companies registered under the 1940 Act that is sub-advised or sub-administered
by the Sub-adviser.
Ruth H. Quigley, 63 Miss Quigley is a private investor. From 1984 to 1986, she was President of
Trustee Quigley Friedlander & Co., Inc. (a financial advisory services firm). Miss
1055 California Street Quigley is also a trustee of each of the other investment companies registered
San Francisco, CA 94108 under the 1940 Act that is sub-advised or sub-administered by the Sub-adviser.
</TABLE>
- --------------
* Mr. Guilfoyle is an "interested person" of the Trust as defined by the 1940
Act due to his affiliation with the Sub-adviser.
Statement of Additional Information Page 32
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
John J. Arthur+, 53 Director, Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice President and
Vice President Treasurer, A I M Management Group Inc., A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and Fund Management Company.
Kenneth W. Chancey, 52 Senior Vice President -- Mutual Fund Accounting, the Sub-adviser since 1997; Vice
Vice President and President -- Mutual Fund Accounting, the Sub-adviser from 1992 to 1997.
Principal Accounting Officer
50 California Street
San Francisco, CA 94111
Melville B. Cox, 54 Vice President and Chief Compliance Officer, A I M Advisors, Inc., A I M Capital
Vice President Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company.
Gary T. Crum, 50 Director and President, A I M Capital Management, Inc.; Director and Senior Vice
Vice President President, A I M Management Group Inc. and A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
Robert H Graham, 51 Director, President and Chief Executive Officer, A I M Management Group Inc.; Director and
Vice President President, A I M Advisors, Inc.; Director and Senior Vice President, A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company; and Director, AMVESCAP PLC.
Helge K. Lee, 52 Chief Legal and Compliance Officer -- North America, the Sub-adviser since October 1997;
Vice President Executive Vice President of the Asset Management Division of Liechtenstein Global Trust
50 California Street since October 1996; Senior Vice President, General Counsel and Secretary of LGT Asset
San Francisco, CA 94111 Management, Inc., INVESCO (NY), Inc., GT Global, GT Global Investor Services, Inc. and
G.T. Insurance from May 1994 to October 1996; Senior Vice President, General Counsel and
Secretary of Strong/Corneliuson Management, Inc. and Secretary of each of the Strong Funds
from October 1991 through May 1994.
Carol F. Relihan+, 43 Director, Senior Vice President, General Counsel and Secretary, A I M Advisors, Inc.; Vice
Vice President President, General Counsel and Secretary, A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management Company; Vice President and General
Counsel, A I M Fund Services, Inc.; and Vice President, A I M Capital Management, Inc. and
A I M Distributors, Inc.
Dana R. Sutton, 39 Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice President and
Vice President and Assistant Treasurer, Fund Management Company.
Assistant Treasurer
</TABLE>
- ------------------
+ Mr. Arthur and Ms. Relihan are married to each other.
Statement of Additional Information Page 33
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
The Board of Trustees has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and its
funds and recommending firms to serve as independent auditors for the Trust.
Each of the Trustees and Officers of the Trust is also a Director or Trustee and
Officer of AIM Investment Portfolios, AIM Floating Rate Fund, AIM Growth Series,
AIM Series Trust, AIM Eastern Europe Fund, GT Global Variable Investment Trust,
GT Global Variable Investment Series, Global High Income Portfolio, Growth
Portfolio, Floating Rate Portfolio and Global Investment Portfolio, which are
also registered investment companies advised by AIM and sub-advised by the
Sub-adviser or an affiliate thereof. All of the Trust's Trustees also serve as
directors or trustees of some or all of the other investment companies managed,
administered or advised by AIM. All of the Trust's executive officers hold
similar offices with some or all of the other investment companies managed,
administered or advised by AIM. Each Trustee who is not a director, officer or
employee of the Sub-adviser or any affiliated company is paid aggregate fees of
$5,000 a year plus $300 per Fund for each meeting of the Board attended, and
reimbursed travel and other expenses incurred in connection with attendance at
such meetings. Other Trustees and Officers receive no compensation or expense
reimbursement from the Trust. For the fiscal year ended October 31, 1997, Mr.
Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not directors,
officers or employees of the Sub-adviser or any affiliated company, received
total compensation of $38,650, $38,650, $27,850 and $38,650, respectively, from
the Trust for their services as Trustees. For the fiscal year ended October 31,
1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not
directors, officers or employees of the Sub-adviser or any other affiliated
company, received total compensation of $117,304, $114,386, $88,350 and
$111,688, respectively, from the investment companies managed or administered by
AIM and sub-advised or sub-administered by the Sub-adviser for which he or she
serves as a Director or Trustee. Fees and expenses disbursed to the Trustees
contained no accrued or payable pension or retirement benefits. As of June 26,
1998, the Officers and Trustees and their families as a group owned in the
aggregate beneficially or of record less than 1% of the outstanding shares of
the Funds or of all the Trust's series in the aggregate.
- --------------------------------------------------------------------------------
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
To the best knowledge of the Trust, the names and addresses of the holders of 5%
or more of the outstanding shares of any class of each Fund's equity securities
as of June 26, 1998, and the percentage of the outstanding shares held by such
holders are set forth below.
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ------------------------------ ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Developing Markets Fund -- Olde Discount
Class B FBO 05012322
751 Griswold Street
Detroit, Michigan 48226-3224 58.88% -0-
Raymond James & Assoc. Inc. CSDN
Mary Lynn James IRA
1215 W. Los Angeles Circle
Broken Arrow, Oklahoma 74011-4215 8.08% -0-
Smith Barney Inc.
150926032
388 Greenwich Street
New York, New York 10013-2339 5.45% -0-
</TABLE>
Statement of Additional Information Page 34
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ------------------------------ ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
PaineWebber FBO
Joseph McDonald & Mildred McDonald JJWRO
379 Quarry Pond Court
Moriches, New York 11955-1706 5.35% -0-
Advisor Class G.T. Capital Holdings, Inc. 401(k) FBO
Account 546-33-3477
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources 76.81% -0-
Emerging Markets Fund G.T. Capital Holdings, Inc.
-- Advisor Class SERP Deferred Compensation
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Ellen Hoke 27.87% -0-
Latin American Fund G.T. Capital Holdings, Inc. 401(k) FBO
-- Advisor Class Account 102505451
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources 7.43% -0-
G.T. Capital Holdings, Inc.
SERP Deferred Compensation
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Ellen Hoke 5.88% -0-
</TABLE>
- --------------
*The Trust has no knowledge as to whether all or any portion of the shares owned
of record are also owned beneficially.
Statement of Additional Information Page 35
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
AIM serves as each Fund's investment manager and administrator under an
investment management and administration contract ("Management Contract")
between the Trust and AIM. The Sub-adviser serves as the sub-adviser and sub-
administrator to each Fund under a sub-advisory and sub-administration contract
between AIM and the Sub-adviser ("Sub-Management Contract," and together with
the Management Contract, the "Management Contracts"). As investment managers and
administrators, AIM and the Sub-adviser make all investment decisions for the
Funds and administer each Fund's affairs. Among other things, AIM and the
Sub-adviser furnish the services and pay the compensation and travel expenses of
persons who perform the executive, administrative, clerical and bookkeeping
functions of the Trust and the Funds, and provide suitable office space,
necessary small office equipment and utilities.
The Management Contracts for each Fund may be renewed for one-year terms,
provided that any such renewal has been specifically approved at least annually
by (i) the Trust's Board of Trustees, or by the vote of a majority of a Fund's
outstanding voting securities (as defined in the 1940 Act) and (ii) a majority
of Trustees who are not parties to the Management Contracts or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contracts provide that with respect to each Fund, the Trust or each
of AIM or the Sub-adviser may terminate the Management Contracts without penalty
upon sixty days' written notice. The Management Contracts terminate
automatically in the event of their assignment (as defined in the 1940 Act).
For the fiscal years ended October 31, 1997, December 31, 1996 and December 31,
1995, the Predecessor Fund of Developing Markets Fund paid investment management
and administration fees to the Sub-adviser in the amounts of $7,383,823,
$7,864,840 and $6,878,640, respectively. For the fiscal years ended October 31,
1997, 1996 and 1995, Emerging Markets Fund paid investment management and
administration fees to the Sub-adviser in the amounts of $3,907,922, $4,883,626
and $5,410,744, respectively. For the fiscal years ended October 31, 1997, 1996
and 1995, Latin American Fund paid investment management and administration fees
to the Sub-adviser in the amounts of $3,538,586, $3,365,375 and $3,913,429,
respectively.
DISTRIBUTION SERVICES
Each Fund's Advisor Class shares are offered continuously through the Funds'
principal underwriter and distributor, AIM Distributors, on a "best efforts"
basis pursuant to a distribution contract between the Trust and AIM Distributors
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agency and Service Agreement between the Trust and A I M Fund
Services, Inc. ("AFS"), a registered transfer agent and wholly-owned subsidiary
of AIM, provides that AFS will perform certain shareholder services for the
Funds for a fee per account serviced. The Transfer Agency and Service Agreement
provides that AFS will receive a per account fee plus out-of-pocket expenses to
process orders for purchases, redemptions and exchanges of shares; prepare and
transmit payments for dividends and distributions declared by the Funds;
maintain shareholder accounts and provide shareholders with information
regarding the Funds and their accounts. The Transfer Agency and Service
Agreement became effective on September 8, 1998. The Sub-adviser serves as each
Fund's pricing and accounting agent. For the fiscal years ended October 31,
1997, 1996 and 1995, Emerging Markets Fund paid accounting services fees to the
Sub-adviser of $103,144, $125,349 and $33,216, and Latin American Fund paid
accounting services fees of $90,733, $86,436 and $24,138, respectively.
EXPENSES OF THE FUNDS
Each Fund pays all expenses not assumed by AIM, the Sub-adviser, AIM
Distributors and other agents. These expenses include, in addition to the
advisory, distribution, transfer agency, pricing and accounting agency and
brokerage fees discussed above, legal and audit expenses, custodian fees,
directors' fees, organizational fees, fidelity bond and other insurance
premiums, taxes, extraordinary expenses and the expenses of reports and
prospectuses sent to existing
Statement of Additional Information Page 36
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
investors. The allocation of general Trust expenses and expenses shared among
the Funds and other funds organized as series of the Trust are allocated on a
basis deemed fair and equitable, which may be based on the relative net assets
of the Funds or the nature of the services performed and relative applicability
to the Funds. Expenditures, including costs incurred in connection with the
purchase or sale of portfolio securities, which are capitalized in accordance
with generally accepted accounting principles applicable to investment
companies, are accounted for as capital items and not as expenses. The ratio of
each Fund's expenses to its relative net assets can be expected to be higher
than the expense ratios of funds investing solely in domestic securities, since
the cost of maintaining the custody of foreign securities and the rate of
investment management fees paid by each Fund generally are higher than the
comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
The net asset value per share of each Fund is normally determined daily as of
the close of trading of the New York Stock Exchange ("NYSE") (generally 4:00
p.m. Eastern time) on each business day of the Funds. In the event the NYSE
closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, the net
asset value of a Fund is determined as of the close of the NYSE on such day. Net
asset value per share is determined by dividing the value of a Fund's
securities, cash and other assets (including interest accrued but not collected)
attributable to a particular class, less all its liabilities (including accrued
expenses and dividends payable) attributable to that class, by the total number
of shares outstanding of that class. Determination of each Fund's net asset
value per share is made in accordance with generally accepted accounting
principles.
Each equity security held by a Fund is valued at its last sales price on the
exchange where the security is principally traded or, lacking any sales on a
particular day, the security is valued at the mean between the closing bid and
asked prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. Each security reported on the
NASDAQ National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the mean between the closing bid and asked
prices on that day. Debt securities are valued on the basis of prices provided
by an independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to special securities, yield, quality, coupon
rate, maturity, type of issue, individual trading characteristics and other
market data. Securities for which market quotations are not readily available or
are questionable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers in a manner specifically
authorized by the Board of Trustees. Short-term obligations having 60 days or
less to maturity are valued on the basis of amortized cost. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of each Fund's shares are determined at such
times. Foreign currency exchange rates are also generally determined prior the
close of the NYSE. Occasionally, events affecting the values of such securities
and such exchange rates may occur between the times at which such values are
determined and the close of the NYSE which will not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
Statement of Additional Information Page 37
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
HOW TO PURCHASE AND REDEEM SHARES
- --------------------------------------------------------------------------------
A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the headings "How to Purchase
Shares," "Terms and Conditions of Purchases of the AIM Funds" and "Special
Plans."
For purposes of a Letter of Intent entered into prior to June 1, 1998, any
registered investment adviser, trust company or bank trust department which
exercises investment discretion and which intends within thirteen months to
invest $500,000 or more can be treated as a single purchaser, provided further
that such entity places all purchases and redemption orders. Such entities
should be prepared to establish their qualifications for such treatment.
Complete information concerning the method of exchanging shares of the Funds for
shares of the other AIM Funds is set forth in the Prospectuses under the heading
"Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "How to Redeem Shares." 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 Funds at (800) 959-4246 and guarantee delivery of all
required documents in good order. A repurchase is effected at the net asset
value per share of the applicable Fund next determined after the repurchase
order is received. Such an arrangement is subject to timely receipt by A I M
Fund Services, Inc., the Funds' transfer agent, of all required documents in
good order. If such documents are not received within a reasonable time after
the order is placed, the order is subject to cancellation. While there is no
charge imposed by a Fund or by AIM Distributors (other than any applicable
contingent deferred sales charge) 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 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.
A Fund's net asset value is calculated by dividing the number of outstanding
shares into the net assets of the Fund. Net assets are the excess of a Fund's
assets over its liabilities. A more detailed description of how each Fund's net
asset value is calculated appears in the Prospectuses under the heading
"Determination of Net Asset Value."
PROGRAMS AND SERVICES FOR SHAREHOLDERS
The Funds provide certain services for shareholders and certain investment or
redemption programs. See "Exchange Privilege" and "How to Redeem Shares" in the
Prospectus. All inquiries concerning these programs should be made directly to
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, toll free
at (800) 959-4246.
DIVIDEND ORDER
Dividends may be paid to someone other than the registered owner, or sent to an
address other than the address of record. (Please note that signature guarantees
are required to effect this option.) An investor also may direct that his or her
dividends be invested in one of the other AIM Funds and there is no sales charge
for these investments; Initial Investment minimums apply. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" in the Prospectus.
To effect this option, please contact your authorized dealer. For more
information concerning AIM Funds other than the Fund, please obtain a current
prospectus by contacting your authorized dealer, by writing to A I M Fund
Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, or by calling toll
free (800) 959-4246.
Statement of Additional Information Page 38
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
TAXES
- --------------------------------------------------------------------------------
GENERAL
Each Fund is treated as a separate corporation for federal income tax purposes.
To continue to qualify for treatment as a RIC under the Code, each Fund must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, Futures or Forward Contracts) derived with respect to its
business of investing in securities or those currencies ("Income Requirement");
and (2) the Diversification Requirements.
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by each Fund, and gains realized thereby, may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("foreign taxes") that would reduce the yield and/or total
return on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate foreign taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors. If more than 50% of the value of a Fund's total assets at the
close of its taxable year consists of securities of foreign corporations, the
Fund will be eligible to, and may, file an election with the Internal Revenue
Service that will enable its shareholders, in effect, to receive the benefit of
the foreign tax credit with respect to any foreign taxes paid by it. Pursuant to
the election, the Fund would treat those taxes as dividends paid to its
shareholders and each shareholder would be required to (1) include in gross
income, and treat as paid by him, his share of those taxes, (2) treat his share
of those taxes and of any dividend paid by the Fund that represents income from
foreign and U.S. possessions sources as his own income from those sources and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. Each Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's foreign
taxes and income from sources within, and taxes paid to, foreign countries and
U.S. possessions if it makes this election. Pursuant to the Taxpayer Relief Act
of 1997 ("Tax Act"), individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Form 1099 and
all of whose foreign source income is "qualified passive income" may elect each
year to be exempt from the extremely complicated foreign tax credit limitation
and will be able to claim a foreign tax credit without having to file the
detailed Form 1116 that otherwise is required.
PASSIVE FOREIGN INVESTMENT COMPANIES
Each Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation -- other than a "controlled foreign
corporation" (I.E., a foreign corporation in which, on any day during its
taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly
Statement of Additional Information Page 39
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly or constructively, at least 10% of that
voting power) as to which a Fund is a U.S. shareholder (effective with respect
to each Fund for its taxable year beginning November 1, 1998) -- that, in
general, meets either of the following tests: (1) at least 75% of its gross
income is passive or (2) an average of at least 50% of its assets produce, or
are held for the production of, passive income. Under certain circumstances, a
Fund will be subject to federal income tax on a portion of any "excess
distribution" received on, or of any gain from the disposition of, stock of a
PFIC (collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent it
distributes that income to its shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the QEF's ordinary earnings and net capital gain (I.E., the excess
of net long-term capital gain over net short-term capital loss) -- which most
likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
Effective for its taxable year beginning November 1, 1998, each Fund may elect
to "mark to market" its stock in any PFIC. "Marking-to-market," in this context,
means including in ordinary income each taxable year the excess, if any, of the
fair market value of the stock over a Fund's adjusted basis therein as of the
end of that year. Pursuant to the election, a Fund also will be allowed to
deduct (as an ordinary, not capital, loss) the excess, if any, of its adjusted
basis in PFIC stock over the fair market value thereof as of the taxable
year-end, but only to the extent of any net mark-to-market gains with respect to
that stock included in income by the Fund for prior taxable years. A Fund's
adjusted basis in each PFIC's stock subject to the election will be adjusted to
reflect the amounts of income included and deductions taken thereunder.
Regulations proposed in 1992 provided a similar election with respect to the
stock of certain PFICs.
NON-U.S. SHAREHOLDERS
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
Each Fund's use of hedging transactions, such as selling (writing) and
purchasing options and Futures and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the amount,
character and timing of recognition of the gains and losses a Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by a Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Fund at the end of its taxable year generally
will be deemed to have been sold at that time at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. That 60% portion
will qualify for the reduced maximum tax rates on noncorporate taxpayers' net
capital gain enacted by the Tax Act -- 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain recognized on capital assets held for more than
18 months -- instead of the 28% rate in effect before that legislation, which
now applies to gain recognized on capital assets held for more than one year but
not more than 18 months.
Section 988 of the Code also may apply to gains and losses from transactions in
foreign currencies, foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains and
losses). Each Section 988 gain or loss generally is computed separately and
treated as ordinary income or loss. In the case
Statement of Additional Information Page 40
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
of overlap between sections 1256 and 988, special provisions determine the
character and timing of any income, gain or loss. The Funds attempt to monitor
section 988 transactions to minimize any adverse tax impact.
If a Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures or Forward Contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Fund will be treated as having made an actual sale thereof, with
the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
Futures or Forward Contract entered into by a Fund or a related person with
respect to the same or substantially similar property. In addition, if the
appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting each Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Funds.
Statement of Additional Information Page 41
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
AIM was organized in 1976, and along with its subsidiaries, manages or advises
approximately 90 investment company 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. AIM is the sole
shareholder of the Fund's principal underwriter, AIM Distributors. 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 that has a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 02110, acts as custodian of each Fund's assets. State Street is
authorized to establish and has established separate accounts in foreign
currencies and to cause securities of each Fund to be held in separate accounts
outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are .
conducts an annual audit of each Fund, assists in the
preparation of the Funds' federal and state income tax returns and consults with
the Company and the Funds as to matters of accounting, regulatory filings, and
federal and state income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by , as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of that firm as experts in accounting and auditing.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations
extended to shareholders of private, for-profit corporations. There is a remote
possibility, however, that under certain circumstances shareholders of the Trust
may be held personally liable for the Trust's obligations. However, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or a trustee. The
Trust Agreement provides for indemnification from the Trust property for all
losses and expenses of any shareholder held personally liable for the Trust's
obligations. Thus, the risk of a shareholder incurring financial loss on account
of such liability is limited to circumstances in which the Trust itself would be
unable to meet its obligations and where the other party was held not to be
bound by the disclaimer.
NAME
Prior to May 29, 1998, Developing Markets Fund, Emerging Markets Fund and Latin
American Fund operated under the names GT Global Developing Markets Fund, GT
Global Emerging Markets Fund, and GT Global Latin America Growth Fund,
respectively.
Statement of Additional Information Page 42
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in each
Prospectus, is as follows:
P(1+T)to the power of n=ERV
<TABLE>
<S> <C> <C> <C>
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable maximum sales load is
deducted at the beginning of the 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the 1, 5,
or 10 year periods (or fractional portion of such period).
</TABLE>
The standard total returns of Developing Markets Fund's Predecessor Fund
(recomputed for Class A shares to reflect the deduction of the maximum sales
charge of 4.75% for Class A shares), stated as average annualized total returns
for the periods shown, were:
<TABLE>
<CAPTION>
DEVELOPING
MARKETS FUND
PERIOD (CLASS A)
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
Fiscal year ended Oct. 31, 1997............................................................................ [(9.61)%]
Jan. 11, 1994 (commencement of operations) through Oct. 31, 1997........................................... [(2.47)%]
</TABLE>
Advisor Class shares of Developing Markets Fund have not been in operation for a
full year since the Fund's conversion from a closed-end to an open-end fund.
The standard total returns for the Class A and Advisor Class shares of Emerging
Markets Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS
PERIOD FUND (CLASS A) FUND (ADVISOR CLASS)
- -------------------------------------------------------------------------------- ------------------- ---------------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997................................................. [(18.52)%] [(14.05)%]
June 1, 1995 (commencement of operations) through Oct. 31, 1997................. [n/a] [(6.97)%]
Oct. 31, 1992 through Oct. 31, 1997............................................. [2.30%] [n/a]
</TABLE>
The standard total returns for the Class A and Advisor Class shares of Latin
American Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
LATIN AMERICAN LATIN AMERICAN
PERIOD FUND (CLASS A) FUND (ADVISOR CLASS)
- ----------------------------------------------------------------------------------- ----------------- ---------------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997.................................................... [3.37%] [8.91%]
Oct. 31, 1992 through Oct. 31, 1997................................................ [7.01%] [n/a]
June 1, 1995 (commencement of operations) through Oct. 31, 1997.................... [n/a] [9.39%]
Aug. 13, 1991 (commencement of operations) through Oct. 31, 1997................... [7.23%] [n/a]
</TABLE>
Cumulative total return across a stated period may be calculated as follows:
P(1+V)to the power of n=ERV
<TABLE>
<S> <C> <C> <C>
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a stated portion of, or none
of, the applicable maximum sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the
stated period.
</TABLE>
Statement of Additional Information Page 43
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
The cumulative total return of Developing Markets Fund's Predecessor Fund (not
recomputed to take sales charges into account) for the period January 11, 1994
(commencement of operations) through October 31, 1997 was [(4.53)%].
The cumulative total return (not taking sales charges into account) for the
Class A and Advisor Class shares of Emerging Markets Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS
PERIOD FUND (CLASS A) FUND (ADVISOR CLASS)
- -------------------------------------------------------------------------------- ------------------- ---------------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through Oct. 31, 1997................ [n/a] [n/a]
May 18, 1992 (commencement of operations) through Oct. 31, 1997................. [14.32%] [n/a]
June 1, 1995 (commencement of operations) through Oct. 31, 1997................. [n/a] [(16.03)%]
</TABLE>
The cumulative total return (not taking sales charges into account) for the
Class A and Advisor Class shares of Latin American Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
LATIN AMERICAN
LATIN AMERICAN FUND (ADVISOR
PERIOD FUND (CLASS A) CLASS)
- ------------------------------------------------------------------------------------ --------------- -------------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through Oct. 31, 1997..................... [n/a] [24.25%]
Aug. 13, 1991 (commencement of operations) through Oct. 31, 1997.................... [62.00%] [n/a]
</TABLE>
OTHER INFORMATION REGARDING STANDARD TOTAL AND CUMULATIVE TOTAL RETURNS FOR
DEVELOPING MARKETS FUND
The standard total and cumulative total return data of Developing Markets Fund
are based on the performance of the Predecessor Fund as a closed-end investment
company. The standard total return data, however, have been recomputed to
reflect the deduction of the current maximum sales charge of 4.75% for Class A
shares, which went into effect on November 1, 1997. Future performance of
Developing Markets Fund will be effected by expenses that it will incur as a
series of an open-end investment company.
PERFORMANCE INFORMATION
Total return and yield figures for the Funds are neither fixed nor guaranteed,
and no Fund's principal is insured. Performance quotations reflect historical
information and should not be considered representative of a Fund's performance
for any period in the future. Performance is a function of a number of factors
which can be expected to fluctuate. The Funds may provide performance
information in reports, sales literature and advertisements. The Funds may also,
from time to time, quote information about the Funds published or aired by
publications or other media entities which contain articles or segments relating
to investment results or other data about one or more of the Funds. Such
publications or media entities may include the following, among others:
Advertising Age
Barron's
Best's Review
Broker World
Business Week
Changing Times
Christian Science Monitor
Consumer Reports
Economist
EuroMoney
FACS of the Week
Financial Planning
Financial Product News
Financial World
Forbes
Fortune
Global Finance
Hartford Courant Inc.
Institutional Investor
Insurance Forum
Insurance Week
Investor's Daily
Journal of the American
Society of CLU & ChFC
Kiplinger Letter
Money
Mutual Fund Forecaster
Mutual Fund Magazine
Nation's Business
New York Times
Pension World
Pensions & Investments
Personal Investor
Financial Services Week
Philadelphia Inquirer
Smart Money
USA Today
U.S. News & World Report
Wall Street Journal
Washington Post
CNN
CNBC
PBS
Statement of Additional Information Page 44
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
The Funds and AIM Distributors may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
each Fund with the following, or compare each Fund's performance to performance
data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services
(data and mutual fund rankings and comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and
Development (publications)
International Finance Corporation Emerging
Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Analytical Data Services, Inc. (data and
mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings
and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All Country
(AC) World Index
Morgan Stanley Capital International World
Indices
Morningstar, Inc. (data and mutual fund rankings
and comparisons)
NASDAQ
Organization for Economic Cooperation and
Development (publications)
Salomon Brothers Global Telecommunications
Index
Salomon Brothers World Government Bond
Index-Non-U.S.
Salomon Brothers World Government Bond
Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price
Index
Stangar
Wilshire Associaties
World Bank (publications and reports)
The World Bank Publication of Trends in
Developing Countries
Worldscope
Each Fund may also compare its performance to rates on Certificates of Deposit
and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or AIM
Distributors. Advertising for the Funds may from time to time include
discussions of general economic conditions and interest rates. Advertising for
the Funds may also include reference to the use of those Funds as part of an
individual's overall retirement investment program. From time to time, sales
literature and/or advertisements for any of the Funds may disclose (i) the
largest holdings in the Fund's portfolio, (ii) certain selling group members
and/or (iii) certain institutional shareholders.
From time to time, the Funds' sales literature and/or advertisements may discuss
generic topics pertaining to the mutual fund industry. This includes, but is not
limited to, literature addressing general information about mutual funds,
variable annuities, dollar-cost averaging, stocks, bonds, money markets,
certificates of deposit, retirement, retirement plans, asset allocation,
tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when comparing
a Fund's performance with other funds and other potential investments, investors
should note that the methods of computing performance of other potential
investments are not necessarily comparable to the methods employed by a Fund.
Statement of Additional Information Page 45
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
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 edged." 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 bond 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 risk appear somewhat
larger than the 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
some time 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.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are 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 which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Statement of Additional Information Page 46
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of
Statement of Additional Information Page 47
<PAGE>
AIM DEVELOPING MARKETS FUND
AIM EMERGING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
fixed financial charges and high internal cash generation; and well-established
access to a range of financial markets and assured sources of alternate
liquidity. Issues rated Prime-2 have a strong ability for repayment of senior
short-term debt obligations. This normally will be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds as of October 31, 1997 and for the
fiscal year then ended, and the unaudited financial statements as of June 30,
1998 and for the six months then ended, appear on the following pages.
Statement of Additional Information Page 48
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
AIM GLOBAL THEME FUNDS: ADVISOR CLASS
ADVISOR CLASS SHARES OF
AIM GLOBAL FINANCIAL SERVICES FUND
AIM GLOBAL INFRASTRUCTURE FUND
AIM GLOBAL RESOURCES FUND
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
AIM GLOBAL HEALTH CARE FUND
AIM GLOBAL TELECOMMUNICATIONS FUND
(SERIES PORTFOLIOS OF AIM INVESTMENT FUNDS)
11 Greenway Plaza
Suite 100
Houston, TX 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 FREE OF CHARGE 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 SEPTEMBER 8, 1998 RELATING TO THE AIM
GLOBAL FINANCIAL SERVICES FUND PROSPECTUS, THE AIM GLOBAL INFRASTRUCTURE FUND
PROSPECTUS, THE AIM GLOBAL RESOURCES FUND PROSPECTUS, THE AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND PROSPECTUS, THE AIM GLOBAL HEALTH CARE FUND
PROSPECTUS AND THE AIM GLOBAL TELECOMMUNICATIONS FUND PROSPECTUS EACH DATED
SEPTEMBER 8, 1998
Statement of Additional Information Page 1
<PAGE>
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TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Introduction............................................................................................................. 3
Investment Objectives and Policies....................................................................................... 4
Options, Futures and Currency Strategies................................................................................. 8
Risk Factors............................................................................................................. 17
Investment Limitations................................................................................................... 21
Execution of Portfolio Transactions...................................................................................... 25
Trustees and Executive Officers.......................................................................................... 28
Management............................................................................................................... 30
Valuation of Fund Shares................................................................................................. 33
How to Purchase and Redeem Shares........................................................................................ 33
Taxes.................................................................................................................... 34
Additional Information................................................................................................... 38
Investment Results....................................................................................................... 39
Description of Debt Ratings.............................................................................................. 45
Financial Statements..................................................................................................... 47
</TABLE>
[LOGO]
Statement of Additional Information Page 2
<PAGE>
AIM GLOBAL THEME FUNDS
INTRODUCTION
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Advisor Class shares of
AIM Global Financial Services Fund ("Financial Services Fund"), AIM Global
Infrastructure Fund ("Infrastructure Fund"), AIM Global Resources Fund
("Resources Fund"), AIM Global Consumer Products and Services Fund ("Consumer
Products and Services Fund"), AIM Global Health Care Fund ("Health Care Fund")
and AIM Global Telecommunications Fund ("Telecommunications Fund") (each, a
"Fund" or "Theme Fund," and collectively, the "Funds" or "Theme Funds"). Each
Fund is a diversified series of AIM Investment Funds (the "Trust"), a registered
open-end management investment company organized as a Delaware business trust.
The Financial Services Fund, Infrastructure Fund, Resources Fund and Consumer
Products and Services Fund (each a "Feeder Fund," and, collectively the "Feeder
Funds,") invest all of their investable assets in the Global Financial Services
Portfolio, Global Infrastructure Portfolio, Global Resources Portfolio and
Global Consumer Products and Services Portfolio (each, a "Portfolio," and,
collectively, the "Portfolios"), respectively.
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and INVESCO (NY), Inc. (the "Sub-adviser") serves as the
investment sub-adviser of and sub-administrator for the Health Care Fund,
Telecommunications Fund and the Portfolios (each a "Theme Portfolio," and
collectively the "Theme Portfolios"). AIM and the Sub-adviser also serve as the
administrator and sub-administrator, respectively, for each Feeder Fund.
The Trust is a series mutual fund. The rules and regulations of the United
States Securities and Exchange Commission (the "SEC") require all mutual funds
to furnish prospective investors certain information concerning the activities
of the fund being considered for investment. This information for Financial
Services Fund is included in a Prospectus dated September 8, 1998, for
Infrastructure Fund is included in a separate Prospectus dated September 8,
1998, for Resources Fund is included in a separate Prospectus dated September 8,
1998, for Consumer Products and Services Fund is included in a separate
Prospectus dated September 8, 1998, for Health Care Fund is included in a
separate Prospectus dated September 8, 1998, and for Telecommunications Fund is
included in a separate Prospectus dated September 8, 1998. Additional copies of
the Prospectuses and this Statement of Additional Information may be obtained
without charge by writing the principal distributor of the Funds' shares, A I M
Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, TX 77210-4739
or by calling (800) 347-4246. Investors must receive a Prospectus before they
invest.
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
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 FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name G.T. Investment Funds, Inc., which
was organized as a Maryland corporation on October 29, 1987. The Trust was
reorganized on September 4, 1998 as a Delaware business trust, and is registered
with the SEC as a diversified open-end series management investment company. The
Trust currently consists of thirteen separate portfolios: each of the six Theme
Funds, AIM Global Government Income Fund, AIM Global High Income Fund, AIM
Strategic Income Fund, AIM Global Growth and Income Fund, AIM Emerging Markets
Fund, AIM Developing Markets Fund, and AIM Latin American Growth Fund. Each of
these funds has three separate classes: Class A, Class B and Advisor Class
shares. All historical financial and other information contained in this
Statement of Additional Information for periods prior to September 4, 1998, is
that of the series G.T. Investment Funds, Inc. (renamed AIM Investment Funds,
Inc.).
This Statement of Additional Information relates solely to the Advisor Class
shares of the Funds.
Statement of Additional Information Page 3
<PAGE>
AIM GLOBAL THEME FUNDS
The term "majority of the outstanding shares" of the Trust, of a particular Fund
or of a particular class of a Fund means, respectively, the vote of the lesser
of (a) 67% or more of the shares of the Trust, such Fund or such class present
at a meeting of the Trust's shareholders, if the holders of more than 50% of the
outstanding shares of the Trust, such Fund or such class are present or
represented by proxy, or (b) more than 50% of the outstanding shares of the
Trust, such Fund or such class.
Class A, Class B and Advisor Class shares of each Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees 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 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 Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
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 trustees may elect all of the members of the Board of
Trustees of the Trust. In such event, the remaining holders cannot elect any
trustees of the Trust.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
The investment objective of each Feeder Fund is long-term capital growth. The
investment objective of the Health Care Fund and Telecommunications Fund is
long-term capital appreciation and long-term growth of capital, respectively.
Each Feeder Fund seeks to achieve its investment objective by investing all of
its investable assets in a Portfolio, each of which is a subtrust (a "series")
of Global Investment Portfolio (an open-end management investment company), with
an investment objective that is identical to that of its corresponding Feeder
Fund. Whenever the phrase "all of a Fund's investable assets" is used herein and
in the Prospectus, it means that the only investment securities held by a Feeder
Fund will be its interest in its corresponding Portfolio. A Feeder Fund may
withdraw its investment in its corresponding Portfolio at any time, if the Board
of Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. Upon any such withdrawal, a Feeder Fund's assets
would be invested in accordance with the investment policies of its
corresponding Portfolio described below and in the Prospectus.
SELECTION OF EQUITY INVESTMENTS
With respect to the Resources Portfolio, the Sub-adviser has identified four
areas that it expects will create investment opportunities: (i) improving
supply/demand fundamentals, which may result in higher commodity prices; (ii)
privatization of state-owned natural resource businesses; (iii) management which
can improve production efficiencies without correspondingly increasing commodity
prices; and (iv) service companies with emerging technologies that can enhance
productivity or reduce production costs. Of course, there is no certainty that
these factors will produce the anticipated results.
With respect to the Telecommunications Fund, the Sub-adviser has identified four
areas that it expects will create investment opportunities: (i) deregulation of
companies in the industry, which will allow competition to promote greater
efficiencies; (ii) privatization of state-owned telecommunications businesses;
(iii) development of infrastructure in underdeveloped countries and upgrading of
services in other countries; and (iv) emerging technologies that will enhance
productivity and reduce costs in the telecommunications industry. Of course,
there is no certainty that these factors will produce the anticipated results.
There may be times when, in the opinion of the Sub-adviser, prevailing market,
economic or political conditions warrant reducing the proportion of the Theme
Portfolios' assets invested in equity securities and increasing the proportion
held in cash (U.S. dollars, foreign currencies or multinational currency units)
or invested in debt securities or high quality money market instruments issued
by corporations or the U.S., or a foreign government. A portion of each Theme
Portfolio's assets normally will be held in cash (U.S. dollars, foreign
currencies or multinational currency units) or invested in foreign
Statement of Additional Information Page 4
<PAGE>
AIM GLOBAL THEME FUNDS
or domestic high quality money market instruments pending investment of proceeds
from new sales of fund shares to provide for ongoing expenses and to satisfy
redemptions.
For each Theme Portfolio's investment purposes, an issuer is typically
considered as located in a particular country if it (a) is organized under the
laws of or has its principal office in a particular country, or (b) normally
derives 50% or more of its total revenues from business in that country,
provided that, in the Sub-adviser's view, the value of such issuer's securities
will tend to reflect such country's development to a greater extent than
developments elsewhere. However, these are not absolute requirements, and
certain companies incorporated in a particular country and considered by the
Sub-adviser to be located in that country may have substantial foreign
operations or subsidiaries and/or export sales exceeding in size the assets or
sales in that country.
In certain countries, governmental restrictions and other limitations on
investment may affect a Theme Portfolio's ability to invest in such countries.
In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals. The Sub-adviser is
not aware at this time of the existence of any investment or exchange control
regulations which might substantially impair the operations of the Theme
Portfolios as described in the Prospectus and this Statement of Additional
Information. Restrictions may in the future, however, make it undesirable to
invest in certain countries. None of the Theme Portfolios has a present
intention of making any significant investment in any country or stock market in
which the Sub-adviser considers the political or economic situation to threaten
a Theme Portfolio with substantial or total loss of its investment in such
country or market.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
Each Theme Portfolio may invest in the securities of investment companies
(including investment vehicles or companies advised by the Sub-adviser or its
affiliates ("Affiliated Funds")) within the limits of the Investment Company Act
of 1940, as amended (the "1940 Act"). These limitations currently provide that,
in general, a Theme Portfolio may purchase shares of an investment company
unless (a) such a purchase would cause a Theme Portfolio to own in the aggregate
more than 3% of the total outstanding voting stock of the investment company or
(b) such a purchase would cause the Theme Portfolio to have more than 5% of its
assets invested in the investment company or more than 10% of its assets
invested in an aggregate of all such investment companies. The foregoing
restrictions do not apply to the investment of the Financial Services Fund,
Infrastructure Fund, Resources Fund and Consumer Products and Services Fund in
their corresponding Portfolios. Investment in closed-end investment companies
may involve the payment of substantial premiums above the value of such
companies' portfolio securities. Each Theme Portfolio does not intend to invest
in such investment companies unless, in the judgment of the Sub-adviser, the
potential benefits of such investments justify the payment of any applicable
premiums. The return on such securities will be reduced by operating expenses of
such companies, including payments to the investment managers of those
investment companies. With respect to investments in Affiliated Funds, the
Sub-adviser waives its advisory fee to the extent that such fees are based on
assets of a Theme Portfolio invested in Affiliated Funds.
DEPOSITARY RECEIPTS
A Theme Portfolio may hold securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs"), Global
Depositary Receipts ("GDRs") and European Depositary Receipts ("EDRs") or other
securities convertible into securities of eligible foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. ADRs and ADSs are typically issued
by an American bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depositary Receipts ("CDRs"), are issued in Europe typically
by foreign banks and trust companies and evidence ownership of either foreign or
domestic securities. GDRs are similar to EDRs and are designed for use in
several international financial markets. Generally, ADRs and ADSs in registered
form are designed for use in U.S. securities markets and EDRs in bearer form are
designed for use in European securities markets. For purposes of each Theme
Portfolio's investment policies, a Theme Portfolio's investments in ADRs, ADSs,
GDRs and EDRs will be deemed to be investments in the equity securities
representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
Statement of Additional Information Page 5
<PAGE>
AIM GLOBAL THEME FUNDS
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Theme Portfolios may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Theme Portfolio in connection with other
securities or separately and provide the Theme Portfolio with the right to
purchase at a later date other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Theme Portfolio may make
secured loans of its securities holdings amounting to not more than 30% of its
total assets. Securities loans are made to broker/dealers or institutional
investors pursuant to agreements requiring that the loans be continuously
secured by collateral at least equal at all times to the value of the securities
lent plus any accrued interest, "marked to market" on a daily basis. The Theme
Portfolios may pay reasonable administrative and custodial fees in connection
with the loans of their securities. While the securities loan is outstanding, a
Theme Portfolio will continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. A Theme Portfolio will
have a right to call each loan and obtain the securities within the stated
settlement period. A Theme Portfolio will not have the right to vote equity
securities while they are being lent, but it may call in a loan in anticipation
of any important vote. Loans will only be made to firms deemed by the
Sub-adviser to be of good standing and will not be made unless, in the judgment
of the Sub-adviser, the consideration to be earned from such loans would justify
the risk.
MONEY MARKET INSTRUMENTS
Money market instruments in which the Theme Portfolios may invest include U.S.
government securities, high-grade commercial paper, bank certificates of
deposit, bankers' acceptances and repurchase agreements related to any of the
foregoing. "High-grade commercial paper" refers to commercial paper rated A-1 by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or P-1 by
Moody's Investors Services, Inc. or, if not rated, determined by the Sub-adviser
to be of comparable quality.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Theme Portfolio's investment policies with respect to
bank obligations, obligations of foreign branches of U.S. banks and of foreign
banks are obligations of the issuing bank and may be general obligations of the
parent bank. Such obligations may, however, be limited by the terms of a
specific obligation and by government regulation. As with investments in
non-U.S. securities in general, investments in the obligations of foreign
branches of U.S. banks and of foreign banks may subject each Theme Portfolio to
investment risks that are different in some respects from those of investments
in obligations of U.S. issuers. Although each Theme Portfolio will typically
acquire obligations issued and supported by the credit of U.S. or foreign banks
having total assets at the time of purchase of $1 billion or more, this $1
billion figure is not an investment policy or restriction of each Theme
Portfolio. For the purposes of calculation with respect to the $1 billion
figure, the assets of a bank will be deemed to include the assets of its U.S.
and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Theme Portfolio purchases a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed-upon price, date, and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investments in securities, including possible decline in
the market value of the underlying securities and delays and costs to the Theme
Portfolio if the other party to the repurchase agreement becomes bankrupt, the
Theme Portfolios intend to enter into repurchase agreements only with banks and
dealers believed by the Sub-adviser to present minimal credit risks in
accordance with guidelines established by the Trust's or the Portfolios' Board
of Trustees, as applicable. The Sub-adviser will review and monitor the
creditworthiness of such institutions under the applicable Board's general
supervision.
Statement of Additional Information Page 6
<PAGE>
AIM GLOBAL THEME FUNDS
Each Theme Portfolio will invest only in repurchase agreements collateralized at
all times in an amount at least equal to the repurchase price plus accrued
interest. To the extent that the proceeds from any sale of such collateral upon
a default in the obligation to repurchase were less than the repurchase price, a
Theme Portfolio would suffer a loss. If the financial institution which is party
to the repurchase agreement petitions for bankruptcy or otherwise becomes
subject to bankruptcy or other liquidation proceedings, there may be
restrictions on a Theme Portfolio's ability to sell the collateral and a Theme
Portfolio could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, each Theme Portfolio intends to comply with provisions under such Code
that would allow the immediate resale of such collateral. Each Theme Portfolio
will not enter into a repurchase agreement with a maturity of more than seven
days if, as a result, more than 15% of the value of its net assets (except for
Health Care Fund, more than 10% of the value of its total assets) would be
invested in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Theme Portfolio's borrowings will not exceed 33 1/3% of its total assets,
i.e., the Theme Portfolio's total assets at all times will equal at least 300%
of the amount of outstanding borrowings. If market fluctuations in the value of
a Theme Portfolio's securities holdings or other factors cause the ratio of a
Theme Portfolio's total assets to outstanding borrowings to fall below 300%,
within three days (excluding Sundays and holidays) of such event that Theme
Portfolio may be required to sell portfolio securities to restore the 300% asset
coverage, even though from an investment standpoint such sales might be
disadvantageous. Each Theme Portfolio may also borrow up to 5% of its total
assets for temporary or emergency purposes other than to meet redemptions. Any
borrowing by a Theme Portfolio may cause greater fluctuation in the value of its
shares than would be the case if that Theme Portfolio did not borrow.
Each Theme Portfolio's fundamental investment limitations permit the Theme
Portfolio to borrow money for leveraging purposes. However, each Theme Portfolio
(except the Health Care Fund) is currently prohibited, pursuant to a non-
fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by the
Trust's or the Portfolios' Board of Trustees, as applicable. If a Theme
Portfolio employs leverage in the future, it would be subject to certain
additional risks. Use of leverage creates an opportunity for greater growth of
capital but would exaggerate any increases or decreases in the net asset value
of the Financial Services Fund, Infrastructure Fund, Resources Fund, Consumer
Products and Services Fund or a Theme Portfolio. When the income and gains on
securities purchased with the proceeds of borrowings exceed the costs of such
borrowings, a Theme Portfolio's earnings or a Fund's net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, a Theme Portfolio's earnings or a Fund's net
asset value would decline faster than would otherwise be the case.
Each Theme Portfolio may enter into reverse repurchase agreements. A reverse
repurchase agreement is a borrowing transaction in which the Portfolio transfers
possession of a security to another party such as a bank or broker/dealer in
return for cash, and agrees to repurchase the security in the future at an
agreed upon price, which includes an interest component. Each Theme Portfolio
may also engage in "roll" borrowing transactions, which involve the sale of
Government National Mortgage Association certificates or other securities
together with a commitment (for which the Theme Portfolio may receive a fee) to
purchase similar, but not identical, securities at a future date. Each Theme
Portfolio will segregate with a custodian, cash or liquid securities in an
amount sufficient to cover its obligations under "roll" transactions and reverse
repurchase agreements with broker/dealers. No segregation is required for
reverse repurchase agreements with banks.
SHORT SALES
Each Theme Portfolio may make short sales of securities. A short sale is a
transaction in which a Theme Portfolio sells a security in anticipation that the
market price of that security will decline. A Theme Portfolio may make short
sales (i) as a form of hedging to offset potential declines in long positions in
securities it owns, or anticipates acquiring, or in similar securities, and (ii)
in order to maintain flexibility in its securities holdings.
When a Theme Portfolio makes a short sale of a security it does not own, it must
borrow the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Theme Portfolio may have
to pay a fee to borrow particular securities and will often be obligated to pay
over any payments received on such borrowed securities.
A Theme Portfolio's obligation to replace the borrowed security when the
borrowing is called or expires will be secured by collateral deposited with the
intermediary. The Theme Portfolio will also be required to deposit collateral
with its custodian to the extent, if any, necessary so that the value of both
collateral deposits in the aggregate is at all times equal to at least 100% of
the current market value of the security sold short. Depending on arrangements
made with the
Statement of Additional Information Page 7
<PAGE>
AIM GLOBAL THEME FUNDS
intermediary from which it borrowed the security regarding payment of any
amounts received by that Theme Portfolio on such security, a Theme Portfolio may
not receive any payments (including interest) on its collateral deposited with
such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time a Theme Portfolio replaces the borrowed security, that Theme
Portfolio will incur a loss; conversely, if the price declines, the Theme
Portfolio will realize a gain. Any gain will be decreased, and any loss
increased, by the transaction costs associated with the transaction. Although a
Theme Portfolio's gain is limited by the price at which it sold the security
short, its potential loss theoretically is unlimited.
No Theme Portfolio will make a short sale if, after giving effect to such sale,
the market value of the securities sold short exceeds 25% of the value of its
total assets or the Theme Portfolio's aggregate short sales of the securities of
any one issuer exceed the lesser of 2% of the Theme Portfolio's net assets or 2%
of the securities of any class of the issuer. Moreover, a Theme Portfolio may
engage in short sales only with respect to securities listed on a national
securities exchange. A Theme Portfolio may make short sales "against the box"
without respect to such limitations. In this type of short sale, at the time of
the sale the Theme Portfolio owns the security it has sold short or has the
immediate and unconditional right to acquire at no additional cost the identical
security.
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Sub-adviser's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While the Sub-adviser is experienced in
the use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Theme Portfolio
entered into a short hedge because the Sub-adviser projected a decline in
the price of a security in the Theme Portfolio's portfolio, and the price of
that security increased instead, the gain from that increase might be wholly
or partially offset by a decline in the price of the hedging instrument.
Moreover, if the price of the hedging instrument declined by more than the
increase in the price of the security, the Theme Portfolio could suffer a
loss. In either such case, the Theme Portfolio would have been in a better
position had it not hedged at all.
(4) As described below, a Theme Portfolio might be required to maintain
assets as "cover," maintain segregated accounts or make margin payments when
it takes positions in instruments involving obligations to third parties
(i.e., instruments other than purchased options). If the Theme Portfolio
were unable to close out its positions in such instruments, it might be
required to continue to maintain such assets or accounts or make such
payments until the position expired or matured. The requirements might
impair the Theme Portfolio's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Theme Portfolio sell a portfolio security at a
disadvantageous time. The Theme Portfolio's ability to close out a position
in an instrument
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AIM GLOBAL THEME FUNDS
prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Theme Portfolio.
WRITING CALL OPTIONS
Each Theme Portfolio may write (sell) call options on securities, indices and
currencies. Call options generally will be written on securities and currencies
that, in the opinion of the Sub-adviser are not expected to make any major price
moves in the near future but that, over the long term, are deemed to be
attractive investments for the Theme Portfolios.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or an (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he or she may be
assigned an exercise notice, requiring him or her to deliver the underlying
security or currency against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by purchasing an option
identical to that previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Theme Portfolio's investment objective. When writing a call option, a Theme
Portfolio, in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security or currency above the exercise price,
and retains the risk of loss should the price of the security or currency
decline. Unlike one who owns securities or currencies not subject to an option,
a Theme Portfolio has no control over when it may be required to sell the
underlying securities or currencies, since most options may be exercised at any
time prior to the option's expiration. If a call option that a Theme Portfolio
has written expires, the Theme Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Theme Portfolio will realize a gain or loss from the
sale of the underlying security or currency, which will be increased or offset
by the premium received. Each Theme Portfolio does not consider a security or
currency covered by a call option to be "pledged" as that term is used in that
Theme Portfolio's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Theme Portfolio will be
obligated to sell the security or currency at less than its market value.
The premium that a Theme Portfolio receives for writing a call option is deemed
to constitute the market value of an option. The premium the Theme Portfolio
will receive from writing a call option will reflect, among other things, the
current market price of the underlying investment, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying investment, and the length of the option period. In determining
whether a particular call option should be written, the Sub-adviser will
consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit a Theme Portfolio to
write another call option on the underlying security or currency with either a
different exercise price or expiration date, or both.
Each Theme Portfolio will pay transaction costs in connection with the writing
of options and in entering into closing purchase contracts. Transaction costs
relating to options activity are normally higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities, indices or currencies at the time
the options are written. From time to time, a Theme Portfolio may purchase an
underlying security or currency for delivery in accordance with the exercise of
an option, rather than delivering such security or currency from its portfolio.
In such cases, additional costs will be incurred.
A Theme Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security or currency, any loss resulting from the
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AIM GLOBAL THEME FUNDS
repurchase of a call option is likely to be offset in whole or in part by
appreciation of the underlying security or currency owned by a Theme Portfolio.
WRITING PUT OPTIONS
Each Theme Portfolio may write put options on securities, indices and
currencies. A put option gives the purchaser of the option the right to sell,
and the writer (seller) the obligation to buy, the underlying security or
currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The operation of put options in other
respects, including their related risks and rewards, is substantially identical
to that of call options.
A Theme Portfolio generally would write put options in circumstances where the
Sub-adviser wishes to purchase the underlying security or currency for a Theme
Portfolio's holdings at a price lower than the current market price of the
security or currency. In such event, a Theme Portfolio would write a put option
at an exercise price that, reduced by the premium received on the option,
reflects the lower price it is willing to pay. Since the Theme Portfolio would
also receive interest on debt securities or currencies maintained to cover the
exercise price of the option, this technique could be used to enhance current
return during periods of market uncertainty. The risk in such a transaction
would be that the market price of the underlying security or currency would
decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Theme Portfolio will be
obligated to purchase the security or currency at greater than its market value.
PURCHASING PUT OPTIONS
Each Theme Portfolio may purchase put options on securities, indices and
currencies. As the holder of a put option, a Theme Portfolio would have the
right to sell the underlying security or currency at the exercise price at any
time until (American style) or on (European style) the expiration date. A Theme
Portfolio may enter into closing sale transactions with respect to such options,
exercise such option or permit such option to expire.
Each Theme Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Theme Portfolio in order to protect
against an anticipated decline in the value of the security or currency. Such
hedge protection is provided only during the life of the put option when the
Theme Portfolio, as the holder of the put option, is able to sell the underlying
security or currency at the put exercise price regardless of any decline in the
underlying security's market price or currency's exchange value. The premium
paid for the put option and any transaction costs would reduce any profit
otherwise available for distribution when the security or currency is eventually
sold.
A Theme Portfolio may also purchase put options at a time when it does not own
the underlying security or currency. By purchasing put options on a security or
currency it does not own, that Theme Portfolio seeks to benefit from a decline
in the market price of the underlying security or currency. If the put option is
not sold when it has remaining value, and if the market price of the underlying
security or currency remains equal to or greater than the exercise price during
the life of the put option, the Theme Portfolio will lose its entire investment
in the put option. In order for the purchase of a put option to be profitable,
the market price of the underlying security or currency must decline
sufficiently below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Theme Portfolio may purchase call options on securities, indices and
currencies. As the holder of a call option, the Theme Portfolio would have the
right to purchase the underlying security or currency at the exercise price at
any time until (American style) or on (European style) the expiration date. A
Theme Portfolio may enter into closing sale transactions with respect to such
options, exercise such options or permit such options to expire.
Call options may be purchased by a Theme Portfolio for the purpose of acquiring
the underlying security or currency for its portfolio. Utilized in this fashion,
the purchase of call options would enable a Theme Portfolio to acquire the
security or currency at the exercise price of the call option plus the premium
paid. At times, the net cost of acquiring the security or currency in this
manner may be less than the cost of acquiring the security or currency directly.
This technique may also be useful to a Theme Portfolio in purchasing a large
block of securities that would be more difficult to acquire by direct market
purchases. So long as it holds such a call option, rather than the underlying
security or currency itself, the Theme Portfolio is partially protected from any
unexpected decline in the market price of the underlying security or currency
and, in such event, could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.
A Theme Portfolio may also purchase call options on underlying securities or
currencies it owns to avoid realizing losses that would result in a reduction of
its current return. For example, where a Theme Portfolio has written a call
option on an
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AIM GLOBAL THEME FUNDS
underlying security or currency having a current market value below the price at
which it purchased the security or currency, an increase in the market price
could result in the exercise of the call option written by the Theme Portfolio
and the realization of a loss on the underlying security or currency.
Accordingly, the Theme Portfolio could purchase a call option on the same
underlying security or currency, which could be exercised to fulfill the Theme
Portfolio's delivery obligations under its written call (if it is exercised).
This strategy could allow the Theme Portfolio to avoid selling the portfolio
security or currency at a time when it has an unrealized loss; however, the
Theme Portfolio would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of each
Theme Portfolio's total assets at the time of each purchase.
A Theme Portfolio may attempt to accomplish objectives similar to those involved
in using Forward Contracts by purchasing put or call options on currencies. A
put option gives the Theme Portfolio as purchaser the right (but not the
obligation) to sell a specified amount of currency at the exercise price at any
time until (American style) or on (European style) the expiration date of the
option. A call option gives the Theme Portfolio as purchaser the right (but not
the obligation) to purchase a specified amount of currency at the exercise price
at any time until (American style) or on (European style) the expiration date of
the option. A Theme Portfolio might purchase a currency put option, for example,
to protect itself against a decline in the dollar value of a currency in which
it holds or anticipates holding securities. If the currency's value should
decline against the dollar, the loss in currency value should be offset, in
whole or in part, by an increase in the value of the put. If the value of the
currency instead should rise against the dollar, any gain to a Theme Portfolio
would be reduced by the premium it had paid for the put option. A currency call
option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which a Theme
Portfolio anticipates purchasing securities.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Theme Portfolio will not purchase an OTC option unless it believes that
daily valuations for such options are readily obtainable. OTC options differ
from exchange-traded options in that OTC options are transacted with dealers
directly and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
A Theme Portfolio may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written by
the Theme Portfolio. The assets used as cover for OTC options written by a Theme
Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Theme Portfolio may repurchase any OTC
option it writes at a maximum price to be calculated by a formula set forth in
the option agreement. The cover for an OTC option written subject to this
procedure would be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the option.
A Theme Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. A Theme
Portfolio intends to purchase or write only those exchange-traded options for
which there appears to be a liquid secondary market. However, there can be no
assurance that such a market will exist at any particular time. Closing
transactions can be made for OTC options only by negotiating directly with the
contra party or by a transaction in the secondary market if any such market
exists. Although a Theme Portfolio will enter into OTC options only with contra
parties that are expected to be capable of entering into closing transactions
with the Theme Portfolio, there is no assurance that the Theme Portfolio will in
fact be able to close out an OTC option position at a favorable price prior to
expiration. In the event of insolvency of the contra party, the Theme Portfolio
might be unable to close out an OTC option position at any time prior to its
expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Theme Portfolio writes a
call on an index, it receives a premium and agrees that, prior to the expiration
date, the purchaser of the call, upon exercise of the call, will receive from
the Theme Portfolio an amount of cash if the closing level
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AIM GLOBAL THEME FUNDS
of the index upon which the call is based is greater than the exercise price of
the call. The amount of cash is equal to the difference between the closing
price of the index and the exercise price of the call times a specified multiple
(the "multiplier"), which determines the total dollar value for each point of
such difference. When a Theme Portfolio buys a call on an index, it pays a
premium and has the same rights as to such call as are indicated above. When a
Theme Portfolio buys a put on an index, it pays a premium and has the right,
prior to the expiration date, to require the seller of the put, upon the Theme
Portfolio's exercise of the put, to deliver to the Theme Portfolio an amount of
cash if the closing level of the index upon which the put is based is less than
the exercise price of the put, which amount of cash is determined by the
multiplier, as described above for calls. When a Theme Portfolio writes a put on
an index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Theme Portfolio to deliver to it an amount of
cash equal to the difference between the closing level of the index and the
exercise price times the multiplier, if the closing level is less than the
exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Theme Portfolio
writes a call on an index it cannot provide in advance for its potential
settlement obligations by acquiring and holding the underlying securities. A
Theme Portfolio can offset some of the risk of writing a call index option
position by holding a diversified portfolio of securities similar to those on
which the underlying index is based. However, a Theme Portfolio cannot, as a
practical matter, acquire and hold a portfolio containing exactly the same
securities as underlie the index and, as a result, bears a risk that the value
of the securities held will vary from the value of the index.
Even if a Theme Portfolio could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Theme Portfolio, as the call
writer, will not know that it has been assigned until the next business day at
the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Theme Portfolio purchases an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Theme Portfolio will be required
to pay the difference between the closing index value and the exercise price of
the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each Theme Portfolio may enter into interest rate or currency futures contracts,
and may enter into stock index futures contracts (collectively, "Futures" or
"Futures Contracts"), as a hedge against changes in prevailing levels of
interest rates, currency exchange rates or stock price levels in order to
establish more definitely the effective return on securities or currencies held
or intended to be acquired by the Theme Portfolio. A Theme Portfolio's hedging
may include sales of Futures as an offset against the effect of expected
increases in interest rates, and decreases in currency exchange rates and stock
prices, and purchases of Futures as an offset against the effect of expected
declines in interest rates, and increases in currency exchange rates or stock
prices.
Each Theme Portfolio only will enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading thereon in the United States
are regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Theme Portfolio's exposure to interest rate, currency exchange
rate and stock market fluctuations, that Theme Portfolio may be able to hedge
its exposure more effectively and at a lower cost through using Futures
Contracts.
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AIM GLOBAL THEME FUNDS
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Theme Portfolio realizes a gain;
if it is more, the Theme Portfolio realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Theme
Portfolio realizes a gain; if it is less, the Theme Portfolio realizes a loss.
The transaction costs must also be included in these calculations. There can be
no assurance, however, that a Theme Portfolio will be able to enter into an
offsetting transaction with respect to a particular Futures Contract at a
particular time. If a Theme Portfolio is not able to enter into an offsetting
transaction, that Theme Portfolio will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Theme
Portfolio.
Each Theme Portfolio's Futures transactions will be entered into for hedging
purposes only; that is, Futures Contracts will be sold to protect against a
decline in the price of securities or currencies that a Theme Portfolio owns, or
Futures Contracts will be purchased to protect a Theme Portfolio against an
increase in the price of securities or currencies it has committed to purchase
or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Theme Portfolio in order to initiate Futures trading and maintain
the Theme Portfolio's open positions in Futures Contracts. A margin deposit made
when the Futures Contract is entered into ("initial margin") is intended to
ensure the Theme Portfolio's performance under the Futures Contract. The margin
required for a particular Futures Contract is set by the exchange on which the
Futures Contract is traded and may be significantly modified from time to time
by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin" to and from the futures
commission merchant through which the Theme Portfolio entered in the Futures
Contract will be made on a daily basis as the price of the underlying security,
currency or index fluctuates making the Futures Contract more or less valuable,
a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Theme Portfolio's
portfolio being hedged. The degree of imperfection of correlation depends upon
circumstances such as variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
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AIM GLOBAL THEME FUNDS
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Theme Portfolio were unable to liquidate a Futures or option on Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Theme Portfolio would
continue to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Theme Portfolio would continue to
be required to make daily variation margin payments and might be required to
maintain the position being hedged by the Future or option or to maintain cash
or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, 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 is exercised on the
last trading day 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 level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Theme Portfolio writes an option on a Futures Contract, it will be required
to deposit initial and variation margin pursuant to requirements similar to
those applicable to Futures Contracts. Premiums received from the writing of an
option on a Futures Contract are included in the initial margin deposit.
A Theme Portfolio may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Theme Portfolio enters into Futures Contracts, options on
Futures Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Theme Portfolio, after taking into
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AIM GLOBAL THEME FUNDS
account unrealized profits and unrealized losses on any contracts the Theme
Portfolio has entered into. In general, a call option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract exceeds the
strike, I.E., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Trust's Board
of Trustees and the Portfolios' Board of Trustees, as applicable, without a
shareholder vote. This limitation does not limit the percentage of a Theme
Portfolio's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. A Theme Portfolio
either may accept or make delivery of the currency at the maturity of the
Forward Contract. A Theme Portfolio may also, if its contra party agrees, prior
to maturity, enter into a closing transaction involving the purchase or sale of
an offsetting contract.
A Theme Portfolio engages in forward currency transactions in anticipation of,
or to protect itself against, fluctuations in exchange rates. A Theme Portfolio
might sell a particular foreign currency forward, for example, when it holds
bonds denominated in a foreign currency but anticipates, and seeks to be
protected against, a decline in the currency against the U.S. dollar. Similarly,
a Theme Portfolio might sell the U.S. dollar forward when it holds bonds
denominated in U.S. dollars but anticipates, and seeks to be protected against,
a decline in the U.S. dollar relative to other currencies. Further, a Theme
Portfolio might purchase a currency forward to "lock in" the price of securities
denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. Each Theme Portfolio will enter into such Forward
Contracts with major U.S. or foreign banks and securities or currency dealers in
accordance with guidelines approved by the Trust's or the Portfolios' Board of
Trustees, as applicable.
A Theme Portfolio may enter into Forward Contracts either with respect to
specific transactions or with respect to overall investments of that Theme
Portfolio. The precise matching of the Forward Contract amounts and the value of
specific securities generally will not be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the Forward Contract
is entered into and the date it matures. Accordingly, it may be necessary for
that Theme Portfolio to purchase additional foreign currency on the spot (I.E.,
cash) market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Theme Portfolio is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on the
spot market some of the foreign currency the Theme Portfolio is obligated to
deliver. The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward Contracts involve the risk that anticipated currency
movements will not be predicted accurately, causing a Theme Portfolio to sustain
losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Theme Portfolio to
sell a currency, that Theme Portfolio either may sell a security and use the
sale proceeds to make delivery of the currency or retain the security and offset
its contractual obligation to deliver the currency by purchasing a second
contract pursuant to which the Theme Portfolio will obtain, on the same maturity
date, the same amount of the currency that it is obligated to deliver.
Similarly, a Theme Portfolio may close out a Forward Contract requiring it to
purchase a specified currency by entering into a second contract, if its contra
party agrees, entitling it to sell the same amount of the same currency on the
maturity date of the first contract. A Theme Portfolio would realize a gain or
loss as a result of entering into such an offsetting Forward Contract under
either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
the offsetting contract.
The cost to a Theme Portfolio of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because Forward Contracts are usually
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities a Theme Portfolio owns or intends to acquire, but it does
establish a rate of exchange in advance. In addition, while Forward Contract
sales limit the risk of loss due to a decline in the value of the hedged
currencies, they also limit any potential gain that might result should the
value of the currencies increase.
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AIM GLOBAL THEME FUNDS
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Theme Portfolio may use options on foreign currencies, Futures on foreign
currencies, options on Futures on foreign currencies and Forward Contracts, to
hedge against movements in the values of the foreign currencies in which the
Theme Portfolio's securities are denominated. Such currency hedges can protect
against price movements in a security that the Theme Portfolio owns or intends
to acquire that are attributable to changes in the value of the currency in
which it is denominated. Such hedges do not, however, protect against price
movements in the securities that are attributable to other causes.
A Theme Portfolio might seek to hedge against changes in the value of a
particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Theme Portfolio may hedge
against price movements in that currency by entering into a contract on another
currency or basket of currencies, the values of which the Sub-adviser believes
will have a positive correlation to the value of the currency being hedged. The
risk that movements in the price of the contract will not correlate perfectly
with movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Theme Portfolio could be disadvantaged by dealing in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Theme Portfolio might be required to accept or make
delivery of the underlying foreign currency in accordance with any U.S. or
foreign regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options purchased by a Theme Portfolio) expose the Theme Portfolio to an
obligation to another party. A Theme Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies, or other options, Forward Contracts or Future Contracts,
or (2) cash, receivables and short-term debt securities with a value sufficient
at all times to cover its potential obligations not covered as provided in (1)
above. Each Theme Portfolio will comply with SEC guidelines regarding cover for
these instruments and, if the guidelines so require, set aside cash or liquid
securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Theme Portfolio's assets is used for cover or otherwise set aside, it could
affect portfolio management or the Theme Portfolio's ability to meet redemption
requests or other current obligations.
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RISK FACTORS
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ILLIQUID SECURITIES
Each Theme Portfolio may invest up to 15% of its net assets in illiquid
securities. Securities may be considered illiquid if a Theme Portfolio cannot
reasonably expect within seven days to sell the security for approximately the
amount at which that Theme Portfolio values such securities. See "Investment
Limitations." The sale of illiquid securities, if they can be sold at all,
generally will require more time and result in higher brokerage charges or
dealer discounts and other selling expenses than will the sale of liquid
securities such as securities eligible for trading on U.S. securities exchanges
or in OTC markets. Moreover, restricted securities, which may be illiquid for
purposes of this limitation, often sell, if at all, at a price lower than
similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Theme Portfolio may be obligated to pay all or part
of the registration expenses and a considerable period may elapse between the
time of the decision to sell and the time the Theme Portfolio may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Theme Portfolio might
obtain a less favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Theme Portfolio, however, could affect adversely the marketability of such
portfolio securities and the Theme Portfolio might be unable to dispose of such
securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Trust's or the
Portfolios' Board of Trustees, as applicable, has the ultimate responsibility
for determining whether specific securities, including restricted securities
pursuant to Rule 144A under the 1933 Act, are liquid or illiquid. Each Board has
delegated the function of making day-to-day determinations of liquidity to the
Sub-adviser, in accordance with procedures approved by that Board. The
Sub-adviser takes into account a number of factors in reaching liquidity
decisions, including, but not limited to, (i) the frequency of trading in the
security; (ii) the number of dealers that make quotes for the security; (iii)
the number of dealers that have undertaken to make a market in the security;
(iv) the number of other potential purchasers; and (v) the nature of the
security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). The
Sub-adviser monitors the liquidity of securities held by each Theme Portfolio
and periodically reports such determinations to the Trust's or the Portfolios'
Board of Trustees, as applicable. If the liquidity percentage restriction of a
Theme Portfolio is satisfied at the time of investment, a later increase in the
percentage of illiquid securities held by the Theme Portfolio resulting from a
change in market value or assets will not constitute a violation of that
restriction. If as a result of a change in market value or assets, the
percentage of illiquid securities held by the Theme Portfolio increases above
the applicable limit, the Sub-adviser will take appropriate steps to bring the
aggregate amount of illiquid assets back within the
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AIM GLOBAL THEME FUNDS
prescribed limitations as soon as reasonably practicable, taking into account
the effect of any disposition on the Theme Portfolio.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment convertibility of currencies into U.S. dollars and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation by any country, a Theme Portfolio could lose its entire investment
in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Theme Portfolio may invest may have groups that advocate radical religious or
revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for widespread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of a Theme Portfolio's
investment in those countries. Instability may also result from, among other
things; (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which a Theme
Portfolio invests and adversely affect the value of a Theme Portfolio's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Theme Portfolio. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the cost and expenses of a Theme Portfolio. For
example, certain countries require prior governmental approval before
investments by foreign persons may be made, or may limit the amount of
investment by foreign persons in a particular company or limit the investment by
foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
for the repatriation of investment income, capital or the proceeds of securities
sales by foreign investors. In addition, if there is a deterioration in a
country's balance of payments of for other reasons, a country may impose
restrictions on foreign capital remittances abroad. A Theme Portfolio could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL REGULATION.
Foreign companies are subject to accounting, auditing and financial standards
and requirements that differ, in some cases significantly, from those applicable
to U.S. companies. In particular, the assets, liabilities and profits appearing
on the financial statements of such a company may not reflect its financial
position or results of operations in the way they would be reflected had such
financial statements been prepared in accordance with U.S. generally accepted
accounting principles. Most of the foreign securities held by a Theme Portfolio
will not be registered with the SEC or regulators of any foreign country, nor
will the issuers thereof be subject to the SEC's reporting requirements. Thus,
there will be less available information concerning most foreign issuers of
securities held by a Theme Portfolio than is available concerning U.S. issuers.
In instances where the financial statements of an issuer are not deemed to
reflect accurately the financial situation of the issuer, the Sub-adviser will
take appropriate steps to evaluate the proposed investment, which may include
on-site inspection of the issuer, interviews with its management and
consultations with accountants, bankers and other specialists. There is
substantially less publicly available information about foreign companies than
there are reports and ratings published about U.S. companies and the U.S.
government. In addition, where public information is available, it may be less
reliable than such information regarding U.S. issuers. Issuers of securities in
foreign jurisdictions are generally not subject to the same degree of regulation
as are U.S. issuers with respect to such matters as restrictions on market
manipulation, insider trading rules, shareholder proxy requirements and timely
disclosure of information.
CURRENCY FLUCTUATIONS. Because each Theme Portfolio, under normal
circumstances, will invest a substantial portion of its total assets in the
securities of foreign issuers which are denominated in foreign currencies, the
strength or weakness of the U.S. dollar against such foreign currencies will
account for part of a Theme Portfolio's investment performance. A decline in the
value of any particular currency against the U.S. dollar will cause a decline in
the U.S. dollar value of that Theme Portfolio's holdings of securities and cash
denominated in such currency and, therefore, will cause an overall decline in
the appropriate Fund's net asset value and any net investment income and capital
gains derived from such securities to be distributed in U.S. dollars to
shareholders of that Fund. Moreover, if the value of the foreign currencies in
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AIM GLOBAL THEME FUNDS
which a Theme Portfolio receives its income falls relative to the U.S. dollar
between receipt of the income and the making of Theme Portfolio distributions,
the Theme Portfolio may be required to liquidate securities in order to make
distributions if the Theme Portfolio has insufficient cash in U.S. dollars to
meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and the pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Theme Portfolio values its assets daily in terms of U.S. dollars,
the Portfolios do not intend to convert their holdings of foreign currencies
into U.S. dollars on a daily basis. Each Portfolio will do so, from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference ("spread") between the prices at which
they buy and sell various currencies. Thus, a dealer may offer to sell a foreign
currency to a Portfolio at one rate, while offering a lesser rate of exchange
should a Portfolio desire to sell the currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of a Theme Portfolio
are uninvested and no return is earned thereon. The inability of a Theme
Portfolio to make intended security purchases due to settlement problems could
cause that Theme Portfolio to miss attractive investment opportunities.
Inability to dispose of a portfolio security due to settlement problems either
could result in losses to that Theme Portfolio due to subsequent declines in
value of the portfolio security or, if that Theme Portfolio has entered into a
contract to sell the security, could result in possible liability to the
purchaser. The Sub-adviser will consider such difficulties when determining the
allocation of a Theme Portfolio's assets, although the Sub-adviser does not
believe that such difficulties will have a material adverse effect on a Theme
Portfolio's portfolio trading activities.
Each Theme Portfolio may use foreign custodians, which may involve risks in
addition to those related to its use of U.S. custodians. Such risks include
uncertainties relating to determining and monitoring the foreign custodian's
financial strength, reputation and standing; maintaining appropriate safeguards
concerning that Theme Portfolio's investments; and possible difficulties in
obtaining and enforcing judgments against such custodians.
WITHHOLDING TAXES. Each Theme Portfolio's net investment income from foreign
issuers may be subject to withholding taxes by the foreign issuer's country,
thereby reducing that income or delaying the receipt of income when those taxes
may be recaptured. See "Taxes."
CONCENTRATION. To the extent a Theme Portfolio invests a significant portion
of its assets in securities of issuers located in a particular country or region
of the world, such Portfolio may be subject to greater risks and may experience
greater volatility than a fund that is more broadly diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. The countries
that are members of the European Economic Community ("Common Market") (Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain, and the United Kingdom) eliminated certain import tariffs and
quotas and other trade barriers with respect to one another over the past
several years. The Sub-adviser believes that this deregulation should improve
the prospects for economic growth in many Western European countries. Among
other things, the deregulation could enable companies domiciled in one country
to avail themselves of lower labor costs existing in other countries. In
addition, this deregulation could benefit companies domiciled in one country by
opening additional markets for their goods and services in other countries.
Since, however, it is not clear what the exact form or effect of these Common
Market reforms will be on business in Western Europe, it is impossible to
predict the long-term impact of the implementation of these programs on the
securities owned by a Theme Portfolio.
SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
United States securities markets, and should be considered highly speculative.
Such risks include: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging
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AIM GLOBAL THEME FUNDS
instruments; (5) higher rates of inflation (including the risk of social unrest
associated with periods of hyper-inflation) and high unemployment; (6) controls
on foreign investment and local practices disfavoring foreign investors and
limitations on repatriation of invested capital, profits and dividends, and on a
fund's ability to exchange local currencies for U.S. dollars; (7) political
instability and social unrest and violence; (8) the risk that the governments of
Russia and Eastern European countries may decide not to continue to support the
economic reform programs implemented recently and could follow radically
different political and/or economic policies to the detriment of investors,
including non-market-oriented policies such as the support of certain industries
at the expense of other sectors or investors, or a return to the centrally
planned economy that existed when such countries had a communist form of
government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING JAPAN. Japan's economic growth has declined
significantly since 1990. The general government position has deteriorated as a
result of weakening economic growth and stimulative measures taken to support
economic activity and to restore financial stability. Although the decline in
interest rates and fiscal stimulation packages have helped to contain
recessionary forces, uncertainties remain. Japan is also heavily dependent upon
international trade, so its economy is especially sensitive to trade barriers
and disputes. Japan has had difficult relations with its trading partners,
particularly the United States, where the trade imbalance is the greatest. It is
possible that trade sanctions and other protectionist measures could impact
Japan adversely in both the short and the long term.
The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially in the U.S. In general, however, reported net income in Japan is
understated relative to U.S. accounting standards and this is one reason why
price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the U.S., both of
which factors tend to result in lower discount rates and higher price-earnings
ratios in Japan than in the U.S.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are not always equally
enforced. In addition, Japan's banking industry is undergoing problems related
to bad loans and declining values in real estate.
SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies of Pacific
region countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made periodically in certain of such
currencies. Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea. In
addition, the Theme Portfolios may invest in Hong Kong, which reverted to
Chinese Administration on July 1, 1997. Investments in Hong Kong may be subject
to expropriation, national, nationalization or confiscation, in which case a
Theme Portfolio could lose its entire investment in Hong Kong. In addition, the
reversion of Hong Kong also presents a risk that the Hong Kong dollar will be
devalued and a risk of possible loss of investor confidence in Hong Kong's
currency, stock market and assets.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
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AIM GLOBAL THEME FUNDS
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the
securities of companies in emerging markets may entail special risks relating to
potential political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Theme Portfolio could lose its entire
investment in any such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading volume in issuers compared to
the volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economics and securities
markets of certain emerging market countries.
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
FEEDER FUNDS
The Financial Services Fund, Infrastructure Fund, Resources Fund and Consumer
Products and Services Fund each has the following fundamental investment policy
to enable it to invest in the Financial Services Portfolio, Infrastructure
Portfolio, Resources Portfolio and Consumer Products and Services Portfolio,
respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
All other fundamental investment policies, and the non-fundamental investment
policies, of each Feeder Fund and its corresponding Portfolio are identical.
Therefore, although the following discusses the investment policies of each
Portfolio and its Board of Trustees, it applies equally to each Feeder Fund and
its Board of Trustees.
Each Portfolio has adopted the following investment limitations as fundamental
policies that (unless otherwise noted) may not be changed without approval by
the affirmative vote of a majority of the outstanding shares of the Portfolio.
Whenever a Feeder Fund is requested to vote on a change in the investment
limitations of its corresponding Portfolio, the Fund will hold a meeting of its
shareholders and will cast its votes as instructed by its shareholders.
No Portfolio may:
(1) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Portfolio may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner;
Statement of Additional Information Page 21
<PAGE>
AIM GLOBAL THEME FUNDS
(2) Purchase or sell physical commodities, but the Portfolio may
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Portfolio might be considered an underwriter
under the federal securities laws in connection with its disposition of
portfolio securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Portfolio's total
assets (including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the
Portfolio may borrow up to an additional 5% of its total assets (not
including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Portfolio's total assets would be invested in securities of that
issuer or the Portfolio would own or hold more than 10% of the outstanding
voting securities of that issuer, except that up to 25% of the Portfolio's
total assets may be invested without regard to this limitation, and except
that this limitation does not apply to securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities or to securities
issued by other investment companies.
The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of the Portfolios' Board of Trustees without
shareholder approval. No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Portfolio's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the
Portfolio has entered into;
(5) Borrow money except for temporary or emergency purposes (other than
to meet redemptions). While borrowings exceed 5% of the Portfolio's total
assets, the Portfolio will not make any additional investments;
(6) Invest more than 10% of its total assets in shares of other
investment companies and may not invest more than 5% of its total assets in
any one investment company or acquire more than 3% of the outstanding voting
securities of any one investment company;
(7) Purchase securities on margin, provided that each Portfolio may
obtain short-term credits as may be necessary for the clearance of purchases
and sales of securities, and further provided that the Portfolio may make
margin deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(8) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to the Prospectus for further information with respect to
the investment objective of each Feeder Fund, which may not be changed without
the approval of Fund shareholders, and its corresponding Portfolio's investment
objective, which may be changed without the approval of its shareholders, and
other investment policies, techniques and limitations, which may or may not be
changed without shareholder approval.
Statement of Additional Information Page 22
<PAGE>
AIM GLOBAL THEME FUNDS
HEALTH CARE FUND
The Health Care Fund has adopted the following investment limitations as
fundamental policies, which (unless otherwise noted) may not be changed without
approval by a majority of the outstanding shares of the Fund.
The Health Care Fund may not:
(1) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Health Care Fund may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that real estate
can be liquidated in an orderly manner;
(2) Engage in the business of underwriting securities of other issuers,
except to the extent that the Health Care Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(3) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(4) Purchase or sell physical commodities, but the Health Care Fund may
purchase, sell or enter into financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Health Care Fund's
total assets (including the amount borrowed but reduced by any liabilities
not constituting borrowings) at the time of the borrowing, except that the
Health Care Fund may borrow up to an additional 5% of its total assets (not
including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Health Care Fund's total assets would be invested in securities of
that issuer or the Health Care Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to 25% of the
Health Care Fund's total assets may be invested without regard to this
limitation, and except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to securities issued by other investment companies.
Notwithstanding any other investment policy of the Health Care Fund, the Health
Care Fund may invest all of its investable assets (cash, securities and
receivables related to securities) in an open-end management investment company
having substantially the same investment objective, policies and limitations as
the Fund.
The following investment policies of the Health Care Fund are not fundamental
policies and may be changed by vote of the Trust's Board of Trustees without
shareholder approval. The Health Care Fund will not:
(1) Purchase securities for which there is no readily available market,
or enter into repurchase agreements or purchase time deposits maturing in
more than seven days, or purchase OTC options or hold assets set aside to
cover OTC options written by the Health Care Fund, if immediately after and
as a result, the value of such securities would exceed, in the aggregate,
15% of the Health Care Fund's net assets;
(2) Purchase securities on margin, provided that the Health Care Fund
may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the Health Care
Fund may make margin deposits in connection with its use of financial
options and futures, forward and spot currency contracts, swap transactions
and other financial contracts or derivative instruments; or
(3) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities; or
(4) Borrow money except for temporary or emergency purposes (other than
to meet redemptions). While borrowings exceed 5% of the Health Care Fund's
total assets, it will not make any additional investments.
Investors should refer to the Health Care Fund's Prospectus for further
information with respect to the Health Care Fund's investment objective, which
may not be changed without the approval of its shareholders, and other
investment policies, techniques and limitations, which may be changed without
shareholder approval.
Statement of Additional Information Page 23
<PAGE>
AIM GLOBAL THEME FUNDS
TELECOMMUNICATIONS FUND
The Telecommunications Fund has adopted the following investment limitations as
fundamental policies, which (unless otherwise noted) may not be changed without
approval by the affirmative vote of a majority of the outstanding shares of the
Fund.
The Telecommunications Fund may not:
(1) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Telecommunications Fund may exercise rights under agreements relating to
such securities, including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner;
(2) Purchase or sell physical commodities, but the Telecommunications
Fund may purchase, sell or enter into financial options and futures, forward
and spot currency contracts, swap transactions and other financial contracts
or derivative instruments;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Telecommunications Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Telecommunications
Fund's total assets (including the amount borrowed but reduced by any
liabilities not constituting borrowings) at the time of the borrowing,
except that the Telecommunications Fund may borrow up to an additional 5% of
its total assets (not including the amount borrowed) for temporary or
emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5%
of the Telecommunications Fund's total assets would be invested in
securities of that issuer or the Telecommunications Fund would own or hold
more than 10% of the outstanding voting securities of that issuer, except
that up to 25% of the Telecommunications Fund's total assets may be invested
without regard to this limitation, and except that this limitation does not
apply to securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities or to securities issued by other investment
companies.
Notwithstanding any other investment policy of the Telecommunications Fund, the
Telecommunications Fund may invest all of its investable assets (cash,
securities and receivables related to securities) in an open-end management
investment company having substantially the same investment objective, policies
and limitations as the Fund.
The following investment policies of the Telecommunications Fund are not
fundamental policies and may be changed by vote of the Trust's Board of Trustees
without shareholder approval. The Telecommunications Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Telecommunications Fund to own more than 10% of any class of securities of
any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(5) Borrow money except for temporary or emergency purposes (other than
to meet redemptions). While borrowings exceed 5% of the Telecommunications
Fund's total assets, it will not make any additional investments;
Statement of Additional Information Page 24
<PAGE>
AIM GLOBAL THEME FUNDS
(6) Purchase securities on margin, provided that the Telecommunications
Fund may obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that the
Telecommunications Fund may make margin deposits in connection with its use
of financial options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments; or
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to the Telecommunications Fund's Prospectus for further
information with respect to the Telecommunications Fund's investment objective,
which may not be changed without the approval of shareholders, and other
investment policies, techniques and limitations, which may be changed without
shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's or Portfolio's investment policies or
restrictions. A Fund or Portfolio may exchange securities, exercise conversion
or subscription rights, warrants or other rights to purchase common stock or
other equity securities and may hold, except to the extent limited by the 1940
Act, any such securities so acquired without regard to the Fund's or Portfolio's
investment policies and restrictions. The original cost of the securities so
acquired will be included in any subsequent determination of a Fund's or
Portfolio's compliance with the investment percentage limitations referred to
above and in the Prospectus.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Trust's and the Portfolios' Board of
Trustees, the Sub-adviser is responsible for the execution of each Theme
Portfolio's securities transactions and the selection of broker/dealers who
execute such transactions on behalf of each Theme Portfolio. In executing
transactions, the Sub-adviser seeks the best net results for each Theme
Portfolio, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although the
Sub-adviser generally seeks reasonably competitive commission rates and spreads,
payment of the lowest commission or spread is not necessarily consistent with
the best net results. While each Theme Portfolio may engage in soft dollar
arrangements for research services, as described below, it has no obligation to
deal with any broker/dealer or group of broker/dealers in the execution of
portfolio transactions.
Consistent with the interests of each Theme Portfolio, the Sub-adviser may
select broker/dealers to execute that Theme Portfolio's portfolio transaction on
the basis of the research and brokerage services they provide to the Sub-adviser
for its use in managing that Theme Portfolio and its other advisory accounts.
Such services may include furnishing analyses, reports and information
concerning issuers, industries, securities, geographic regions, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement). Research and brokerage services received from such
broker are in addition to, and not in lieu of, the services required to be
performed by the Sub-adviser under the applicable investment management and
administration contract. A commission paid to such broker may be higher than
that which another qualified broker would have charged for effecting the same
transaction, provided that the Sub-adviser determines in good faith that such
commission is reasonable in terms either of that particular transaction or the
overall responsibility of the Sub-adviser to that Theme Portfolio and its other
clients and that the total commissions paid by that Theme Portfolio will be
reasonable in relation to the benefits it received over the long term. Research
services may also be received from dealers who execute portfolio transactions in
OTC markets.
The Sub-adviser may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by a Theme Portfolio toward payment of its expenses, such
as custodian fees.
Investment decisions for a Theme Portfolio and for other investment accounts
managed by the Sub-adviser are made independently of each other in light of
differing conditions. However, the same investment decision occasionally may be
Statement of Additional Information Page 25
<PAGE>
AIM GLOBAL THEME FUNDS
made for two or more of such accounts, including a Theme Portfolio. In such
cases, simultaneous transactions may occur. Purchases or sales are then
allocated as to price or amount in a manner deemed fair and equitable to all
accounts involved. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as a Theme Portfolio is
concerned, in other cases the Sub-adviser believes that coordination and the
ability to participate in volume transactions will be beneficial to that Theme
Portfolio.
Under a policy adopted by the Trust's and the Portfolios' Board of Trustees, and
subject to the policy of obtaining the best net results, the Sub-adviser may
consider a broker/dealer's sale of the shares of the Theme Funds and the other
portfolios for which AIM or the Sub-adviser serves as investment manager or
administrator in selecting broker/dealers for the execution of portfolio
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Theme Funds and
such other portfolios.
Each Theme Portfolio contemplates purchasing most foreign equity securities in
OTC markets or stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located, if that
is the best available market. The fixed commissions paid in connection with most
such foreign stock transactions generally are higher than negotiated commissions
on U.S. transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by a Theme Portfolio in the form of ADRs,
ADSs, EDRs, CDRs or securities convertible into foreign equity securities. ADRs,
ADSs, EDRs and CDRs may be listed on stock exchanges, or traded in the OTC
markets in the United States or Europe, as the case may be. ADRs, like other
securities traded in the United States, will be subject to negotiated commission
rates. The foreign and domestic debt securities and money market instruments in
which a Theme Portfolio may invest are generally traded in the OTC markets.
A Theme Portfolio does not have any obligation to deal with any broker/dealer or
group of broker/dealers in the execution of securities transactions. Each Theme
Portfolio contemplates that, consistent with the policy of obtaining the best
net results, brokerage transactions may be conducted through certain companies
that are affiliated with AIM or the Sub-adviser. The Trust's or the Portfolios'
Board of Trustees, as applicable, has adopted procedures in conformity with Rule
17e-1 under the 1940 Act to ensure that all brokerage commissions paid to such
affiliates are reasonable and fair in the context of the market in which they
are operating. Any such transactions will be effected and related compensation
paid only in accordance with applicable SEC regulations.
For the fiscal years ended October 31, 1997, 1996 and 1995, the Health Care Fund
paid aggregate brokerage commissions of $1,150,118, $1,619,500 and $545,743,
respectively. For the fiscal years ended October 31, 1997, 1996 and 1995, the
Telecommunications Fund paid aggregate brokerage commissions of $2,254,069,
$2,848,733 and $2,253,982, respectively. For the fiscal years ended October 31,
1997, 1996 and 1995, the Financial Services Portfolio paid aggregate brokerage
commissions of $250,893, $77,822 and $38,814, respectively. For the fiscal years
ended October 31, 1997, 1996 and 1995, the Infrastructure Portfolio paid
aggregate brokerage commissions of $131,543, $124,164 and $122,399,
respectively. For the fiscal years ended October 31, 1997, 1996 and 1995, the
Resources Portfolio paid aggregate brokerage commissions of $1,281,212, $496,370
and $98,462, respectively. For the fiscal years ended October 31, 1997 and 1996
and for the fiscal period December 30, 1994 (commencement of operations) to
October 31, 1995, the Consumer Products and Services Portfolio paid aggregate
brokerage commissions of $1,454,348, $356,459 and $17,605, respectively. For the
fiscal years ended October 31, 1997 and 1996, the Health Care Fund paid to GT
Bank in Liechtenstein AG, which was an "affiliated" broker, aggregate brokerage
commissions of $23,081 and $32,898, respectively, for transactions involving
purchases and sales of portfolio securities which represented 2.01% and 2.03%,
respectively, of the total brokerage commissions paid by the Health Care Fund
and 1.61% and 1.71%, respectively, of the aggregate dollar amount of
transactions involving payment of commissions by the Health Care Fund. For
fiscal year ended Octover 31, 1997, the Telecommunications Fund paid to GT Bank
in Liechtenstein, AG, which was an "affiliated" broker, aggregate brokerage
commissions of $220,584 for transactions involving purchases and sales of
portfolio securities which represented 1.00% of the total brokerage commissions
paid by the Fund and .67% of the aggregate dollar amount of transactions
involving payment of commissions by the Fund.
PORTFOLIO TRADING AND TURNOVER
Although each Theme Portfolio does not intend generally to trade for short-term
profits, the securities held by that Theme Portfolio will be sold whenever
management believes it is appropriate to do so, without regard to the length of
time a particular security may have been held. Portfolio turnover rate is
calculated by dividing the lesser of sales or purchases of portfolio securities
by each Theme Portfolio's average month-end portfolio value, excluding
short-term investments. The portfolio turnover rate will not be a limiting
factor when management deems portfolio changes appropriate. Higher
Statement of Additional Information Page 26
<PAGE>
AIM GLOBAL THEME FUNDS
portfolio turnover involves correspondingly greater brokerage commissions and
other transaction costs that the Theme Portfolio will bear directly, and may
result in the realization of net capital gains that are taxable when distributed
to each Fund's shareholders. For the fiscal years ended October 31, 1996 and
1997, the Telecommunications Fund's portfolio turnover rates were 37% and 35%,
respectively. For the fiscal years ended October 31, 1996 and 1997, the Health
Care Fund's portfolio turnover rates were 157% and 149%, respectively. For the
fiscal years ended October 31, 1996 and 1997, the portfolio turnover rates for
the Financial Services Portfolio, Infrastructure Portfolio and Resources
Portfolio were 103% and 91%, 41% and 41%, and 94% and 321%, respectively. For
the fiscal years ended October 31, 1996 and 1997, the portfolio turnover rates
for the Consumer Products and Services Portfolio were 169% and 392%,
respectively.
Statement of Additional Information Page 27
<PAGE>
AIM GLOBAL THEME FUNDS
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Trust's Trustees and Executive Officers and the Portfolios' Trustees and
Executive Officers are listed below. Unless otherwise indicated, the address of
each Executive Officer is 11 Greenway, Suite 100, Houston, Texas 77046.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 40 President, GT Global, Inc. ("GT Global") since 1995; Director, GT Global since
Director, Chairman of the Board and President 1991; Senior Vice President and Director of Sales and Marketing, GT Global from
50 California Street May 1992 to April 1995; Director, Liechtenstein Global Trust AG (holding company
San Francisco, CA 94111 of the various international GT companies) Advisory Board from January 1996 to
May 1998; Director, G.T. Global Insurance Agency ("G.T. Insurance") since 1996;
President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice
President and Director, Sales and Marketing, G.T. Insurance from April 1995 to
November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992
to 1993; and Trustee, each of the other investment companies registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), that is
sub-advised or sub-administered by the Sub-adviser.
C. Derek Anderson, 57 President, Plantagenet Capital Management, LLC (an investment partnership);
Director Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director,
Suite 400 PremiumWear, Inc. (formerly Munsingwear, Inc.) (a casual apparel company);
San Francisco, CA 94104 Director, "R" Homes, Inc. and various other companies; and Trustee, each of the
other investment companies registered under the 1940 Act that is sub-advised or
sub-administered by the Sub-adviser.
Frank S. Bayley, 58 Partner, law firm of Baker & McKenzie; Director and Chairman, C.D. Stimson
Director Company (a private investment company); and Trustee, each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is sub-advised or sub-
Suite 2400 administered by the Sub-adviser.
San Francisco, CA 94111
Arthur C. Patterson, 54 Managing Partner, Accel Partners (a venture capital firm); Director, Viasoft and
Director PageMart, Inc. (both public software companies) and several other privately held
428 University Avenue software and communications companies; and Trustee, each of the other investment
Palo Alto, CA 94301 companies registered under the 1940 Act that is sub-advised or sub-administered
by the Sub-adviser.
Ruth H. Quigley, 63 Private investor; President, Quigley Friedlander & Co., Inc. (a financial
Director advisory services firm) from 1984 to 1986; and Trustee, each of the other
1055 California Street investment companies registered under the 1940 Act that is sub-advised or sub-
San Francisco, CA 94108 administered by the Sub-adviser.
</TABLE>
- --------------
* Mr. Guilfoyle is an "interested person" of the Trust as defined by the 1940
Act due to his affiliation with the Sub-adviser.
Statement of Additional Information Page 28
<PAGE>
AIM GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
John J. Arthur+, 53 Director, Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice
Vice President President and Treasurer, A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company.
Kenneth W. Chancey, 53 Senior Vice President -- Mutual Fund Accounting, the Sub-adviser since 1997;
Vice President and Vice President -- Mutual Fund Accounting, the Sub-adviser from 1992 to 1997.
Principal Accounting Officer
50 California Street
San Francisco, CA 94111
Melville B. Cox, 54 Vice President and Chief Compliance Officer, A I M Advisors, Inc., A I M Capital
Vice President Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund
Management Company.
Gary T. Crum, 50 Director and President, A I M Capital Management, Inc.; Director and Senior Vice
Vice President President, A I M Management Group Inc. and A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP PLC.
Robert H. Graham, 51 Director, President and Chief Executive Officer, A I M Management Group Inc.;
Vice President Director and President, A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company; and Director, AMVESCAP PLC.
Helge K. Lee, 52 Chief Legal and Compliance Officer -- North America, the Sub-adviser since
Vice President and Secretary October 1997; Secretary and Chief Legal and Compliance Officer, INVESCO (NY)
50 California Street Asset Management, Inc., INVESCO (NY), Inc., GT Global Investor Services, Inc.
San Francisco, CA 94111 and G.T. Insurance since August 1997; Secretary and Chief Legal and Compliance
Officer, GT Global from August 1997 to April 1998; Executive Vice President of
the Asset Management Division of Liechtenstein Global Trust AG, from October
1996 to May 1998; Senior Vice President, General Counsel and Secretary of
INVESCO (NY) Asset Management, Inc., INVESCO (NY), Inc., GT Global, GT Global
Investor Services, Inc. and G.T. Insurance from May 1994 to October 1996; and
Senior Vice President, General Counsel and Secretary of Strong/Corneliuson
Management, Inc. and Secretary of each of the Strong Funds from October 1991 to
May 1994.
Carol F. Relihan+, 43 Director, Senior Vice President, General Counsel and Secretary, A I M Advisors,
Vice President Inc.; Vice President, General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel, Fund Management Company;
Vice President and General Counsel, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and A I M Distributors, Inc.
Dana R. Sutton, 39 Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice
Vice President and Assistant President and Assistant Treasurer, Fund Management Company.
Treasurer
</TABLE>
- --------------
+ Mr. Arthur and Ms. Relihan are married to each other.
Statement of Additional Information Page 29
<PAGE>
AIM GLOBAL THEME FUNDS
The Board of Trustees has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and its
funds and recommending firms to serve as independent auditors of the Trust. Each
of the Trustees and Officers of the Trust is also a Director or Trustee and
Officer of AIM Investment Portfolios, Inc., AIM Floating Rate Fund, AIM Series
Trust, AIM Growth Series, AIM Eastern Europe Fund, GT Global Variable Investment
Trust, GT Global Variable Investment Series, Global Investment Portfolio (of
which the Portfolios are subtrusts), Growth Portfolio, Floating Rate Portfolio
and Global High Income Portfolio, which also are registered investment companies
advised by AIM and sub-advised by the Sub-adviser or an affiliate thereof. All
of the Trust's Trustees also serve as directors or trustees of some or all of
the other investment companies managed, administered or advised by AIM. All of
the Trust's executive officers hold similar offices with some or all of the
other investment companies managed, administered or advised by AIM. Each Trustee
who is not a director, officer or employee of the Sub-adviser or any affiliated
company is paid aggregate fees of $5,000 a year, plus $300 per Fund for each
meeting of the Board attended and reimbursed travel and other expenses incurred
in connection with attendance at such meetings. Other Trustees and Officers
receive no compensation or expense reimbursement from the Trust. For the fiscal
year ended October 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss
Quigley, who are not directors, officers or employees of the Sub-adviser or any
affiliated company, received total compensation of $38,650, $38,650, $27,850 and
$38,650, respectively, from the Trust for their services as Directors. For the
fiscal year ended October 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and
Miss Quigley who are not directors, officers or employees of the Sub-adviser or
any other affiliated company, received total compensation of $117,304, $114,386,
$88,350 and $111,688, respectively, from the investment companies managed or
administered by AIM and sub-advised or sub-administered by the Sub-adviser for
which he or she serves as a Director or Trustee. Fees and expenses disbursed to
the Directors contained no exercised or payable pension or retirement benefits.
As of June 26, 1998, the Officers and Trustees and their families as a group
owned in the aggregate beneficially or of record less than 1% of the outstanding
shares of each Fund or of all the Trust's series in the aggregate.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FEEDER FUNDS
AND THE PORTFOLIOS
AIM serves as each Portfolio's investment manager and administrator under an
investment management and administration contract between each Portfolio and AIM
("Portfolio Management Contract"). The Sub-adviser serves as each Portfolio's
sub-adviser and sub-administrator under a sub-advisory and sub-administration
agreement between AIM and the Sub-adviser ("Portfolio Management Sub-Contract,"
and together with the Portfolio Management Contract, the "Portfolio Management
Contracts"). AIM serves as administrator to each Feeder Fund under an
administration contract between the Trust and AIM ("Administration Contract").
The Sub-adviser serves as sub-administrator to each Feeder Fund under a
sub-administration contract between AIM and the Sub-adviser ("Administration
Sub-Contract," and together with the Administration Contract, the
"Administration Contracts"). The Administration Contracts will not be deemed
advisory contracts, as defined under the 1940 Act. As investment managers and
administrators, AIM and the Sub-adviser make all investment decisions for each
Portfolio and, as administrators, administer each Portfolio's and each Feeder
Fund's affairs. Among other things, AIM and the Sub-adviser furnish the services
and pay the compensation and travel expenses of persons who perform the
executive, administrative, clerical and bookkeeping functions of each Portfolio
and each Feeder Fund and provide suitable office space, necessary small office
equipment and utilities.
The Portfolio Management Contracts may be renewed with respect to a Portfolio
for additional one-year terms, provided that any such renewal has been
specifically approved at least annually by (i) the Portfolios' Board of Trustees
or the vote of a majority of the Portfolio's outstanding voting securities (as
defined in the 1940 Act) and (ii) a majority of Trustees who are not parties to
the Portfolio Management Contracts or "interested persons" of any such party (as
defined in the 1940 Act), cast in person at a meeting called for the specific
purpose of voting on such approval. The Portfolio Management Contracts provide
that with respect to each Portfolio, and the Administration Contracts provide
that with respect to each Feeder Fund, either the Trust, each Portfolio or the
Sub-adviser may terminate the Contracts without penalty upon sixty days' written
notice to the other party. The Portfolio Management Contracts terminate
automatically in the event of their assignment (as defined in the 1940 Act).
Statement of Additional Information Page 30
<PAGE>
AIM GLOBAL THEME FUNDS
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE HEALTH CARE
FUND AND TELECOMMUNICATIONS FUND
AIM serves as the investment manager and administrator to the Health Care Fund
and Telecommunications Fund under an investment management and administration
contract ("Management Contract") between the Trust and AIM. The Sub-adviser
serves as the sub-adviser and sub-administrator to the Health Care Fund and
Telecommunications Fund under a Sub-Advisory and Sub-Administration Contract
between AIM and the Sub-adviser ("Sub-Management Contract," and together with
the Management Contract, the "Management Contracts"). As investment managers and
administrators, AIM and the Sub-adviser make all investment decisions for the
Health Care Fund and Telecommunications Fund and administer the Health Care
Fund's and the Telecommunications Fund's affairs. Among other things, AIM and
the Sub-adviser furnish the services and pay the compensation and travel
expenses of persons who perform the executive, administrative, clerical and
bookkeeping functions of the Trust and the Health Care Fund and
Telecommunications Fund, and provide suitable office space, necessary small
office equipment and utilities.
The Management Contracts may be renewed for additional one-year terms with
respect to the Health Care Fund and Telecommunications Fund, provided that any
such renewal has been specifically approved at least annually by: (i) the
Trust's Board of Trustees, or by the vote of a majority of the Health Care Fund
and Telecommunications Fund's outstanding voting securities (as defined in the
1940 Act), and (ii) a majority of Trustees who are not parties to the Management
Contracts or "interested persons" of any such party (as defined in the 1940
Act), cast in person at a meeting called for the specific purpose of voting on
such approval. The Management Contracts provide that with respect to the Health
Care Fund and Telecommunications Fund either the Trust or each of AIM or the
Sub-adviser may terminate the Contracts without penalty upon sixty days' written
notice to the other party. The Management Contracts terminate automatically in
the event of their assignment (as defined in the 1940 Act).
The following table discloses the amount of investment management and
administration fees paid by the Theme Portfolios to the Sub-adviser during the
periods shown:
HEALTH CARE FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 5,820,067
1996...................................................................................................... 5,495,494
1995...................................................................................................... 4,453,857
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 17,999,111
1996...................................................................................................... 23,119,601
1995...................................................................................................... 23,861,460
</TABLE>
FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 346,965
1996...................................................................................................... 99,991
1995...................................................................................................... 51,353
</TABLE>
INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 772,727
1996...................................................................................................... 635,456
1995...................................................................................................... 601,421
</TABLE>
RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 979,215
1996...................................................................................................... 425,745
1995...................................................................................................... 213,856
</TABLE>
Statement of Additional Information Page 31
<PAGE>
AIM GLOBAL THEME FUNDS
CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1997...................................................................................................... $ 1,207,854
1996...................................................................................................... 422,640
1995 (since Fund inception on Dec. 30, 1994).............................................................. 16,284
</TABLE>
For the fiscal years ended October 31, 1995 and 1996, the Sub-adviser reimbursed
the Financial Services Portfolio, Infrastructure Portfolio and Resources
Portfolio for their respective investment management and administration fees in
the amounts of $51,353 and $103,267; $0 and $0; and $213,856 and $0,
respectively. Each of these Portfolios had no reimbursement for the fiscal year
ended October 31, 1997. For the fiscal years ended October 31, 1995, 1996 and
1997, the Financial Services Fund, Infrastructure Fund and Resources Fund paid
administration fees of $18,756, $34,865 and $119,765; $208,892, $218,735 and
$266,025; and $74,485, $147,614 and $338,578, respectively. However, the Sub-
adviser reimbursed those Funds for such fees in the amounts of $18,756, $34,865
and $0; $177,376, $0 and $0; and $74,485, $0 and $0, respectively. For the
fiscal period December 30, 1994 (commencement of operations) to October 31,
1995, and for the fiscal years ended October 31, 1996 and 1997, the Sub-adviser
reimbursed the Consumer Products and Services Portfolio for investment
management and administration fees in the amount of $16,284, $0 and $0,
respectively. For the same periods, the Consumer Products and Services Fund paid
$5,933, $147,623 and $416,297, respectively, in administration fees; however,
the Sub-adviser reimbursed the Fund in the amounts of $5,933, $0 and $0,
respectively.
DISTRIBUTION SERVICES RELATING TO EACH FUND
Each Fund's Advisor Class shares are offered continuously through each Fund's
principal underwriter and distributor, AIM Distributors, on a "best efforts"
basis pursuant to a distribution contract between the Trust and AIM Distributors
without a front-end sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agency and Service Agreement between the Trust and A I M Fund
Services, Inc. ("AFS"), a registered transfer agent and wholly-owned subsidiary
of AIM, provides that AFS will perform certain shareholder services for the
Funds for a fee per account serviced. The Transfer Agency and Service Agreement
provides that AFS will receive a per account fee plus out-of-pocket expenses to
process orders for purchases, redemptions and exchanges of shares; prepare and
transmit payments for dividends and distributions declared by the Funds;
maintain shareholder accounts and provide shareholders with information
regarding the Funds and their accounts. The Transfer Agency and Service
Agreement became effective on September 8, 1998. See "Additional Information --
Special Servicing Agreement." The Sub-adviser also serves as each Fund's pricing
and accounting agent. For the fiscal years ended October 31, 1995, 1996 and 1997
the accounting services fees for the Health Care Fund, Telecommunications Fund,
Financial Services Fund, Infrastructure Fund, Resources Fund and Consumer
Products and Services Fund were $30,660, $141,582 and $153,780; $170,297,
$621,480 and $493,322; $616, $3,493 and $12,292 ; $5,836, $21,910 and $27,303;
$1,931, $14,761 and $34,698; and $318, $14,778 and $43,330, respectively.
EXPENSES OF THE FUNDS AND OF THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by AIM, the
Sub-adviser, AIM Distributors and other agents. These expenses include, in
addition to the advisory, administration, distribution, transfer agency, pricing
and accounting agency and brokerage fees described above, legal and audit
expenses, custodian fees, trustees' fees, organizational fees, fidelity bond and
other insurance premiums, taxes, extraordinary expenses and expenses of reports
and prospectuses sent to existing investors. The allocation of general Company
expenses and expenses shared among the Funds and other funds organized as series
of the Company are allocated on a basis deemed fair and equitable, which may be
based on the relative net assets of the Funds or the nature of the service
performed and relative applicability to the Funds. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of each Fund's expenses to its relative net assets can be
expected to be higher than the expense ratios of funds investing solely in
domestic securities, since the cost of maintaining the custody of foreign
securities and the rate of investment management fees paid by the Funds or the
Portfolios generally are higher than the comparable expenses of such other
funds.
Statement of Additional Information Page 32
<PAGE>
AIM GLOBAL THEME FUNDS
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
The net asset value per share of each Fund is normally determined daily as of
the close of trading of the New York Stock Exchange ("NYSE") (generally 4:00
p.m. Eastern time) on each business day of the Fund. In the event the NYSE
closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, the net
asset value of a Fund is determined as of the close of the NYSE on such day. Net
asset value per share is determined by dividing the value of each Theme
Portfolio's securities, cash and other assets (including interest accrued but
not collected) attributable to a particular class, less all its liabilities
(including accrued expenses and dividends payable) attributable to that class,
by the total number of shares outstanding of that class. Determination of each
Theme Portfolio's net asset value per share is made in accordance with generally
accepted accounting principles.
Each equity security held by a Theme Portfolio is valued at its last sales price
on the exchange where the security is principally traded or, lacking any sales
on a particular day, the security is valued at the mean between the closing bid
and asked prices on that day. Each security traded in the over-the-counter
market (but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based upon
quotes furnished by market makers for such securities. Each security reported on
the NASDAQ National Market System is valued at the last sales price on the
valuation date or absent a last sales price, at the mean between the closing bid
and asked prices on that day. Debt securities are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and may
reflect appropriate factors such as institution-size trading in similar groups
of securities, developments related to special securities, yield, quality,
coupon rate, maturity, type of issue, individual trading characteristics and
other market data. Securities for which market quotations are not readily
available or are questionable are valued at fair value as determined in good
faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations having
60 days or less to maturity are valued on the basis of amortized cost. For
purposes of determining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of each Fund's shares are determined at such
times. Foreign currency exchange rates are also generally determined prior the
close of the NYSE. Occasionally, events affecting the values of such securities
and such exchange rates may occur between the times at which such values are
determined and the close of the NYSE which will not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees of the Fund and the Portfolio.
- --------------------------------------------------------------------------------
HOW TO PURCHASE AND REDEEM SHARES
- --------------------------------------------------------------------------------
A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
For purposes of a Letter of Intent entered into prior to June 1, 1998, any
registered investment adviser, trust company or bank trust department which
exercises investment discretion and which intends within thirteen months to
invest $500,000 or more can be treated as a single purchaser, provided further
that such entity places all purchases and redemption orders. Such entities
should be prepared to establish their qualifications for such treatment.
Statement of Additional Information Page 33
<PAGE>
AIM GLOBAL THEME FUNDS
Complete information concerning the method of exchanging shares of the Funds for
shares of the other AIM Funds is set forth in the Prospectuses under the heading
"Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "How to Redeem Shares." 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 Funds at (800) 959-4246 and guarantee delivery of all
required documents in good order. A repurchase is effected at the net asset
value per share of the applicable Fund next determined after the repurchase
order is received. Such an arrangement is subject to timely receipt by A I M
Fund Services, Inc., the Funds' transfer agent, of all required documents in
good order. If such documents are not received within a reasonable time after
the order is placed, the order is subject to cancellation. While there is no
charge imposed by a Fund or by AIM Distributors (other than any applicable
contingent deferred sales charge) 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 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.
A Fund's net asset value is calculated by dividing the number of outstanding
shares into the net assets of the Fund. Net assets are the excess of a Fund's
assets over its liabilities. A more detailed description of how each Fund's net
asset value is calculated appears in the Prospectuses under the heading
"Determination of Net Asset Value."
PROGRAMS AND SERVICES FOR SHAREHOLDERS. The Funds provide certain services for
shareholders and certain investment or redemption programs. See "Exchange
Privilege" and "How to Redeem Shares" in the Prospectus. All inquiries
concerning these programs should be made directly to A I M Fund Services, Inc.,
P.O. Box 4739, Houston, Texas 77210-4739, toll free at (800) 959-4246.
DIVIDEND ORDER. Dividends may be paid to someone other than the registered
owner, or sent to an address other than the address of record. (Please note that
signature guarantees are required to effect this option.) An investor also may
direct that his or her dividends be invested in one of the other AIM Funds and
there is no sales charge for these investments; initial investment minimums
apply. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions" in the Prospectus. To effect this option, please contact your
authorized dealer. For more information concerning AIM Funds other than the
Funds, please obtain a current prospectus by contacting your authorized dealer,
by writing to A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas
77210-4739, or by calling toll free (800) 959-4246.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
To continue to qualify for treatment as a regulated investment company ("RIC")
under the Code, each Fund must distribute to its shareholders for each taxable
year at least 90% of its investment company taxable income (consisting generally
of net investment income, net short-term capital gain and net gains from certain
foreign currency transactions) ("Distribution Requirement") and must meet
several additional requirements. With respect to each Fund, these requirements
include the following: (1) the Fund must derive at least 90% of its gross income
each taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); and (2) the Diversification
Requirements. Each Feeder Fund, as an investor in its corresponding Portfolio,
is deemed to own a proportionate share of the Portfolio's assets, and to earn a
proportionate share of the Portfolio's income, for purposes of determining
whether the Fund satisfies the requirements described above to qualify as a RIC.
Statement of Additional Information Page 34
<PAGE>
AIM GLOBAL THEME FUNDS
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See the next section for a discussion of the tax consequences to each Feeder
Fund of hedging transactions engaged in, and investments in passive foreign
investment companies ("PFICs") and other foreign securities, by its
corresponding Portfolio and to the Health Care Fund and Telecommunications Fund
of those transactions and investments.
TAXATION OF THE THEME PORTFOLIOS
THE PORTFOLIOS AND THEIR RELATIONSHIP TO THE FEEDER FUNDS. Each Portfolio is
treated as a separate partnership for federal income tax purposes and is not a
"publicly traded partnership." As a result, each Portfolio is not subject to
federal income tax; instead, each Feeder Fund, as an investor in its
corresponding Portfolio, is required to take into account in determining its
federal income tax liability its share of the Portfolio's income, gains, losses,
deductions and credits, without regard to whether it has received any cash
distributions from the Portfolio. Each Portfolio also is not subject to Delaware
income or franchise tax.
Because, as noted above, each Feeder Fund is deemed to own a proportionate share
of its corresponding Portfolio's assets, and to earn a proportionate share of
its corresponding Portfolio's income, for purposes of determining whether the
Fund satisfies the requirements to qualify as a RIC, each Portfolio intends to
conduct its operations so that its corresponding Fund will be able to continue
to satisfy all those requirements.
Distributions to each Feeder Fund from its corresponding Portfolio (whether
pursuant to a partial or complete withdrawal or otherwise) will not result in
the Fund's recognition of any gain or loss for federal income tax purposes,
except that (1) gain will be recognized to the extent any cash that is
distributed exceeds the Fund's basis for its interest in the Portfolio before
the distribution, (2) income or gain will be recognized if the distribution is
in liquidation of the Fund's entire interest in the Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio, and
(3) loss will be recognized if a liquidation distribution consists solely of
cash and/or unrealized receivables. Each Feeder Fund's basis for its interest in
its corresponding Portfolio generally will equal the amount of cash and the
basis of any property the Fund invests in the Portfolio, increased by the Fund's
share of the Portfolio's net income and gains and decreased by (a) the amount of
cash and the basis of any property the Portfolio distributes to the Fund and (b)
the Fund's share of the Portfolio's losses.
FOREIGN TAXES. Dividends and interest received by a Theme Portfolio, and
gains realized thereby, may be subject to income, withholding or other taxes
imposed by foreign countries and U.S. possessions ("foreign taxes") that would
reduce the yield and/or total return on its securities. Tax conventions between
certain countries and the United States may reduce or eliminate foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of a
Fund's total assets (taking into account, in the case of a Feeder Fund, its
proportionate share of its corresponding Portfolio's assets) at the close of its
taxable year consists of securities of foreign corporations, the Fund will be
eligible to, and may, file an election with the Internal Revenue Service that
will enable its shareholders, in effect, to receive the benefit of the foreign
tax credit with respect to any foreign taxes paid by it (taking into account, in
the case of a Feeder Fund, its proportionate share of any foreign taxes paid by
its corresponding Portfolio) (a "Fund's foreign taxes"). Pursuant to the
election, a Fund would treat those taxes as dividends paid to its shareholders
and each shareholder would be required to (1) include in gross income, and treat
as paid by him, his share of the Fund's foreign taxes, (2) treat his share of
those taxes and of any dividend paid by the Fund that represents its income from
foreign and U.S. possessions sources (taking into account, in the case of a
Feeder Fund, its proportionate share of its corresponding Portfolio's Income
from those sources) as his own income from those sources and (3) either deduct
the taxes deemed paid by him in computing his taxable income or, alternatively,
use the foregoing information in calculating the foreign tax credit against his
federal income tax. Each Fund will report to its shareholders shortly after each
taxable year their respective shares of the Fund's foreign taxes and income
(taking into account, in the case of a Feeder Fund, its proportionate share of
its corresponding Portfolio's income) from sources within foreign countries and
U.S. possessions if it makes this election. Pursuant to the Taxpayer Relief Act
of 1997 ("Tax Act"), individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Form 1099 and
all of whose foreign source of income is "qualified passive income" may elect
each year to be exempt from the extremely complicated foreign tax credit
limitation and will be able to claim a foreign tax credit without having to file
the detailed Form 1116 that otherwise is required.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Theme Portfolio may invest in the
stock of PFICs. A PFIC is a foreign corporation -- other than a "controlled
foreign corporation" (I.E., a foreign corporation in which, on any day during
its taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own,
Statement of Additional Information Page 35
<PAGE>
AIM GLOBAL THEME FUNDS
directly, indirectly or constructively, at least 10% of that voting power) as to
which the Theme Portfolio is a U.S. shareholder (effective with respect to each
Fund for their taxable year beginning November 1, 1998) -- that, in general,
meets either of the following tests: (1) at least 75% of its gross income is
passive or (2) an average of at least 50% of its assets produce, or are held for
the production of, passive income. Under certain circumstances, a Fund will be
subject to federal income tax on a part (or, in the case of a Feeder Fund, its
proportionate share of a part) of any "excess distribution" received by it (or,
in the case of a Feeder Fund, by its corresponding Portfolio) on the stock of a
PFIC or of any gain on the Fund's (or, in the case of a Feeder Fund, its
corresponding Portfolio's) disposition of that stock (collectively "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to it to the extent it distributes that income to its
shareholders.
If a Theme Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Theme Portfolio (or, in the case of a Portfolio, its
corresponding Feeder Fund) would be required to include in income each year its
pro rata share (taking into account, in the case of a Feeder Fund, its
proportionate share of its corresponding Portfolio's pro rata share) of the
QEF's annual ordinary earnings and net capital gain (I.E., the excess of net
long-term capital gain over net short-term capital loss) -- which most likely
would have to be distributed by the Theme Portfolio (or, in the case of a
Portfolio, its corresponding Feeder Fund) to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received thereby from the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
A holder of stock in any PFIC may elect to include in ordinary income for each
taxable year beginning after 1997, the excess, if any, of the fair market value
of the stock over the adjusted basis therein as of the end of that year.
Pursuant to the election, a deduction (as an ordinary, not capital, loss) also
will be allowed for the excess, if any, of the holder's adjusted basis in PFIC
stock over the fair market value thereof as of the taxable year-end, but only to
the extent of any net mark-to-market gains with respect to that stock included
in income for prior taxable years. The adjusted basis in each PFIC's stock
subject to the election will be adjusted to reflect the amounts of income
included and deductions taken thereunder. Regulations proposed in 1992 provided
a similar election with respect to the stock of certain PFICs.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Theme Portfolios'
use of hedging transactions, such as selling (writing) and purchasing options
and Futures Contracts and entering into Forward Contracts, involves complex
rules that will determine, for federal income tax purposes, the amount,
character and timing of recognition of the gains and losses a Theme Portfolio
realizes in connection therewith. Gains from disposition of foreign currencies
(except certain gains that may be excluded by future regulations), and gains
from the options, Futures and Forward Contracts derived by a Theme Portfolio
with respect to its business of investing in securities or foreign currencies,
will qualify as permissible income under the Income Requirement for that Theme
Portfolio (or, in the case of a Portfolio, its corresponding Feeder Fund).
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Theme Portfolio at the end of its taxable
year generally will be deemed to have been sold at that time at market value for
federal income tax purposes. Sixty percent of any net gain or loss recognized on
these deemed sales, and 60% of any net gain or loss realized from any actual
sales of Section 1256 Contracts, will be treated as long-term capital gain or
loss, and the balance will be treated as short-term capital gain or loss. That
60% portion will qualify for the reduced maximum tax rates on non-corporate
taxpayers' net capital gain enacted by the Tax Act -- 20% (10% for taxpayers in
the 15% marginal tax bracket) for gain recognized on capital assets held for
more than 18 months -- instead of the 28% rate in effect before that
legislation, which now applies to gain recognized on capital assets held for
more than one year but not more than 18 months.
Section 988 of the Code also may apply to gains and losses from transactions in
foreign currencies, foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains and
losses). Each Section 988 gain or loss generally is computed separately and
treated as ordinary income or loss. In the case of overlap between sections 1256
and 988, special provisions determine the character and timing of any income,
gain or loss. Each Theme Portfolio attempts to monitor section 988 transactions
to minimize any adverse tax impact.
If a Theme Portfolio has an "appreciated financial position" -- generally, an
interest (including an interest through an option, Futures or Forward Contract
or short sale) with respect to any stock, debt instrument (other than "straight
debt") or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Theme Portfolio will be treated as having
made an actual sale thereof, with the result that gain will be recognized at
that time. A constructive sale generally consists of a short sale, an offsetting
notional principal contract or Futures or Forward Contract entered into by a
Theme Portfolio or a related person with respect to the same or substantially
similar property. In addition, if the appreciated financial position is itself a
short sale
Statement of Additional Information Page 36
<PAGE>
AIM GLOBAL THEME FUNDS
or such a contract, acquisition of the underlying property or substantially
similar property will be deemed a constructive sale.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds, their shareholders and the Portfolios.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
Statement of Additional Information Page 37
<PAGE>
AIM GLOBAL THEME FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
AIM was organized in 1976, and along with its subsidiaries, manages or advises
approximately 90 investment company 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. AIM is the sole
shareholder of the Funds' principal underwriter, AIM Distributors. 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 that has a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Funds' and Theme
Portfolios' assets. State Street is authorized to establish and has established
separate accounts in foreign currencies and to cause securities of the Theme
Portfolios to be held in separate accounts outside the United States in the
custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Trust's and Theme Portfolios' independent accountants are
, conducts annual audits of the Portfolios' and the
Funds' financial statements, assists in the preparation of each Portfolio's and
each Fund's federal and state income tax returns and consults with the Trust and
Global Investment Portfolio as to matters of accounting, regulatory filings, and
federal and state income taxation.
The audited financial statements of the Trust included in this Statement of
Additional Information have been examined by , as stated
in their opinion appearing herein, and are included in reliance upon such
opinion given upon the authority of that firm as experts in accounting and
auditing.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations
extended to shareholders of private, for-profit corporations. There is a remote
possibility, however, that under certain circumstances shareholders of the Trust
may be held personally liable for the Trust's obligations. However, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or a trustee. The
Trust Agreement provides for indemnification from the Trust property for all
losses and expenses of any shareholder held personally liable for the Trust's
obligations. Thus, the risk of a shareholder incurring financial loss on account
of such liability is limited to circumstances in which the Trust itself would be
unable to meet its obligations and where the other party was held not to be
bound by the disclaimer.
NAMES
Prior to May 29, 1998, AIM Global Consumer Products and Services Fund operated
under the name of GT Global Consumer Products and Services Fund; AIM Global
Financial Services Fund operated under the name of GT Global Financial Services
Fund; AIM Global Health Care Fund operated under the name of GT Global Health
Care Fund; AIM Global Infrastructure Fund operated under the name of GT Global
Infrastructure Fund; AIM Global Resources Fund operated under the name of GT
Global Natural Resources Fund; and AIM Global Telecommunications Fund operated
under the name of GT Global Telecommunications Fund.
SPECIAL SERVICING AGREEMENT
Subject to receipt of an exemptive order from the SEC, the Funds will be parties
to a Special Servicing Agreement ("Agreement") among the Trust on behalf of the
Funds, AIM Series Trust on behalf of its sole series, AIM Global Trends Fund
("Global Trends Fund"), AIM, the Sub-adviser, and AFS. The Agreement will
provide that, if the Board of Trustees determines that a Fund's share of the
aggregate expenses of Global Trends Fund is less than the estimated savings to
the Fund from the operation of Global Trends Fund, the Fund will bear those
expenses in proportion to the average daily value of its shares owned by Global
Trends Fund, provided that no Fund will bear such expenses in excess of the
estimated savings to it. Those savings are expected to result primarily from the
elimination of numerous separate shareholder accounts which are or would have
been invested directly in the Funds and the resulting reduction in shareholder
servicing costs. Although such cost savings are not certain, the estimated
savings to the Funds generated by the operation of Global Trends Fund are
expected to be sufficient to offset most, if not all, of the expenses incurred
by that Fund.
Statement of Additional Information Page 38
<PAGE>
AIM GLOBAL THEME FUNDS
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
P(1+T)(n)=ERV
<TABLE>
<S> <C> <C>
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable maximum sales load is deducted at
the beginning of the 1, 5, or 10 year periods.)
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the 1, 5, or 10
year periods (or fractional portion of such period).
</TABLE>
The standardized returns for the Class A and Advisor Class shares of the Health
Care Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
HEALTH CARE
HEALTH CARE FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997................... 22.27% 29.00%
Oct. 31, 1992 through Oct. 31, 1997............... 15.24% n/a
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 29.54%
Aug. 7, 1989 (commencement of operation) through
Oct. 31, 1997.................................... 15.23% n/a
</TABLE>
The standardized returns for the Class A and Advisor Class shares of the
Telecommunications Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
TELECOMMUNI- TELECOMMUNI-
CATIONS CATIONS FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997................... 12.11% 18.33%
Oct. 31, 1992 through Oct. 31, 1997............... 13.88% n/a
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 14.00%
Jan. 27, 1992 (commencement of operations) through
Oct. 31, 1997.................................... 11.48% n/a
</TABLE>
The standardized returns for the Class A and Advisor Class shares of the
Financial Services Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL
FINANCIAL SERVICES
SERVICES FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997................... 23.74% 30.52%
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 24.52%
May 31, 1994 (commencement of operations) through
Oct. 31, 1997.................................... 13.70% n/a
</TABLE>
The standardized returns for the Class A and Advisor Class shares of the
Infrastructure Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
INFRASTRUCTURE
INFRASTRUCTURE FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997................... 4.18% 10.10%
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 12.59%
May 31, 1994 (commencement of operations) through
Oct. 31, 1997.................................... 8.30% n/a
</TABLE>
Statement of Additional Information Page 39
<PAGE>
AIM GLOBAL THEME FUNDS
The standardized returns for the Class A and Advisor Class shares of the
Resources Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
RESOURCES
RESOURCES FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997................... 16.81% 23.23%
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 30.33%
May 31, 1994 (commencement of operations) through
Oct. 31, 1997.................................... 18.64% n/a
</TABLE>
The standardized returns for the Class A and Advisor Class shares of the
Consumer Products and Services Fund, stated as average annualized total returns
for the periods shown, were:
<TABLE>
<CAPTION>
CONSUMER
CONSUMER PRODUCTS
PRODUCTS AND
AND SERVICES
SERVICES FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997................... 5.30% 11.15%
June 1, 1995 (commencement of operations) to Oct.
31, 1997......................................... n/a 34.67%
Dec. 30, 1994 (commencement of operations) to Oct.
31, 1997......................................... 27.70% n/a
</TABLE>
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
P(1+U)(n)=ERV
<TABLE>
<S> <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>
Cumulative total return across a stated period may be calculated as follows:
P(1+V)(n)=ERV
<TABLE>
<S> <C> <C>
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a stated portion of, or none of, the
applicable maximum sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the stated period.
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Health Care Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
HEALTH CARE FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 87.05%
Aug. 7, 1989 (commencement of operations) through
Oct. 31, 1997.................................... 237.37% n/a
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Telecommunications Fund, stated
as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
TELECOMMUNI- TELECOMMUNI-
CATIONS CATIONS FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 37.30%
Jan. 27, 1992 (commencement of operations) through
Oct. 31, 1997.................................... 96.32% n/a
</TABLE>
Statement of Additional Information Page 40
<PAGE>
AIM GLOBAL THEME FUNDS
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Financial Services Fund, stated
as aggregate total returns for the period shown, were:
<TABLE>
<CAPTION>
FINANCIAL
FINANCIAL SERVICES
SERVICES FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 69.98%
May 31, 1994 (commencement of operations) through
Oct. 31, 1997.................................... 62.87% n/a
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Infrastructure Fund, stated as
aggregate total returns for the period shown, were:
<TABLE>
<CAPTION>
INFRASTRUCTURE
INFRASTRUCTURE FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 33.22%
May 31, 1994 (commencement of operations) through
Oct. 31, 1997.................................... 37.89% n/a
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Resources Fund, stated as
aggregate total returns for the period shown, were:
<TABLE>
<CAPTION>
RESOURCES
RESOURCES FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 89.81%
May 31, 1994 (commencement of operations) through
Oct. 31, 1997.................................... 88.33% n/a
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Consumer Products and Services
Fund, stated as aggregate total returns for the period shown, were:
<TABLE>
<CAPTION>
CONSUMER
CONSUMER PRODUCTS
PRODUCTS AND
AND SERVICES
SERVICES FUND
FUND (ADVISOR
PERIOD (CLASS A) CLASS)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through
Oct. 31, 1997.................................... n/a 105.47%
Dec. 30, 1994 (commencement of operations) through
Oct. 31, 1997.................................... 110.02% n/a
</TABLE>
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and operating expenses of
each Fund, so that current or past yield or total return should not be
considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
PERFORMANCE INFORMATION
Total return and yield figures for the Funds are neither fixed nor guaranteed,
and no Fund's principal is insured. Performance quotations reflect historical
information and should not be considered representative of a Fund's performance
for any period in the future. Performance is a function of a number of factors
which can be expected to fluctuate. The Funds may provide performance
information in reports, sales literature and advertisements. The Funds may also,
from time to time, quote information about the Funds published or aired by
publications or other media entities which contain articles or segments relating
to investment results or other data about one or more of the Funds. Such
publications or media entities may include the following, among others:
Advertising Age
Barron's
Best's Review
Broker World
Business Week
Changing Times
Christian Science Monitor
Consumer Reports
Economist
EuroMoney
FACS of the Week
Financial Planning
Financial Product News
Financial World
Forbes
Statement of Additional Information Page 41
<PAGE>
AIM GLOBAL THEME FUNDS
Fortune
Global Finance
Hartford Courant Inc.
Institutional Investor
Insurance Forum
Insurance Week
Investor's Daily
Journal of the American
Society of CLU & ChFC
Kiplinger Letter
Money
Mutual Fund Forecaster
Mutual Fund Magazine
Nation's Business
New York Times
Pension World
Pensions & Investments
Personal Investor
Financial Services Week
Philadelphia Inquirer
Smart Money
USA Today
U.S. News & World Report
Wall Street Journal
Washington Post
CNN
CNBC
PBS
The Funds and AIM Distributors may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
each Fund with the following, or compare each Fund's performance to performance
data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services
(data and mutual fund rankings and comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and
Development (publications)
International Finance Corporation Emerging
Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Analytical Data Services, Inc. (data and
mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings
and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All Country
(AC) World Index
Morgan Stanley Capital International World
Indices
Morningstar, Inc. (data and mutual fund rankings
and comparisons)
NASDAQ
Organization for Economic Cooperation and
Development (publications)
Salomon Brothers Global Telecommunications
Index
Salomon Brothers World Government Bond
Index-Non-U.S.
Salomon Brothers World Government Bond
Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price
Index
Stangar
Wilshire Associaties
World Bank (publications and reports)
The World Bank Publication of Trends in
Developing Countries
Worldscope
Each Fund may also compare its performance to rates on Certificates of Deposit
and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or AIM
Distributors. Advertising for the Funds may from time to time include
discussions of general economic conditions and interest rates. Advertising for
the Funds may also include reference to the use of those Funds as part of an
individual's overall retirement
Statement of Additional Information Page 42
<PAGE>
AIM GLOBAL THEME FUNDS
investment program. From time to time, sales literature and/or advertisements
for any of the Funds may disclose (i) the largest holdings in the Fund's
portfolio, (ii) certain selling group members and/or (iii) certain institutional
shareholders.
From time to time, the Funds' sales literature and/or advertisements may discuss
generic topics pertaining to the mutual fund industry. This includes, but is not
limited to, literature addressing general information about mutual funds,
variable annuities, dollar-cost averaging, stocks, bonds, money markets,
certificates of deposit, retirement, retirement plans, asset allocation,
tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when comparing
a Fund's performance with other funds and other potential investments, investors
should note that the methods of computing performance of other potential
investments are not necessarily comparable to the methods employed by a Fund.
GENERAL INFORMATION ABOUT THE THEME FUNDS AND THEME PORTFOLIOS
Each Theme Portfolio may invest worldwide across industries within the Portfolio
area of concentration without national or regional restrictions. The ability of
each Theme Portfolio to invest worldwide may allow the portfolio managers to
select industries in different economic cycles and varying stages of
development, though there is no assurance that the managers will be successful
in this selection.
Each Theme Portfolio's area of concentration reflects the underlying theme of
the Portfolio. AIM Distributors believes that there are certain social,
political and economic trends that may benefit one or more industries within a
Theme Portfolio's area of concentration. Of course, there is no assurance that
any of the Funds will benefit as a result.
HEALTH CARE FUND
From time to time the Fund and AIM Distributors will quote information including
data regarding:
/ / Trading volume, number of listed companies and the largest companies of
the global health care industry
/ / Expenditures by various countries, regions and age groups on health care
/ / Population of countries, regions and age groups
/ / Natality and mortality rates in various regions, countries and age
groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New health care products and products seeking approval
/ / Health maintenance organizations (HMOs) and their enrollment growth
/ / Studies from, but not limited to, the American Medical Association
showing the effectiveness of using drugs to cure illness
/ / Medical technology and devices in use or in development
/ / Regulatory environment of health care industries
/ / Consolidation in the health care industries
The information quoted has not been independently verified by a Fund or AIM
Distributors and will be based on data provided that is believed to be reliable
and accurate from sources including the following:
/ / Research firms such as Mehta and Isaly which publishes PHARMACEUTICAL
PORTFOLIO RECOMMENDATIONS
/ / OECD and its publications such as the OECD HEALTH DATA, as supplemented
annually
/ / Morgan Stanley Capital International stock market industry indices such
as Health & Personal Care
/ / The World Bank and its publications such as THE WORLD DEVELOPMENT
REPORT, as supplemented annually
/ / IFC and publications such as the EMERGING STOCK MARKETS FACTBOOK
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRIES
The Fund and the Sub-adviser believe that certain market and demographic factors
merit an investor's consideration when making a health care investment.
Worldwide standards of living and life expectancy have increased at a
substantial rate. The Sub-adviser expects this growth, which works to the
general benefit of the global health care industry, to continue at a roughly
comparable rate in the future, although no assurances can be given in this
regard. Moreover, according to the Sub-adviser, the health care industry
historically has proven to be a relatively non-cyclical industry that continues
to provide goods and services to the public in periods of economic weakness as
well as economic strength.
The Sub-adviser believes that the anticipated increase in the world's elderly
population could increase demand for health care products and services. For
example, according to data compiled by the Sub-adviser, in Japan the number of
people age 65 and older is expected to grow over 100% by the year 2025; in
Germany, France and the U.S., the same age group
Statement of Additional Information Page 43
<PAGE>
AIM GLOBAL THEME FUNDS
should grow 40%. Similarly, the U.S. Census Bureau predicts the number of
Americans 85 and older to double in the next 30 years. From time to time, the
Fund and AIM Distributors will quote information including, but not limited to,
international data regarding populations, birth rates, mortality rates, life
expectancy, health care expenditures, and gross domestic product vs. life
expectancy. The information quoted has not been independently verified by the
Fund or AIM Distributors and will be based on data that is believed to be
reliable and accurate.
TELECOMMUNICATIONS FUND
From time to time the Fund and AIM Distributors will quote information including
data regarding:
/ / Increased usage of new technologies such as, but not limited to,
cellular and wireless communications in emerging and established
countries around the world
/ / Supply and demand of telephone equipment and services
/ / Regulatory environment of telecommunications industries
/ / Revenue, price and usage of telecommunications products and services
/ / Privatization and/or deregulation of telecommunications companies
The information quoted has not been independently verified by the Fund or AIM
Distributors and will be based on data provided that is believed to be reliable
and accurate from sources including the following:
/ / Salomon Brothers World Equity Telecommunications Index, which includes
stock market data about the telecommunications industry in established
and developing markets
/ / OECD and other publications from its subsidiaries such as the
International Telecommunications Union
/ / Morgan Stanley Capital International stock market industry indices such
as Telecommunications, Broadcasting & Publishing and Data Processing &
Reproduction
/ / International Technology Consultants, a Washington D.C. based firm which
publishes reports such as EASTERN EUROPEAN & SOVIET TELECOM REPORT and
LATIN AMERICAN TELECOM REPORT
/ / Telegeography and other publications
DEREGULATION IN THE UNITED STATES
The United States has been the bellwether for deregulation of the telephone
industry. The divestiture of the Bell System from American Telephone and
Telegraph has produced competing companies in the United States. Such U.S.
market-driven competition has, for example, led to lower costs for consumers
which in turn led to greater consumer usage and to higher industrywide revenues.
The Sub-adviser expects this scenario to continue to benefit such companies in
the U.S. and similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard.
CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and AIM Distributors will quote information including
data regarding:
/ / Trading volume, number of listed companies and the largest companies
located around the world in the consumer products and services
industries
/ / Expenditures, demand and consumption by various countries, regions,
income classes and age groups of consumer products and services
/ / Population of countries, regions and age groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New consumer products and services in the development or manufacturing
stages
/ / Income of various regions, countries and age groups
/ / Sales and sales growth of consumer products and services companies in
their own country and abroad
/ / Sales, supply and demand of consumer products and services
/ / Parent Companies and the products and services they distribute
/ / Regulatory environment of consumer products industries
Statement of Additional Information Page 44
<PAGE>
AIM GLOBAL THEME FUNDS
The information quoted will not be independently verified by the Fund or AIM
Distributors and will be based on data provided that is believed to be reliable
and accurate from sources including the following:
/ / Consumer and trade groups
/ / Fortune magazine and other periodicals
/ / The World Bank and its publications
/ / The International Monetary Fund (IMF) and its publications
/ / IFC and its publications
/ / OECD and its publications
INFRASTRUCTURE FUND
From time to time the Fund and AIM Distributors may quote information including:
/ / Supply and demand of telephone equipment and services, electricity,
water, transportation, construction materials and other infrastructure
related products and services
/ / Regulatory environment of infrastructure industries
/ / Quantity and costs of current and projected infrastructure projects
/ / Privatization of industries and companies
/ / New technologies, products and services used in infrastructure
industries
/ / Infrastructure Finance magazine and other periodicals
FINANCIAL SERVICES FUND
From time to time the Fund and AIM Distributors may quote information including:
/ / Supply and demand of financial services
/ / Regulatory environment of financial service industries
/ / Credit ratings of U.S. and non-U.S. banks
/ / New technologies, products and services used in the financial services
industries
/ / Consolidation in the financial services industries
RESOURCES FUND
From time to time the Fund and AIM Distributors may quote information including:
/ / Supply, demand and prices of natural resources
/ / Regulatory environment of natural resources
/ / Supply, demand and prices of products manufactured from natural
resources
/ / New technologies, products and services used in the natural resources
industries
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
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 edged." 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
Statement of Additional Information Page 45
<PAGE>
AIM GLOBAL THEME FUNDS
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the 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
some time 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.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are 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 which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations
Statement of Additional Information Page 46
<PAGE>
AIM GLOBAL THEME FUNDS
will likely have some quality and protective characteristics, these may be
outweighed by large uncertainties or major exposures to adverse conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds as of October 31, 1997 and for the
fiscal year then ended, and the unaudited financial statements as of April 30,
1998 and for the six months then ended, appear on the following pages.
Statement of Additional Information Page 47
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ADVISOR CLASS SHARES OF
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
(SERIES PORTFOLIOS OF AIM INVESTMENT FUNDS)
11 Greenway Plaza
Suite 100
Houston, TX 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 FREE OF CHARGE 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 SEPTEMBER 8, 1998 RELATING TO THE AIM
GLOBAL GOVERNMENT INCOME FUND PROSPECTUS, THE AIM STRATEGIC INCOME FUND
PROSPECTUS, THE AIM GLOBAL HIGH INCOME FUND PROSPECTUS AND THE AIM GLOBAL GROWTH
& INCOME FUND PROSPECTUS EACH DATED SEPTEMBER 8, 1998
Statement of Additional Information Page 1
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Introduction..................................................................................... 3
Investment Objectives and Policies............................................................... 4
Options, Futures and Currency Strategies......................................................... 9
Risk Factors..................................................................................... 19
Investment Limitations........................................................................... 24
Execution of Portfolio Transactions.............................................................. 29
Trustees and Executive Officers.................................................................. 31
Control Persons and Principal Holders of Securities.............................................. 34
Management....................................................................................... 35
Valuation of Fund Shares......................................................................... 37
How to Purchase and Redeem Shares................................................................ 38
Taxes............................................................................................ 39
Additional Information........................................................................... 42
Investment Results............................................................................... 43
Description of Debt Ratings...................................................................... 48
Financial Statements............................................................................. 50
</TABLE>
[LOGO]
Statement of Additional Information Page 2
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
INTRODUCTION
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Advisor Class shares of
AIM Global Government Income Fund ("Government Income Fund"), AIM Strategic
Income Fund ("Strategic Income Fund"), AIM Global High Income Fund ("High Income
Fund"), and AIM Global Growth & Income Fund ("Growth & Income Fund") (each, a
"Fund," and collectively, the "Funds"). Each Fund is a non-diversified series of
AIM Investment Funds (the "Company"), a registered open-end management
investment company organized as a Delaware business trust. The High Income Fund
invests all its investable assets in AIM Global High Income Portfolio
("Portfolio").
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and INVESCO (NY), Inc. (the "Sub-adviser") serves as the
investment sub-adviser and sub-administrator for the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund and the Global High Income
Portfolio (the "Portfolio"). AIM and the Sub-adviser also serve as the
administrator and sub-administrator, respectively, of the High Income Fund.
The Trust is a series mutual fund. The rules and regulations of the United
States Securities and Exchange Commission (the "SEC") require all mutual funds
to furnish prospective investors certain information concerning the activities
of the fund being considered for investment. This information for Government
Income Fund is included in a Prospectus dated September 8, 1998, for Strategic
Income Fund is included in a separate Prospectus dated September 8, 1998, for
High Income Fund is included in a separate Prospectus dated September 8, 1998,
and for Growth & Income Fund is included in a separate Prospectus dated
September 8, 1998. Additional copies of the Prospectuses and this Statement of
Additional Information may be obtained without charge by writing the principal
distributor of the Funds' shares, A I M Distributors, Inc. ("AIM Distributors"),
P.O. Box 4739, Houston, TX 77210-4739 or by calling (800) 347-4246. Investors
must receive a Prospectus before they invest.
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
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 FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name G.T. Investment Funds, Inc., which
was organized as a Maryland corporation on October 29, 1987. The Trust was
reorganized on May 29, 1998 as a Delaware business trust, and is registered with
the SEC as a diversified open-end series management investment company. The
Trust currently consists of thirteen separate portfolios: each of the six Theme
Funds, AIM Global Government Income Fund, AIM Global High Income Fund, AIM
Strategic Income Fund, AIM Global Growth and Income Fund, AIM Emerging Markets
Fund, AIM Developing Markets Fund, and AIM Latin American Growth Fund. Each of
these funds has three separate classes: Class A, Class B and Advisor Class
shares. All historical financial and other information contained in this
Statement of Additional Information for periods prior to May 29, 1998, is that
of the series G.T. Investment Funds, Inc.
This Statement of Additional Information relates solely to the Advisor Class
shares of the Funds.
The term "majority of the outstanding shares" of the Trust, a particular Fund,
or a particular class of a Fund means, respectively, the vote of the lesser of
(a) 67% or more of the shares of the Trust, such Fund or such class present at a
meeting
Statement of Additional Information Page 3
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
of the Trust's shareholders, if the holders of more than 50% of the outstanding
shares of the Trust, such Fund or such class are present or represented by
proxy, or (b) more than 50% of the outstanding shares of the Trust, such Fund or
such class.
Class A, and Class B and Advisor Class shares of each Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees 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 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 Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
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
Trustees of the Trust. In such event, the remaining holders cannot elect any
trustees of the Trust.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
The Government Income Fund primarily seeks high current income and secondarily
seeks capital appreciation and protection of principal through active management
of the maturity structure and currency exposure of its portfolio. The Strategic
Income Fund and the High Income Fund primarily seek high current income and
secondarily seek capital appreciation. The High Income Fund seeks to achieve its
investment objectives by investing all of its investable assets in the
Portfolio, which is a non-diversified open-end management investment company
with investment objectives identical to those of the Fund. Whenever the phrase
"all of the High Income Fund's investable assets" is used herein and in the
Prospectus, it means that the only investment securities held by the High Income
Fund will be its interest in the Portfolio. The High Income Fund may withdraw
its investment in the Portfolio at any time, if the Board of Trustees of the
Trust determines that it is in the best interests of the Fund and its
shareholders to do so. Upon any such withdrawal, the High Income Fund's assets
would be invested in accordance with the investment policies of the Portfolio
described below and in the Prospectus. The investment objective of the Growth &
Income Fund is long-term capital appreciation together with current income. The
Growth & Income Fund seeks its objective by investing in a global portfolio of
both equity securities and debt obligations allocated among diverse
international markets.
INVESTMENT IN EMERGING MARKETS
The Portfolio seeks its objectives by investing, under normal circumstances, at
least 65% of its total assets in debt securities of issuers in emerging markets.
The Strategic Income Fund may invest up to 50% of its assets in debt securities
of issuers in emerging markets. The Strategic Income Fund and the Portfolio do
not consider the following countries to be emerging markets: Australia, Austria,
Belgium, Canada, Denmark, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom,
and United States.
In addition to the factors set forth in the Prospectus, the Sub-adviser will
also consider, when determining what countries constitute emerging markets,
data, analysis, and classification of countries published or disseminated by the
International Bank for Reconstruction and Development (commonly known as the
World Bank) and the International Finance Corporation.
SELECTION OF DEBT INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Government Income Fund, the Strategic
Income Fund, the Growth & Income Fund, and the Portfolio, the Sub-adviser
ordinarily considers the following factors: prospects for relative economic
growth among the different countries in which the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund, and the Portfolio may invest;
Statement of Additional Information Page 4
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
expected levels of inflation; government policies influencing business
conditions; the outlook for currency relationships; and the range of the
individual investment opportunities available to international investors.
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in the following types of money market instruments (i.e., debt
instruments with less than 12 months remaining until maturity) denominated in
U.S. dollars or other currencies: (a) obligations issued or guaranteed by the
U.S. or foreign governments, their agencies, instrumentalities or
municipalities; (b) obligations of international organizations designed or
supported by multiple foreign governmental entities to promote economic
reconstruction or development; (c) finance company obligations, corporate
commercial paper and other short-term commercial obligations: (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Government Income
Fund, the Strategic Income Fund and the Portfolio may not invest more than 25%
of their respective total assets in bank securities; (e) repurchase agreements
with respect to the foregoing; and (f) other substantially similar short-term
debt securities with comparable characteristics. Money market instruments in
which the Growth & Income Fund may invest include U.S. government securities,
high-grade commercial paper, bank certificates of deposit, bankers' acceptances
and repurchase agreements related to any of the foregoing. "High-grade
commercial paper" refers to commercial paper rated A-1 by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P"), or P-1 by Moody's Investors
Service, Inc. ("Moody's") or, if not rated, determined by the Sub-adviser to be
of comparable quality.
SELECTION OF EQUITY INVESTMENTS
With respect to Growth & Income Fund, for investment purposes, an issuer is
typically considered as located in a particular country if it (a) is
incorporated under the laws of or has its principal office in that country, or
(b) it normally derives 50% or more of its total revenue from business in that
country. However, these are not absolute requirements, and certain companies
incorporated in a particular country and considered by the Sub-adviser to be
located in that country may have substantial off-shore operations or
subsidiaries and/or export sales exceeding in size the assets or sales in that
country.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by the Government Income Fund,
the Strategic Income Fund, the Growth & Income Fund and the Portfolio presently
may be made only by acquiring shares of other investment companies (including
investment vehicles or companies advised by the Sub-adviser or its affiliates
("Affiliated Funds")) with local governmental approval to invest in those
countries. At such time as direct investment in these countries is allowed, the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio anticipate investing directly in these markets. The Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund and the
Portfolio may also invest in the securities of closed-end investment companies
within the limits of the Investment Company Act of 1940, as amended ("1940
Act"). These limitations currently provide that, in part, a Fund or the
Portfolio may purchase shares of another investment company unless (a) such a
purchase would cause the Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund or the Portfolio to own in the aggregate more than 3% of
the total outstanding voting securities of the investment company or (b) such a
purchase would cause the Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund or the Portfolio to have more than 5% of its total assets
invested in the investment company or more than 10% of its aggregate assets
invested in an aggregate of all such investment companies. The foregoing
limitations do not apply to the investment by the High Income Fund in the
Portfolio. Investment in investment companies may involve the payment of
substantial premiums above the value of such companies' portfolio securities.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio do not intend to invest in such investment companies unless,
in the judgment of the Sub-adviser, the potential benefits of such investments
justify the payment of any applicable premiums. The return on such securities
will be reduced by operating expenses of such companies including payments to
the investment managers of those investment companies. With respect to
investments in Affiliated Funds, the Sub-adviser waives its advisory fee to the
extent that such fees are based on assets of a Fund invested in Affiliated
Funds.
DEPOSITARY RECEIPTS
The Growth & Income Fund may hold equity securities of foreign issuers in the
form of American Depositary Receipts ("ADRs"), American Depositary Shares
("ADSs"), Global Depositary Receipts ("GDRs") and European Depositary Receipts
("EDRs"), or other securities convertible into securities of eligible issuers.
These securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. ADRs and ADSs typically are issued
by an American bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depositary Receipts ("CDRs"), are issued in Europe typically
by
Statement of Additional Information Page 5
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
foreign banks and trust companies and evidence ownership of either foreign or
domestic securities. GDRs are similar to EDRs and are designed for use in
several international financial markets. Generally, ADRs and ADSs in registered
form are designed for use in United States securities markets and EDRs in bearer
form are designed for use in European securities markets. For purposes of the
Fund's investment policies, the Fund's investments in ADRs, ADSs, GDRs and EDRs
will be deemed to be investments in the equity securities representing
securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
SAMURAI AND YANKEE BONDS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai
bonds"), and may invest in dollar-denominated bonds sold in the United States by
non-U.S. issuers ("Yankee bonds"). It is the policy of the Government Income
Fund, the Strategic Income Fund and the Portfolio to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Government Income Fund, the Strategic
Income Fund, the Growth & Income Fund or the Portfolio in connection with other
securities or separately and provide a Fund or the Portfolio with the right to
purchase at a later date other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio may make
secured loans of portfolio securities amounting to not more than 30% of its
total assets. Securities loans are made to broker/dealers or institutional
investors pursuant to agreements requiring that the loans continuously be
secured by collateral at least equal at all times to the value of the securities
lent plus any accrued interest, "marked to market" on a daily basis. The
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund, and
the Portfolio may pay reasonable administrative and custodial fees in connection
with loans of its securities. While the securities loan is outstanding, the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio will continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. The Government Income
Fund, the Strategic Income Fund, the Growth & Income Fund and the Portfolio each
will have a right to call each loan and obtain the securities within the stated
settlement period. The Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund and the Portfolio will not have the right to vote equity
securities while they are lent, but each may call in a loan in anticipation of
any important vote. Loans will be made only to firms deemed by the Sub-adviser
to be of good standing and will not be made unless, in the judgment of the
Sub-adviser, the consideration to be earned from such loans would justify the
risk.
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Strategic Income Fund's, the Growth & Income Fund's and
the Portfolio's investment policies with respect to bank obligations,
obligations of foreign branches of U.S. banks and of foreign banks are
obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Strategic Income Fund, the
Growth & Income Fund and the Portfolio to investment risks that are different in
some respects from those of investments in obligations of domestic issuers.
Although the Strategic Income Fund, the Growth & Income Fund and the Portfolio
typically will acquire obligations issued and supported by the credit of U.S. or
foreign banks having total assets at the time of purchase in excess of $1
billion, this $1 billion figure is not an investment policy or restriction of
the Strategic Income Fund, the Growth & Income Funds or the Portfolio. For the
purposes of calculation with respect to the $1 billion figure, the assets of a
bank will be deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund, or the Portfolio buys a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed upon price, date and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investments in securities, including possible decline in
the market value of the underlying securities and delays and costs to the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund or
Portfolio if the other party to the repurchase agreement becomes bankrupt, the
Government Income Fund, the Strategic Income Fund, Growth & Income Fund and the
Portfolio intend to enter into repurchase agreements only with banks and
broker/dealers believed by the Sub-adviser to present minimal credit risks in
accordance with guidelines approved by the Board of Trustees. The Sub-adviser
reviews and monitors the creditworthiness of such institutions under the Board's
general supervision.
The Government Income Fund, the Strategic Income Fund, Growth & Income Fund and
the Portfolio will invest only in repurchase agreements collateralized at all
times in an amount at least equal to the repurchase price plus accrued interest.
There is no limitation on the amount of the Growth & Income Fund's assets that
may be subject to repurchase agreements at any time. To the extent that the
proceeds from any sale of such collateral upon a default in the obligation to
repurchase were less than the repurchase price, the Government Income Fund, the
Strategic Income Fund, Growth & Income Fund or the Portfolio would suffer a
loss. If the financial institution which is party to the repurchase agreement
petitions for bankruptcy or otherwise becomes subject to bankruptcy or other
liquidation proceedings there may be restrictions on the Government Income Fund,
the Strategic Income Fund, the Growth & Income Fund's or the Portfolio's ability
to sell the collateral and the Government Income Fund, the Strategic Income
Fund, Growth & Income Fund or the Portfolio could suffer a loss. However, with
respect to financial institutions whose bankruptcy or liquidation proceedings
are subject to the U.S. Bankruptcy Code, the Government Income Fund, the
Strategic Income Fund Growth & Income Fund and the Portfolio intend to comply
with provisions under such Code that would allow the immediate resale of such
collateral. The Government Income Fund and the Growth & Income Fund will not
enter into a repurchase agreement with a maturity of more than seven days if, as
a result, more than 10% of the value of each Fund's total assets would be
invested in such repurchase agreements and other illiquid investments and
securities for which no readily available market exists.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's and the Portfolio's borrowings will not exceed 33 1/3% of the Fund's or
the Portfolio's respective total assets, i.e., the Government Income Fund's, the
Strategic Income Fund's, the Growth & Income Fund's and the Portfolio's
respective total assets at all times will equal at least 300% of the amount of
its outstanding borrowings. If market fluctuations in the value of the
Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's or the Portfolio's total assets to outstanding borrowings to fall below
300%, within three days (excluding Sundays and holidays) of such event the
respective Fund or the Portfolio may be required to sell portfolio securities to
restore the 300% asset coverage, even though from an investment standpoint such
sales might be disadvantageous. The Government Income Fund, the Strategic Income
Fund, the Growth & Income Fund and the Portfolio each may borrow up to 5% of its
respective total assets for temporary or emergency purposes other than to meet
redemptions. Any borrowing by the Government Income Fund, the Strategic Income
Fund, the Growth & Income Fund or the Portfolio may cause greater fluctuation in
the value of its shares than would be the case if the Fund or the Portfolio did
not borrow.
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's and the Portfolio's fundamental investment limitations permit them to
borrow money for leveraging purposes. The Government Income Fund and the Growth
& Income Fund, however, currently are prohibited, pursuant to a non-fundamental
investment policy, from borrowing money in order to purchase securities.
Nevertheless, this policy may be changed in the future by a vote of a majority
of the Trust's Board of Trustees. The Strategic Income Fund and the Portfolio
may borrow for leveraging purposes. If the Strategic Income Fund or the
Portfolio employs leverage, it would be subject to certain additional risks. Use
of leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the Strategic Income Fund's or the
Portfolio's net asset value. When the income and gains on securities purchased
with the proceeds of borrowings exceed the costs of such borrowings, the
Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's or the Portfolio's earnings or net asset value will increase faster than
otherwise would be the case; conversely, if such income and gains fail to exceed
such costs, the Fund's or the Portfolio's earnings or net asset value would
decline faster than would otherwise be the case.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio may enter into reverse repurchase agreements. A reverse
repurchase agreement is a borrowing transaction in which a Fund or the Portfolio
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price, which includes an interest component. The
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio also may engage in "roll" borrowing transactions which involve a
Fund's or the Portfolio's sale of Government National Mortgage Association
certificates or other securities together with a commitment (for which a Fund or
the Portfolio may receive a fee) to purchase similar, but not identical,
securities at a future date. The Government Income Fund, the Strategic Income
Fund, the Growth & Income Fund and the Portfolio will segregate with a
custodian, cash or liquid securities in an amount sufficient to cover its
obligations under "roll" transactions and reverse repurchase agreements with
broker/dealers. No segregation is required for reverse repurchase agreements
with banks.
SHORT SALES
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio may make short sales of securities, although they have no
current intention of doing so. A short sale is a transaction in which a Fund or
the Portfolio sells a security in anticipation that the market price of that
security will decline. The Government Income Fund, the Strategic Income Fund,
the Growth & Income Fund and the Portfolio may make short sales as a form of
hedging to offset potential declines in long positions in securities it owns, or
anticipates acquiring, and in order to maintain portfolio flexibility. The
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio only may make short sales "against the box." In this type of short
sale, at the time of the sale, the Fund or the Portfolio owns the security it
has sold short or has the immediate and unconditional right to acquire the
identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund or the
Portfolio will deposit in a separate account with its custodian an equal amount
of the securities sold short or securities convertible into or exchangeable for
such securities at no cost. The Government Income Fund, the Strategic Income
Fund, the Growth & Income Fund or the Portfolio could close out a short position
by purchasing and delivering an equal amount of the securities sold short,
rather than by delivering securities already held by the Fund or the Portfolio,
because the Fund or the Portfolio might want to continue to receive interest and
dividend payments on securities in its portfolio that are convertible into the
securities sold short.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio might make a short sale "against the box" in order to hedge
against market risks when the Sub-adviser believes that the price of a security
may decline, causing a decline in the value of a security owned by the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund or
the Portfolio or a security convertible into or exchangeable for such security.
In such case, any future losses in the Government Income Fund's, the Strategic
Income Fund's, the Growth & Income Fund's or the Portfolio's long position
should be reduced by a gain in the short position. Conversely, any gain in the
long position should be reduced by a loss in the short position. The extent to
which such gains or losses in the long position are reduced will depend upon the
amount of the securities sold short relative to the amount of the securities the
Fund or the Portfolio owns, either directly or indirectly, and, in the case
where a Fund or the Portfolio owns convertible securities,
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
changes in the investment values or conversion premiums of such securities.
There will be certain additional transaction costs associated with short sales
"against the box," but a Fund or the Portfolio will endeavor to offset these
costs with income from the investment of the cash proceeds of short sales.
- --------------------------------------------------------------------------------
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Sub-adviser's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While the Sub-adviser is experienced in
the use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if the Government Income
Fund, the Strategic Income Fund, the Growth & Income Fund or the Portfolio
entered into a short hedge because the Sub-adviser projected a decline in
the price of a security in the Fund's or the Portfolio's portfolio, and the
price of that security increased instead, the gain from that increase might
by wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by
more than the increase in the price of the security, the Government Income
Fund, the Strategic Income Fund, the Growth & Income Fund or the Portfolio
could suffer a loss. In either such case, the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio would have
been in a better position had it not hedged at all.
(4) As described below, the Government Income Fund, the Strategic Income
Fund, the Growth & Income Fund or the Portfolio might be required to
maintain assets as "cover," maintain segregated accounts or make margin
payments when it takes positions in instruments involving obligations to
third parties (I.E., instruments other than purchased options). If a Fund or
the Portfolio were unable to close out its positions in such instruments, it
might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. The requirements might
impair the Fund's ability or the Portfolio's ability to sell a portfolio
security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund or the Portfolio sell a
portfolio security at a disadvantageous time. The Fund's or the Portfolio's
ability to close out a position in an instrument prior to expiration or
maturity depends on the existence of a liquid secondary market or, in the
absence of such a market, the ability and willingness of the other party to
the transaction ("contra party") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed
out at a time and price that is favorable to the Fund or the Portfolio.
WRITING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio may write (sell) call options on securities, indices and
currencies. Call options generally will be written on securities and currencies
that, in
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
the opinion of the Sub-adviser are not expected to make any major price moves in
the near future but that, over the long term, are deemed to be attractive
investments for the Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund and the Portfolio.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with a
Fund's or the Portfolio's investment objectives. When writing a call option, the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund or
the Portfolio, in return for the premium, gives up the opportunity for profit
from a price increase in the underlying security or currency above the exercise
price, and retains the risk of loss should the price of the security or currency
decline. Unlike one who owns securities or currencies not subject to an option,
a Fund or the Portfolio has no control over when it may be required to sell the
underlying securities or currencies, since most options may be exercised at any
time prior to the option's expiration. If a call option that a Fund or the
Portfolio has written expires, the Fund or the Portfolio will realize a gain in
the amount of the premium; however, such gain may be offset by a decline in the
market value of the underlying security or currency during the option period. If
the call option is exercised, the Fund or the Portfolio will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund and the Portfolio do not
consider a security or currency covered by a call option to be "pledged" as that
term is used in the Government Income Fund's, the Strategic Income Fund's, the
Growth & Income Fund's and the Portfolio's fundamental investment policies that
limit the pledging or mortgaging of their assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund or the Portfolio will
be obligated to sell the security or currency at less than its market value.
The premium that the Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund or the Portfolio receives for writing a call option is
deemed to constitute the market value of an option. The premium a Fund or the
Portfolio will receive from writing a call option will reflect, among other
things, the current market price of the underlying investment, the relationship
of the exercise price to such market price, the historical price volatility of
the underlying investment, and the length of the option period. In determining
whether a particular call option should be written, the Sub-adviser will
consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Government Income
Fund, the Strategic Income Fund, the Growth & Income Fund or the Portfolio to
write another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity normally are higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, a Fund or the Portfolio may purchase an
underlying security or currency for delivery in accordance with the exercise of
an option, rather than delivering such security or currency from its portfolio.
In such cases, additional costs will be incurred.
A Fund or the Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security or currency, any loss resulting from the
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AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
repurchase of a call option is likely to be offset in whole or in part by
appreciation of the underlying security or currency owned by a Fund or the
Portfolio.
WRITING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio may write put options on securities, indices and currencies. A
put option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at anytime until (American Style) or on (European Style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
A Fund or the Portfolio generally would write put options in circumstances where
the Sub-adviser wishes to purchase the underlying security or currency for the
Fund's or the Portfolio's portfolio at a price lower than the current market
price of the security or currency. In such event, the Fund or the Portfolio
would write a put option at an exercise price that, reduced by the premium
received on the option, reflects the lower price it is willing to pay. Since the
Fund or the Portfolio also would receive interest on debt securities or
currencies maintained to cover the exercise price of the option, this technique
could be used to enhance current return during periods of market uncertainty.
The risk in such a transaction would be that the market price of the underlying
security or currency would decline below the exercise price less the premium
received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund or the Portfolio
will be obligated to purchase the security or currency at greater than its
market value.
PURCHASING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio may purchase put options on securities, indices and
currencies. As the holder of a put option, the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio would have the
right to sell the underlying security or currency at the exercise price at any
time until (American Style or on (European Style) the expiration date. The
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund or
the Portfolio may enter into closing sale transactions with respect to such
options, exercise them or permit them to expire.
A Fund or the Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Fund or the Portfolio as a hedging
technique in order to protect against an anticipated decline in the value of the
security or currency. Such hedge protection is provided only during the life of
the put option when the Fund or the Portfolio, as the holder of the put option,
is able to sell the underlying security or currency at the put exercise price
regardless of any decline in the underlying security's market price or
currency's exchange value. The premium paid for the put option and any
transaction costs would reduce any profit otherwise available for distribution
when the security or currency eventually is sold.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio also may purchase put options at a time when that Fund or the
Portfolio does not own the underlying security or currency. By purchasing put
options on a security or currency it does not own, a Fund or the Portfolio seeks
to benefit from a decline in the market price of the underlying security or
currency. If the put option is not sold when it has remaining value, and if the
market price of the underlying security or currency remains equal to or greater
than the exercise price during the life of the put option, the Fund or the
Portfolio will lose its entire investment in the put option. In order for the
purchase of a put option to be profitable, the market price of the underlying
security or currency must decline sufficiently below the exercise price to cover
the premium and transaction costs, unless the put option is sold in a closing
sale transaction.
PURCHASING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
or the Portfolio may purchase call options on securities, indices and
currencies. As the holder of a call option, a Fund or the Portfolio would have
the right to purchase the underlying security or currency at the exercise price
at any time until (American Style) or on (European Style) the expiration date. A
Fund or the Portfolio may enter into closing sale transactions with respect to
such options, exercise them or permit them to expire.
Call options may be purchased by a Fund or the Portfolio for the purpose of
acquiring the underlying security or currency for its portfolio. Utilized in
this fashion, the purchase of call options would enable the Fund or the
Portfolio to acquire the security or currency at the exercise price of the call
option plus the premium paid. At times, the net cost of acquiring the
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AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
security or currency in this manner may be less than the cost of acquiring the
security or currency directly. This technique also may be useful to a Fund or
the Portfolio in purchasing a large block of securities that would be more
difficult to acquire by direct market purchases. So long as it holds such a call
option, rather than the underlying security or currency itself, a Fund or the
Portfolio is partially protected from any unexpected decline in the market price
of the underlying security or currency and, in such event, could allow the call
option to expire, incurring a loss only to the extent of the premium paid for
the option.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio also may purchase call options on underlying securities or
currencies it owns to avoid realizing losses that would result in a reduction of
a Fund's or the Portfolio's current return. For example, where a Fund or the
Portfolio has written a call option on an underlying security or currency having
a current market value below the price at which it purchased the security or
currency, an increase in the market price could result in the exercise of the
call option written by the Fund or the Portfolio and the realization of a loss
on the underlying security or currency. Accordingly, the Fund or the Portfolio
could purchase a call option on the same underlying security or currency, which
could be exercised to fulfill the Fund's or the Portfolio's delivery obligations
under its written call (if it is exercised). This strategy could allow the Fund
or the Portfolio to avoid selling the portfolio security or currency at a time
when it has an unrealized loss; however, the Fund or the Portfolio would have to
pay a premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Government Income Fund, the Strategic Income Fund, the Growth & Income's Fund's
or the Portfolio's total assets at the time of purchase.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
or the Portfolio may attempt to accomplish objectives similar to those involved
in using Forward Contracts by purchasing put or call options on currencies. A
put option gives a Fund or the Portfolio as purchaser the right (but not the
obligation) to sell a specified amount of currency at the exercise price at any
time until (American Style) or on (European Style) the expiration of the option.
A call option gives a Fund or the Portfolio as purchaser the right (but not the
obligation) to purchase a specified amount of currency at the exercise price at
any time until (American Style) or on (European Style) the expiration of the
option. A Fund or the Portfolio might purchase a currency put option, for
example, to protect itself against a decline in the dollar value of a currency
in which it holds or anticipates holding securities. If the currency's value
should decline against the dollar, the loss in currency value should be offset,
in whole or in part, by an increase in the value of the put. If the value of the
currency instead should rise against the dollar, any gain to the Fund or the
Portfolio would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the dollar of a currency in which
the Fund or the Portfolio anticipates purchasing securities.
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation), and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. The Funds and the Portfolio will not purchase an OTC option unless the
Fund or the Portfolio believes that daily valuations for such options are
readily obtainable. OTC options differ from exchange-traded options in that OTC
options are transacted with dealers directly and not through a clearing
corporation (which guarantees performance). Consequently, there is a risk of
non-performance by the dealer. Since no exchange is involved, OTC options are
valued on the basis of the average of the last bid prices obtained from dealers,
unless a quotation from only one dealer is available, in which case only that
dealer's price will be used. In the case of OTC options, there can be no
assurance that a liquid secondary market will exist for any particular option at
any specific time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
A Fund or the Portfolio may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written by
the Fund or the Portfolio. The assets used as cover for OTC options written by a
Fund or the Portfolio will be considered illiquid unless the OTC options are
sold to qualified dealers who agree that the Fund or the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by a
formula set forth in the option agreement. The cover for an OTC option written
subject to this procedure would be considered illiquid only to the extent that
the maximum repurchase price under the formula exceeds the intrinsic value of
the option.
A Fund's or the Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. Each Fund
and the Portfolio intends to purchase or write only those exchange-traded
options for which there appears to be a liquid secondary market. However, there
can be no assurance that such a market will exist at any
Statement of Additional Information Page 12
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
particular time. Closing transactions can be made for OTC options only by
negotiating directly with the contra party or by a transaction in the secondary
market if any such market exists. Although each Fund and the Portfolio will
enter into OTC options only with contra parties that are expected to be capable
of entering into closing transactions with the Fund or the Portfolio, there is
no assurance that the Fund or the Portfolio will in fact be able to close out an
OTC option position at a favorable price prior to expiration. In the extent of
insolvency of the contra party, the Fund or the Portfolio might be unable to
close out an OTC option position at any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund or the Portfolio
writes a call on an index, it receives a premium and agrees that, prior to the
expiration date, the purchaser of the call, upon exercise of the call, will
receive from the Fund or the Portfolio an amount of cash if the closing level of
the index upon which the call is based is greater than the exercise price of the
call. The amount of cash is equal to the difference between the closing price of
the index and the exercise price of the call times a specified multiple (the
"multiplier"), which determines the total dollar value for each point of such
difference. When a Fund or the Portfolio buys a call on an index, it pays a
premium and has the same rights as to such call as are indicated above. When a
Fund or the Portfolio buys a put on an index, it pays a premium and has the
right, prior to the expiration date, to require the seller of the put, upon the
Fund's or the Portfolio's exercise of the put, to deliver to the Fund or the
Portfolio an amount of cash if the closing level of the index upon which the put
is based is less than the exercise price of the put, which amount of cash is
determined by the multiplier, as described above for calls. When a Fund or the
Portfolio writes a put on an index, it receives a premium and the purchaser has
the right, prior to the expiration date, to require the Fund or the Portfolio to
deliver to it an amount of cash equal to the difference between the closing
level of the index and the exercise price times the multiplier, if the closing
level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund or the
Portfolio writes a call on an index it cannot provide in advance for its
potential settlement obligations by acquiring and holding the underlying
securities. A Fund or the Portfolio can offset some of the risk of writing a
call index option position by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, a Fund or the
Portfolio cannot, as a practical matter, acquire and hold a portfolio containing
exactly the same securities as underlie the index and, as a result, bears a risk
that the value of the securities held will vary from the value of the index.
Even if a Fund or the Portfolio could assemble a securities portfolio that
exactly reproduced the composition of the underlying index, it still would not
be fully covered from a risk standpoint because of the "timing risk" inherent in
writing index options. When an index option is exercised, the amount of cash
that the holder is entitled to receive is determined by the difference between
the exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Fund or the Portfolio, as the
call writer, will not know that it has been assigned until the next business day
at the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Fund or the Portfolio purchases an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Fund or the Portfolio will be
required to pay the difference between the closing index value and the exercise
price of the option (times the applicable multiplier) to the assigned writer.
Statement of Additional Information Page 13
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
or the Portfolio may enter into interest rate or currency futures contracts,
including futures contracts on indices of debt securities, ("Futures" or
"Futures Contracts"), as a hedge against changes in prevailing levels of
interest rates or currency exchange rates in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund or the Portfolio. The Government Income Fund's, the Strategic Income
Fund's, the Growth & Income Fund's or the Portfolio's hedging may include sales
of Futures as an offset against the effect of expected increases in interest
rates or decreases in currency exchange rates, and purchases of Futures as an
offset against the effect of expected declines in interest rates or increases in
currency exchange rates. The Growth & Income Fund may also enter into stock
index Futures Contracts as a hedge against changes in stock prices.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio only will enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading thereon in the United States
are regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Fund's or the Portfolio's exposure to interest rate and
currency exchange rate fluctuations, a Fund or the Portfolio may be able to
hedge exposure more effectively and at a lower cost through using Futures
Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (debt
security or currency) for a specified price at a designated date, time and
place. An index Futures Contract provides for the delivery, at a designated
date, time and place, of an amount of cash equal to a specified dollar amount
times the difference between the index value at the close of trading on the
contract and the price at which the Futures Contract is originally struck; no
physical delivery of the securities comprising the index is made. Brokerage fees
are incurred when a Futures Contract is bought or sold, and margin deposits must
be maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio realizes a
gain; if it is more, the Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund or the Portfolio realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund or the
Portfolio realizes a gain; if it is less, the Government Income Fund, the
Strategic Income Fund, the Growth & Income Fund or the Portfolio realizes a
loss. The transaction costs also must be included in these calculations. There
can be no assurance, however, that a Fund or the Portfolio will be able to enter
into an offsetting transaction with respect to a particular Futures Contract at
a particular time. If a Fund or the Portfolio is not able to enter into an
offsetting transaction, the Fund or the Portfolio will continue to be required
to maintain the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund or the
Portfolio.
The Government Income Fund's, the Strategic Income Fund's, the Growth & Income
Fund's and the Portfolio's Futures transactions will be entered into for hedging
purposes only; that is, Futures Contracts will be sold to protect against a
decline in the price of securities or currencies that the Fund or the Portfolio
owns, or Futures Contracts will be purchased to protect the Fund or the
Portfolio against an increase in the price of securities or currencies it has
committed to purchase or expects to purchase.
Statement of Additional Information Page 14
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Government Income Fund, the Strategic Income Fund, the Growth &
Income Fund or the Portfolio in order to initiate Futures trading and to
maintain the Fund's or the Portfolio's open positions in Futures Contracts. A
margin deposit made when the Futures Contract is entered into ("initial margin")
is intended to assure a Fund's or the Portfolio's performance under the Futures
Contract. The margin required for a particular Futures Contract is set by the
exchange on which the Futures Contract is traded, and may be modified
significantly from time to time by the exchange during the term of the Futures
Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund or the Portfolio entered into the
Futures Contract will be made on a daily basis as the price of the underlying
security, currency or index fluctuates making the Futures Contract more or less
valuable, a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest and currency rates, which in turn are affected by fiscal and
monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Fund's or the
Portfolio's portfolio being hedged. The degree of imperfection of correlation
depends upon circumstances such as: variations in speculative market demand for
Futures and for securities or currencies, including technical influences in
Futures trading; and differences between the financial instruments being hedged
and the instruments underlying the standard Futures Contracts available for
trading. A decision of whether, when, and how to hedge involves skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and option on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund or the Portfolio were unable to liquidate a Futures or option on
Futures position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The Fund or the
Portfolio would continue to be subject to market risk with respect to the
position. In addition, except in the case of purchased options, the Fund or the
Portfolio would continue to be required to make daily variation margin payments
and might be required to maintain the position being hedged by the Future or
option or to maintain cash or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
Statement of Additional Information Page 15
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, 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 is exercised on the
last trading day 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 level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund or the Portfolio writes an option on a Futures Contract, it will be
required to deposit initial and variation margin pursuant to requirements
similar to those applicable to Futures Contracts. Premiums received from the
writing of an option on a Futures Contract are included in the initial margin
deposit.
A Fund or the Portfolio may seek to close out an option position by selling an
option covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund or the Portfolio enters into Futures Contracts,
options on Futures Contracts and options on foreign currencies traded on a
CFTC-regulated exchange, in each case other than for BONA FIDE hedging purposes
(as defined by the CFTC), the aggregate initial margin and premiums required to
establish those positions (excluding the amount by which options are
"in-the-money") will not exceed 5% of the liquidation value of a Fund's or the
Portfolio's portfolio, after taking into account unrealized profits and
unrealized losses on any contracts the Fund or the Portfolio has entered into.
In general, a call option on a Futures Contract is "in-the-money" if the value
of the underlying Futures Contract exceeds the strike, I.E., exercise, price of
the call; a put option on a Futures Contract is "in-the-money" if the value of
the underlying Futures Contract is exceeded by the strike price of the put. This
guideline may be modified by the Trust's or the Portfolio's Board of Trustees,
as applicable, without a shareholder vote. This limitation does not limit the
percentage of a Fund's or the Portfolio's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, generally arranged with a commercial bank
or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. The
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio either may accept or make delivery of the currency at the maturity
of the Forward Contract. A Fund or the Portfolio may also, if its contra party
agrees, prior to maturity, enter into a closing transaction involving the
purchase or sale of an offsetting contract.
A Fund or the Portfolio engages in forward currency transactions in anticipation
of, or to protect itself against, fluctuations in exchange rates. A Fund or the
Portfolio might sell a particular foreign currency forward, for example, when it
holds bonds denominated in a foreign currency but anticipates, and seeks to be
protected against, a decline in the currency against the U.S. dollar. Similarly,
a Fund or the Portfolio might sell the U.S. dollar forward when it holds bonds
denominated in U.S. dollars but anticipates, and seeks to be protected against,
a decline in the U.S. dollar relative to other currencies. Further, the Funds or
the Portfolio might purchase a currency forward to "lock in" the price of
securities denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Government Income Fund, the Strategic Income Fund, the
Growth & Income Fund or
Statement of Additional Information Page 16
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
the Portfolio will enter into such Forward Contracts with major U.S. or foreign
banks and securities or currency dealers in accordance with guidelines approved
by the Trust's or the Portfolio's Board of Trustees, as applicable.
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
or the Portfolio may enter into Forward Contracts either with respect to
specific transactions or with respect to the overall investment of the Fund or
the Portfolio. The precise matching of the Forward Contract amounts and the
value of specific securities generally will not be possible because the future
value of such securities in foreign currencies will change as a consequence of
market movements in the value of those securities between the date the Forward
Contract is entered into and the date it matures. Accordingly, it may be
necessary for the Fund or the Portfolio to purchase additional foreign currency
on the spot (I.E., cash) market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency the
Fund or the Portfolio is obligated to deliver and if a decision is made to sell
the security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency the Fund or
the Portfolio is obligated to deliver. The projection of short-term currency
market movements is extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be predicted accurately,
causing the Fund or the Portfolio to sustain losses on these contracts and
transaction costs.
At or before the maturity of a Forward Contract requiring the Fund or the
Portfolio to sell a currency, the Fund or the Portfolio either may sell a
portfolio security and use the sale proceeds to make delivery of the currency or
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to which the Fund or the
Portfolio will obtain, on the same maturity date, the same amount of the
currency that it is obligated to deliver. Similarly, the Fund or the Portfolio
may close out a Forward Contract requiring it to purchase a specified currency
by entering into a second contract, if its contra party agrees, entitling it to
sell the same amount of the same currency on the maturity date of the first
contract. The Fund or the Portfolio would realize a gain or loss as a result of
entering into such an offsetting Forward Contract under either circumstance to
the extent the exchange rate or rates between the currencies involved moved
between the execution dates of the first contract and the offsetting contract.
The cost to a Fund or the Portfolio of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because Forward Contracts usually are
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities the Fund or the Portfolio owns or intends to acquire, but
it does establish a rate of exchange in advance. In addition, while Forward
Contracts limit the risk of loss due to a decline in the value of the hedged
currencies, they also limit any potential gain that might result should the
value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund or the Portfolio may use options on foreign currencies, Futures on
foreign currencies, options on Futures on foreign currencies and Forward
Contracts to hedge against movements in the values of the foreign currencies in
which the Fund's or the Portfolio's securities are denominated. Such currency
hedges can protect against price movements in a security that a Fund or the
Portfolio owns or intends to acquire that are attributable to changes in the
value of the currency in which it is denominated. Such hedges do not, however,
protect against price movements in the securities that are attributable to other
causes.
A Fund or the Portfolio might seek to hedge against changes in the value of a
particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Fund or the Portfolio may hedge
against price movements in that currency by entering into a contract on another
currency or basket of currencies, the values of which the Sub-adviser believes
will have a positive correlation to the value of the currency being hedged. The
risk that movements in the price of the contract will not correlate perfectly
with movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund or the Portfolio could be disadvantaged by dealing in the odd
lot market (generally consisting of transactions of less than $1 million) for
the underlying foreign currencies at prices that are less favorable than for
round lots.
Statement of Additional Information Page 17
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Fund or the Portfolio might be required to accept
or make delivery of the underlying foreign currency in accordance with any U.S.
or foreign regulations regarding the maintenance of foreign banking arrangements
by U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options purchased by a Fund or the Portfolio) expose the Fund or the Portfolio
to an obligation to another party. A Fund or the Portfolio will not enter into
any such transactions unless it owns either (1) an offsetting ("covered")
position in securities, currencies, or other options, Forward Contracts or
Futures Contracts, or (2) cash, receivables and short-term debt securities with
a value sufficient at all times to cover its potential obligations not covered
as provided in (1) above. Each Fund and the Portfolio will comply with SEC
guidelines regarding cover for these instruments and, if the guidelines so
require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Fund's or the Portfolio's assets are used for cover or segregated accounts,
it could affect portfolio management or the Fund's or the Portfolio's ability to
meet redemption requests or other current obligations.
INTEREST RATE AND CURRENCY SWAPS
The Strategic Income Fund and the Portfolio usually will enter into interest
rate swaps on a net basis, that is, the two payment streams are netted out in a
cash settlement on the payment date or dates specified in the instrument, with
the Strategic Income Fund or the Portfolio receiving or paying, as the case may
be, only the net amount of the two payments. The net amount of the excess, if
any, of each of the Strategic Income Fund's and the Portfolio's obligations over
its entitlements with respect to each swap will be accrued on a daily basis and
an amount of cash or liquid securities having an aggregate net asset value at
least equal to the accrued excess will be maintained in an account by a
custodian that satisfies the requirements of the 1940 Act. The Strategic Income
Fund and the Portfolio will also establish and maintain such segregated accounts
with respect to its total obligations under any swaps that are not entered into
on a net basis and with respect to any caps or floors that are written by that
Fund or the Portfolio. The Sub-adviser, the Strategic Income Fund and the
Portfolio believe that swaps, caps and floors do not constitute senior
securities under the 1940 Act and, accordingly, will not treat them as being
subject to the Fund's and the Portfolio's borrowing restrictions. The Strategic
Income Fund and the Portfolio will not enter into any swap, cap, floor, collar
or other derivative transaction unless, at the time of entering into the
transaction, the unsecured long-term debt rating of the counterparty combined
with any credit enhancements is rated at least A by Moody's or S&P, or has an
equivalent rating from a nationally recognized statistical rating organization
or is determined to be of equivalent credit quality by the Sub-adviser. If a
counterparty defaults, the Strategic Income Fund or the Portfolio may have
contractual remedies pursuant to the agreements related to the transactions. The
swap market has grown substantially in recent years, with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap market has
become relatively liquid. Caps, floors and collars are more recent innovations
for which standardized documentation has not yet been fully developed and, for
that reason, they are less liquid than swaps.
Statement of Additional Information Page 18
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AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
RISK FACTORS
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ILLIQUID SECURITIES
The Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio each may invest up to 15% of net assets in illiquid
securities. Securities may be considered illiquid if a Fund or the Portfolio
cannot reasonably expect within seven days to receive approximately the amount
at which the Fund or the Portfolio values such securities. The sale of illiquid
securities, if they can be sold at all, generally will require more time and
result in higher brokerage charges or dealer discounts and other selling
expenses than will the sale of liquid securities, such as securities eligible
for trading on U.S. securities exchanges or in the over-the-counter markets.
Moreover, restricted securities, which may be illiquid for purposes of this
limitation often sell, if at all, at a price lower than similar securities that
are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, each Fund and the Portfolio may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time a Fund or the Portfolio
may be permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, a Fund or
the Portfolio might obtain a less favorable price than prevailed when it decided
to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund or the Portfolio, however, could affect adversely the marketability of
such portfolio securities and a Fund or the Portfolio might be unable to dispose
of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Trust's or the
Portfolio's Board of Trustees has the ultimate responsibility for determining
whether specific securities, including restricted securities eligible for resale
to qualified institutional buyers pursuant to Rule 144A under the 1933 Act, are
liquid or illiquid. The Board has delegated the function of making day-to-day
determinations of liquidity to the Sub-adviser in accordance with procedures
approved by the Board. The Sub-adviser takes into account a number of factors in
reaching liquidity decisions, including: (i) the frequency of trading in the
security; (ii) the number of dealers that make quotes for the security; (iii)
the number of dealers that have undertaken to make a market in the security;
(iv) the number of other potential purchasers; and (v) the nature of the
security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). The
Sub-adviser will monitor the liquidity of securities held by each Fund and the
Portfolio and report periodically on such decisions to the Trust's or the
Portfolio's Board of Trustees. Moreover, as noted in the
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AIM GLOBAL GROWTH & INCOME FUND
Prospectus, certain securities, such as those subject to registration
restrictions of more than seven days, will generally be treated as illiquid. If
the liquidity percentage restriction of a Fund or the Portfolio is satisfied at
the time of investment, a later increase in the percentage of illiquid
securities held by a Fund or the Portfolio resulting from a change in market
value or assets will not constitute a violation of that restriction. If as a
result of a change in market value or assets, the percentage of illiquid
securities held by the Fund or Portfolio increases above the applicable limit,
the Sub-adviser will take appropriate steps to bring the aggregate amount of
illiquid assets back within the prescribed limitations as soon as reasonably
practicable, taking into account the effect of any disposition on the Fund or
the Portfolio.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, either a Fund or the Portfolio could lose its
entire investment in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Fund or the Portfolio may invest may have groups that advocate radical religious
or revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for widespread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of a Fund's or the Portfolio's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which a Fund or the
Portfolio invests and adversely affect the value of the Fund's or the
Portfolio's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Government Income Fund,
the Strategic Income Fund, the Growth & Income Fund or the Portfolio. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the cost and expenses of a Fund or the Portfolio.
For example, certain countries require prior governmental approval before
investments by foreign persons may be made, or may limit the amount of
investment by foreign persons in a particular company, or limit the investment
by foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
for the repatriation of investment income, capital or the proceeds of securities
sales by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
restrictions on foreign capital remittances abroad. The Government Income Fund,
the Strategic Income Fund, the Growth & Income Fund or the Portfolio could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the foreign securities held by the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund or
the Portfolio will not be registered with the SEC or regulators of any foreign
country, nor will the issuers thereof be subject to the SEC's reporting
requirements. Thus, there will be less available information concerning most
foreign issuers of securities held by the Government Income Fund, the Strategic
Income Fund, the Growth & Income Fund and the Portfolio than is available
concerning U.S. issuers. In instances where the financial statements of an
issuer are not deemed to reflect accurately the financial situation of the
issuer, the Sub-adviser will take appropriate steps to evaluate the proposed
investment, which may include on-site inspection of the issuer, interviews with
its management and consultations with accountants, bankers and other
specialists. There is substantially less publicly available information about
foreign companies than there are reports and ratings published about U.S.
companies and the U.S. Government. In addition, where public information is
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available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because the Funds and the Portfolio, under normal
circumstances, will invest substantial portions of their total assets in the
securities of foreign issuers which are denominated in foreign currencies, the
strength or weakness of the U.S. dollar against such foreign currencies will
account for part of each Fund's and the Portfolio's investment performance. A
decline in the value of any particular currency against the U.S. dollar will
cause a decline in the U.S. dollar value of each Fund's and the Portfolio's
holdings of securities and cash denominated in such currency and, therefore,
will cause an overall decline in their respective net asset values and any net
investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Funds. Moreover, if the value
of the foreign currencies in which a Fund or the Portfolio receives its income
declines relative to the U.S. dollar between the receipt of the income and the
making of Fund distributions, the Fund or the Portfolio may be required to
liquidate securities in order to make distributions if the Fund or the Portfolio
has insufficient cash in U.S. dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and the pace of business activity in the other countries, and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Funds and the Portfolio value their assets daily in terms of U.S.
dollars, they do not intend to convert holdings of foreign currencies into U.S.
dollars on a daily basis. The Funds and the Portfolio will do so from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference ("spread") between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to sell
a foreign currency to a Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the U.S., and
foreign securities transactions usually are subject to fixed commissions, which
generally are higher than negotiated commissions on U.S. transactions. In
addition, foreign securities transactions may be subject to difficulties
associated with the settlement of such transactions. Delays in settlement could
result in temporary periods when assets of a Fund or the Portfolio are
uninvested and no return is earned thereon. The inability of a Fund or the
Portfolio to make intended security purchases due to settlement problems could
cause it to miss attractive opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to a Fund or
the Portfolio due to subsequent declines in value of the portfolio security or,
if the Fund or the Portfolio has entered into a contract to sell the security,
could result in possible liability to the purchaser. The Sub-adviser will
consider such difficulties when determining the allocation of each Fund's or the
Portfolio's assets, although the Sub-adviser does not believe that such
difficulties will have a material adverse effect on the Funds' or the
Portfolio's portfolio trading activities.
The Funds and the Portfolio may use foreign custodians, which may involve risks
in addition to those related to the use of U.S. custodians. Such risks include
uncertainties relating to: (i) determining and monitoring the financial
strength, reputation and standing of the foreign custodian; (ii) maintaining
appropriate safeguards to protect the Funds' and the Portfolio's investments and
(iii) possible difficulties in obtaining and enforcing judgments against such
custodians.
WITHHOLDING TAXES. Each Fund's and the Portfolio's net investment income
from foreign issuers may be subject to withholding taxes by the foreign issuer's
country, thereby reducing the Fund's and the Portfolio's income or delaying the
receipt of income where those taxes may be recaptured. See "Taxes."
CONCENTRATION. To the extent a Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, such Portfolio may be subject to greater risks and may experience greater
volatility than a fund that is more broadly diversified geographically.
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AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. The countries
that are members of the European Economic Community ("Common Market") (Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain, and the United Kingdom) eliminated certain import tariffs and
quotas and other trade barriers with respect to one another over the past
several years. The Sub-adviser believes that this deregulation should improve
the prospects for economic growth in many Western European countries. Among
other things, the deregulation could enable companies domiciled in one country
to avail themselves of lower labor costs existing in other countries. In
addition, this deregulation could benefit companies domiciled in one country by
opening additional markets for their goods and services in other countries.
Since, however, it is not clear what the exact form or effect of these Common
Market reforms will be on business in Western Europe, it is impossible to
predict the long-term impact of the implementation of these programs on the
securities owned by a Fund.
SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
United States securities markets, and should be considered highly speculative.
Such risks include: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends, and on a fund's ability to exchange local currencies for U.S.
dollars; (7) political instability and social unrest and violence; (8) the risk
that the governments of Russia and Eastern European countries may decide not to
continue to support the economic reform programs implemented recently and could
follow radically different political and/or economic policies to the detriment
of investors, including non-market-oriented policies such as the support of
certain industries at the expense of other sectors or investors, or a return to
the centrally planned economy that existed when such countries had a communist
form of government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING JAPAN. Japan's economic growth has declined
significantly since 1990. The general government position has deteriorated as a
result of weakening economic growth and stimulative measures taken to support
economic activity and to restore financial stability. Although the decline in
interest rates and fiscal stimulation packages have helped to contain
recessionary forces, uncertainties remain. Japan is also heavily dependent upon
international trade, so its economy is especially sensitive to trade barriers
and disputes. Japan has had difficult relations with its trading partners,
particularly the United States, where the trade imbalance is the greatest. It is
possible that trade sanctions and other protectionist measures could impact
Japan adversely in both the short and the long term.
The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially in the U.S. In general, however, reported net income in Japan is
understated relative to U.S. accounting standards and this is one reason why
price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the U.S., both of
which factors tend to result in lower discount rates and higher price-earnings
ratios in Japan than in the U.S.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are not always equally
enforced. In addition, Japan's banking industry is undergoing problems related
to bad loans and declining values in real estate.
SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies of Pacific
region countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made periodically in certain of such
currencies. Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also
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exist between South Korea and North Korea. In addition, the Funds may invest in
Hong Kong, which reverted to Chinese Administration on July 1, 1997. Investments
in Hong Kong may be subject to expropriation, national, nationalization or
confiscation, in which case a Fund could lose its entire investment in Hong
Kong. In addition, the reversion of Hong Kong also presents a risk that the Hong
Kong dollar will be devalued and a risk of possible loss of investor confidence
in Hong Kong's currency, stock market and assets.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. The Strategic Income
Fund, the Growth & Income Fund and the Portfolio may invest in debt securities
in emerging markets. Investing in securities in emerging countries may entail
greater risks than investing in debt securities in developed countries.
Similarly, for Growth & Income Fund, investing in the equity securities of
companies in emerging markets entails additional risks. These risks affecting
debt and equity investments in emerging markets include (i) less social,
political and economic stability; (ii) the small current size of the markets for
such securities and the currently low or nonexistent volume of trading, which
result in a lack of liquidity and in greater price volatility; (iii) certain
national policies which may restrict the Funds' and the Portfolio's investment
opportunities, including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) foreign taxation; and (v) the
absence of developed structures governing private or foreign investment or
allowing for judicial redress for injury to private property.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.
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INVESTMENT LIMITATIONS
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Each Fund and the Portfolio has adopted the following investment limitations as
fundamental policies which may not be changed without approval by the holders of
a majority of the outstanding shares of the Fund or Portfolio, as applicable.
Whenever the High Income Fund is requested to vote on a change in the investment
limitations of the Portfolio, the Fund will hold a meeting of its shareholders
and will cast its votes as instructed by its shareholders.
GOVERNMENT INCOME FUND
The Government Income Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-based
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies of the Government Income Fund are not
fundamental policies and may be changed by vote of the Company's Board of
Trustees without shareholder approval. The Fund may not:
(1) Borrow money to purchase securities or borrow money except for
temporary or emergency purposes. While borrowings exceed 5% of the Fund's
total assets, the Fund will not make any additional investments;
(2) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
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(3) Purchase securities on margin, provided that the Fund may obtain
short-term credits as may be necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments;
(4) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts;
(5) Purchase securities for which there is no readily available market,
or enter into repurchase agreements or purchase time deposits maturing in
more than seven days, or purchase OTC options or hold assets set aside to
cover OTC options written by the Fund, if immediately after and as a result,
the value of such securities would exceed, in the aggregate, 15% of the
Fund's net assets; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
STRATEGIC INCOME FUND
The Strategic Income Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-based
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
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AIM GLOBAL GROWTH & INCOME FUND
The following investment policies of the Strategic Income Fund are not
fundamental policies and may be changed by vote of the Company's Board of
Trustees without shareholder approval. The Fund may not:
(1) Invest more than 15% of its total assets in illiquid securities;
(2) Borrow money to purchase securities and will not invest in
securities of an issuer if the investment would cause the Fund to own more
than 10% of any class of securities of any one issuer (provided, however,
that the Fund may invest all of its investable assets in an open-end
management investment company with substantially the same investment
objectives, policies, and limitations as the Fund.);
(3) Invest more than 10% of its total assets in shares of other
investment companies and invest more than 5% of its total assets in any one
investment company or acquire more than 3% of the outstanding voting
securities of any one investment company (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives, policies, and
limitations as the Fund);
(4) Purchase securities on margin, provided that the Fund may obtain
short-term credits as may be necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments;
(5) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts;
or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
HIGH INCOME FUND AND THE PORTFOLIO
The High Income Fund and the Portfolio each may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-based
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(5) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan; or
(6) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes.
Statement of Additional Information Page 26
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
For purposes of the Fund's and the Portfolio's concentration policy contained in
limitation (1) above, they intend to comply with the SEC staff positions that
securities issued or guaranteed as to principal and interest by any single
foreign government or any supranational organizations in the aggregate are
considered to be securities of issuers in the same industry.
The following investment policies of the High Income Fund and the Portfolio are
not fundamental policies and may be changed by vote of the Trust's or the
Portfolio's Board of Trustees without shareholder approval. The Fund and the
Portfolio each may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund or the Portfolio to own more than 10% of any class of securities of any
one issuer (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(2) Invest in companies for the purpose of exercising control or
management (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(3) Enter into a futures contract, an option on a futures contract or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for BONA FIDE hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's or the Portfolio's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund or the Portfolio has entered into;
(4) Invest more than 10% of its total assets in shares of other
investment companies and invest more than 5% of its total assets in any one
investment company or acquire more than 3% of the outstanding voting
securities of any one investment company (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives as the Fund);
(5) Purchase securities on margin, provided that the Fund may obtain
short-term credits as may be necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
GROWTH & INCOME FUND
Growth & Income Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-based
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
Statement of Additional Information Page 27
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 3/4% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial operations and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Growth & Income Fund are not fundamental
policies and may be changed by vote of the Company's Board of Trustees without
shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(3) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(4) Borrow money except for temporary or emergency purposes (other than
to meet redemptions). While borrowings exceed 5% of the Fund's total assets,
the Fund will not make any additional investments;
(5) Purchase securities on margin, provided that the Fund may obtain
short-term credits as may be necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments;
(6) Purchase securities for which there is no readily available market,
or enter into repurchase agreements or purchase time deposits maturing in
more than seven days, or purchase OTC options or hold assets set aside to
cover OTC options written by the Fund, if immediately after and as a result,
the value of such securities would exceed, in the aggregate, 15% of the
Fund's net assets; or
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Investors should refer to each Fund's Prospectus for further information about
each Fund's respective investment objectives, which may not be changed without
the approval of shareholders and the Portfolio's investment objectives, which
may be changed without the approval of investors in the Portfolio, and other
investment policies and techniques, which may be changed without shareholder
approval.
Statement of Additional Information Page 28
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Trust's and the Portfolio's Board of
Trustees, the Sub-adviser is responsible for the execution of the Government
Income Fund's, the Strategic Income Fund's, the Growth & Income Fund's and the
Portfolio's portfolio transactions and the selection of broker/dealers that
execute such transactions on behalf of these Funds and the Portfolio. In
executing transactions, the Sub-adviser seeks the best net results for the
Government Income Fund, the Strategic Income Fund, the Growth & Income Fund and
the Portfolio, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although the
Sub-adviser generally seeks reasonably competitive commission rates and spreads,
payment of the lowest commission or spread is not necessarily consistent with
the best net results. While the Funds and the Portfolio may engage in soft
dollar arrangements for research services, as described below, neither the Funds
nor the Portfolio has any obligation to deal with any broker/dealer or group of
broker/dealers in the execution of portfolio transactions.
Debt securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
government securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions.
Consistent with the interests of the Funds and the Portfolio, the Sub-adviser
may select brokers to execute the Funds' and the Portfolio's portfolio
transactions on the basis of the research and brokerage services they provide to
the Sub-adviser for its use in managing the Funds and the Portfolio and its
other advisory accounts. Such services may include furnishing analyses, reports
and information concerning issuers, industries, securities, geographic regions,
economic factors and trends, portfolio strategy, and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Research and brokerage services
received from such brokers are in addition to, and not in lieu of, the services
required to be performed by the Sub-adviser under investment management and
administration contracts. A commission paid to such brokers may be higher than
that which another qualified broker would have charged for effecting the same
transaction, provided that the Sub-adviser determines in good faith that such
commission is reasonable in terms either of that particular transaction or the
overall responsibility of the Sub-adviser to the Funds and the Portfolio and its
other clients and that the total commissions paid by the Funds and the Portfolio
will be reasonable in relation to the benefits received by the Funds and the
Portfolio over the long term. Research services may also be received from
dealers who execute Fund transactions in OTC markets.
The Sub-adviser may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Funds or the Portfolio toward payment of the Funds'
or the Portfolio's expenses, such as transfer agent and custodian fees.
Investment decisions for each Fund and the Portfolio and for other investment
accounts managed by the Sub-adviser are made independently of each other in
light of differing conditions. However, the same investment decision
occasionally may be made for two or more of such accounts, including one or both
Funds and the Portfolio. In such cases, simultaneous transactions may occur.
Purchases or sales are then allocated as to price or amount in a manner deemed
fair and equitable to all accounts involved. While in some cases this practice
could have a detrimental effect upon the price or value of the security as far
as the Funds and the Portfolio are concerned, in other cases the Sub-adviser
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Funds and the Portfolio.
Under a policy adopted by the Trust's and the Portfolio's Board of Trustees, and
subject to the policy of obtaining the best net results, the Sub-adviser may
consider a broker/dealer's sale of the shares of the Funds and the other funds
for which AIM or the Sub-adviser serves as investment manager in selecting
brokers and dealers for the execution of portfolio
Statement of Additional Information Page 29
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Funds and such
other funds.
Each Fund and the Portfolio contemplates purchasing most foreign equity
securities in over-the-counter markets or stock exchanges located in the
countries in which the respective principal offices of the issuers of the
various securities are located, if that is the best available market. The fixed
commissions paid in connection with most such foreign stock transactions
generally are higher than negotiated commissions on United States transactions.
There generally is less government supervision and regulation of foreign stock
exchanges and brokers than in the United States. Foreign security settlements
may in some instances be subject to delays and related administrative
uncertainties.
Foreign equity securities may be held by a Fund and the Portfolio in the form of
American Depository Receipts ("ADRs"), American Depository Shares ("ADSs"),
Continental Depository Receipts ("CDRs") or European Depository Receipts
("EDRs") or securities convertible into foreign equity securities. ADRs, ADSs,
CDRs and EDRs may be listed on stock exchanges, or traded in the OTC markets in
the United States or Europe, as the case may be. ADRs, like other securities
traded in the United States, will be subject to negotiated commission rates. The
foreign and domestic debt securities and money market instruments in which the
Funds and the Portfolio may invest generally are traded in the OTC markets.
The Funds and the Portfolio contemplate that, consistent with the policy of
obtaining the best net results, brokerage transactions may be conducted through
certain companies that are affiliates of AIM and the Sub-adviser. The Company's
Board of Trustees has adopted procedures in conformity with Rule 17e-1 under the
1940 Act to ensure that all brokerage commissions paid to such affiliates are
reasonable and fair in the context of the market in which they are operating.
Any such transactions will be effected and related compensation paid only in
accordance with applicable SEC regulations. For the fiscal years ended October
31, 1997, 1996 and 1995, the Portfolio paid aggregate brokerage commissions of
$0, $86,600 and $0, respectively. For the fiscal years ended October 31, 1997,
1996 and 1995, the Government Income Fund paid aggregate brokerage commissions
of $4,987, $24,663 and $0, respectively. For the fiscal years ended October 31,
1997, 1996 and 1995, the Strategic Income Fund paid aggregate brokerage
commissions of $6,177, $85,404 and $0, respectively. For the fiscal years ended
October 31, 1997, 1996, and 1995, the Growth & Income Fund paid aggregate
brokerage commissions of $463,307, $257,953 and $318,958, respectively. For the
fiscal years ended October 31, 1996 and 1997, the Growth & Income Fund paid to
LGT Bank in Liechtenstein, AG, which was an "affiliated" broker, aggregate
brokerage commissions of $16,898 and $12,262, respectively, for transactions
involving purchases and sales of portfolio securities which represented 6.55%
and 2.65%, respectively, of the total brokerage commissions paid by the Fund and
5.69% and 2.94%, respectively, of the aggregate dollar amount of transactions
involving payment of commissions by the Fund.
PORTFOLIO TRADING AND TURNOVER
Each Fund and the Portfolio engages in portfolio trading when the Sub-adviser
concludes that the sale of a security owned by a Fund and the Portfolio and/or
the purchase of another security of better value can enhance principal and/or
increase income. A security may be sold to avoid any prospective decline in
market value, or a security may be purchased in anticipation of a market rise.
Consistent with each Fund's and the Portfolio's investment objectives, a
security also may be sold and a comparable security purchased coincidentally in
order to take advantage of what is believed to be a disparity in the normal
yield and price relationship between the two securities. Although the Funds and
the Portfolio generally do not intend to trade for short-term profits, the
securities in each Fund's and the Portfolio's portfolio will be sold whenever
the Sub-adviser believes it is appropriate to do so, without regard to the
length of time a particular security may have been held. Portfolio turnover is
calculated by dividing the lesser of sales or purchases of portfolio securities
by each Fund's or the Portfolio's average month-end portfolio value, excluding
short-term investments. Higher portfolio turnover involves correspondingly
greater brokerage commissions and other transaction costs that a Fund or the
Portfolio will bear directly, and could result in the realization of net capital
gains that would be taxable when distributed to shareholders. The portfolio
turnover rates for the Government Income Fund, Strategic Income Fund, Growth &
Income Fund and the Portfolio the last two fiscal years were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCT. 31, 1997 OCT. 31, 1996
--------------- ---------------
<S> <C> <C>
Government Income Fund...................................................................... 241% 268%
Strategic Income Fund....................................................................... 149% 177%
High Income Portfolio....................................................................... 214% 290%
Growth & Income Fund........................................................................ 50% 39%
</TABLE>
Statement of Additional Information Page 30
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
TRUSTEES AND
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Trust and the Portfolio's Trustees and Executive Officers are listed below.
Unless otherwise indicated, the address of each Executive Officer is 11 Greenway
Plaza, Suite 100, Houston, Texas 77046.
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 40 President, GT Global, Inc. since 1995; Director, GT Global since 1991; Senior
Trustee, Chairman of the Board and President Vice President and Director of Sales and Marketing, GT Global from May 1992 to
50 California Street April 1995; Vice President and Director of Marketing, GT Global from 1987 to
San Francisco, CA 94111 1992; Director, Liechtenstein Global Trust AG (holding company of the various
international GT companies) Advisory Board from January 1996 to May 1998;
Director, G.T. Global Insurance Agency ("G.T. Insurance") since 1996; President
and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
and Director, Sales and Marketing, G.T. Insurance from April 1995 to November
1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992 to 1993;
and Trustee, each of the other investment companies registered under the 1940
Act that is sub-advised or sub-administered by the Sub-adviser.
C. Derek Anderson, 57 President, Plantagenet Capital Management, LLC (an investment partnership);
Trustee Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director,
Suite 400 PremiumWear, Inc. (formerly Munsingwear, Inc.) (a casual apparel company);
San Francisco, CA 94104 Director, "R" Homes, Inc. and various other companies; and Trustee, each of the
other investment companies registered under the 1940 Act that is sub-advised or
sub-administered by the Sub-adviser.
Frank S. Bayley, 58 Partner, law firm of Baker & McKenzie; Director and Chairman, C.D. Stimson
Trustee Company (a private investment company); and Trustee, each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is sub-advised or sub-
Suite 2400 administered by the Sub-adviser.
San Francisco, CA 94111
Arthur C. Patterson, 54 Managing Partner, Accel Partners (a venture capital firm); Director, Viasoft and
Trustee PageMart, Inc. (both public software companies) and several other privately held
428 University Avenue software and communications companies; and Trustee, each of the other investment
Palo Alto, CA 94301 companies registered under the 1940 Act that is sub-advised or sub-administered
by the Sub-adviser.
Ruth H. Quigley, 63 Private investor; President, Quigley Friedlander & Co., Inc. (a financial
Trustee advisory services firm) from 1984 to 1986; and Trustee, each of the other
1055 California Street investment companies registered under the 1940 Act that is sub-advised or sub-
San Francisco, CA 94108 administered by the Sub-adviser.
</TABLE>
- --------------
* Mr. Guilfoyle is an "interested person" of the Trust as defined by the 1940
Act due to his affiliation with the Sub-adviser.
Statement of Additional Information Page 31
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
TRUST/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
John J. Arthur+, 53 Director, Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice
Vice President President and Treasurer, A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company.
Kenneth W. Chancey, 53 Senior Vice President -- Mutual Fund Accounting, the Sub-adviser since 1997;
Vice President and Principal Accounting Vice President -- Mutual Fund Accounting, the Sub-adviser from 1992 to 1997.
Officer
50 California Street
San Francisco, CA 94111
Melville B. Cox, 54 Vice President and Chief Compliance Officer, A I M Advisors, Inc., A I M Capital
Vice President Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund
Management Company.
Gary T. Crum, 50 Director and President, A I M Capital Management, Inc.; Director and Senior Vice
Vice President President, A I M Management Group Inc. and A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP PLC.
Robert H Graham, 51 Director, President and Chief Executive Officer, A I M Management Group Inc.;
Vice President Director and President, A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company; and Director, AMVESCAP PLC.
Helge K. Lee, 52 Chief Legal and Compliance Officer -- North America, the Sub-adviser since
Vice President October 1997; Secretary and Chief Legal and Compliance Officer, INVESCO (NY)
50 California Street Asset Management, Inc., INVESCO (NY), Inc., GT Global Investor Services, Inc.
San Francisco, CA 94111 and G.T. Insurance since August 1997; Secretary and Chief Legal and Compliance
Officer, GT Global from August 1997 to April 1998; Executive Vice President of
the Asset Management Division of Liechtenstein Global Trust AG, from October
1996 to May 1998; Senior Vice President, General Counsel and Secretary of
INVESCO (NY) Asset Management, Inc., INVESCO (NY), Inc., GT Global, GT Global
Investor Services, Inc. and G.T. Insurance from May 1994 to October 1996; and
Senior Vice President, General Counsel and Secretary of Strong/Corneliuson
Management, Inc. and Secretary of each of the Strong Funds from October 1991 to
May 1994.
Carol F. Relihan+, 43 Director, Senior Vice President, General Counsel and Secretary, A I M Advisors,
Vice President Inc.; Vice President, General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel, Fund Management Company;
Vice President and General Counsel, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and A I M Distributors, Inc.
Dana R. Sutton, 39 Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice
Vice President and Assistant President and Assistant Treasurer, Fund Management Company.
Treasurer
</TABLE>
- ------------------
+ Mr. Arthur and Ms. Relihan are married to each other.
Statement of Additional Information Page 32
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The Board of Trustees has a Nominating and Audit Committee, composed of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and its
funds and recommending firms to serve as independent auditors of the Trust. Each
of the Trustees and Officers of the Trust is also a Trustee and Officer of AIM
Investment Portfolios, AIM Floating Rate Fund, AIM Series Trust, AIM Growth
Series, AIM Eastern Europe Fund, GT Global Variable Investment Trust, GT Global
Variable Investment Series, Global Investment Portfolio, Floating Rate Portfolio
and Growth Portfolio, which also are registered investment companies advised by
AIM and sub-advised by the Sub-adviser. All of the Trust's Trustees also serve
as directors or trustees of some or all of the other investment companies
managed, administered or advised by AIM. All of the Trust's executive officers
held similar offices with some or all of the other investment companies managed,
administered or advised by AIM. Each Trustee who is not a trustee, officer or
employee of the Sub-adviser or any affiliated company is paid aggregate fees of
$5,000 a year, plus $300 per Fund for each meeting of the Board attended, and
reimbursed travel and other expenses incurred in connection with attendance at
such meetings. Other Trustees and Officers receive no compensation or expense
reimbursement from the Trust. For the fiscal year ended October 31, 1997, Mr.
Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not trustees,
officers, or employees of the Sub-adviser or any affiliated company, received
total compensation of $38,650, $38,650, $27,850 and $38,650, respectively, from
the Trust for their services as Trustees. For the fiscal year ended October 31,
1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not
trustees, officers or employees of the Sub-adviser or any other affiliated
company, received total compensation of $117,304, $114,386, $88,350 and
$111,688, respectively, from the investment companies managed or administered by
AIM and sub-advised or sub-advised by the Sub-adviser for which he or she serves
as a Trustee. Fees and expenses disbursed to the Trustees contained no accrued
or payable pension or retirement benefits. As of June 26, 1998, the Officers and
Trustees and their families as a group owned in the aggregate beneficially or of
record less than 1% of the outstanding shares of the Funds or of all the Trust's
series in the aggregate.
Statement of Additional Information Page 33
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
CONTROL PERSONS AND PRINCIPAL HOLDERS
OF SECURITIES
- --------------------------------------------------------------------------------
To the best knowledge of the Trust, the names and addresses of the holders of 5%
or more of the outstanding shares of any class of each Fund's equity securities
as of June 26, 1998, and the percentage of the outstanding shares held by such
holders are set forth below:
<TABLE>
<CAPTION>
PERCENT
OWNED OF
PERCENT RECORD
OWNED OF AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- -------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Government Income Fund -- Advisor Class G.T. Capital Holdings, Inc. 15.24% -0-
SERP II FBO
Account 326-38-5445 P-S
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) FBO 13.37% -0-
Account 326-38-5445
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) FBO 10.05% -0-
Account 545914793
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
Strategic Income Fund -- Advisor Class G.T. Capital Holdings, Inc. 401(k) FBO 5.16% -0-
Account 105341352
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
NFSC FEBO # AEL-841692 5.07% -0-
NFSC/FMTC IRA
FBO Frances M. Resca
31 Louise Road
Braintree, Massachusetts 02184-5901
High Income Fund -- Advisor Class G.T. Capital Holdings, Inc. 23.28% -0-
SERP Deferred Compensation
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Ellen Hoke
IBAK & Co. 15.53% -0-
P.O. Box 1700
102 South Clinton
Iowa City, Iowa 52240-4024
Growth & Income Fund -- Advisor Class G.T. Capital Holdings, Inc. 26.97% -0-
SERP Deferred Compensation
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Ellen Hoke
</TABLE>
- --------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
Statement of Additional Information Page 34
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
AIM serves as the Government Income Fund's, the Strategic Income Fund's and the
Growth & Income Fund's investment manager and administrator under an investment
management and administration contract between the Trust and AIM ("Trust
Management Contract"). The Sub-adviser serves as the Portfolio's sub-adviser and
sub-administrator under a sub-advisory and sub-administration Agreement between
AIM and the Sub-adviser ("Portfolio Management Sub-Contract," and together with
the Portfolio Management Contract, the "Portfolio Management Contracts"). AIM
serves as the Portfolio's investment manager and administrator under an
Investment Management and Administration Contract between the Portfolio and AIM
("Portfolio Management Contract") (collectively, "Management Contracts"). The
Sub-adviser serves as sub-administrator to each Feeder Fund under a
sub-administration contract between AIM and the Sub-adviser ("Administration
Sub-Contract," and together with the Administration Contract, the
"Administration Contracts"). AIM serves as the High Income Fund's administrator
under an Administration Contract ("Administration Contract") between the Trust
and AIM. The Sub-adviser serves as the sub-adviser and sub-administrator to the
Government Income Fund, the Strategic Income Fund and the Growth & Income Fund
under a sub-advisory and sub-administration Contract between AIM and the
Sub-adviser ("Sub-Management Contract," and together with the Management
Contract, the "Management Contracts"). The Administration Contracts will not be
deemed advisory contracts, as defined under the 1940 Act. As investment managers
and administrators, AIM and the Sub-adviser make all investment decisions for
the Government Income Fund, the Strategic Income Fund, the Growth & Income Fund
and the Portfolio and as administrators, AIM and the Sub-adviser administer each
Fund's and the Portfolio's affairs. Among other things, AIM and the Sub-adviser
furnish the services and pay the compensation and travel expenses of persons who
perform the executive, administrative, clerical and bookkeeping functions of the
Trust, the Funds, and the Portfolio and provide suitable office space, necessary
small office equipment and utilities.
The Management Contracts may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Trust's or the Portfolio's Board of Trustees, as applicable, or by the vote of a
majority of the Fund's or the Portfolio's outstanding voting securities (as
defined in the 1940 Act), and (ii) a majority of Trustees who are not parties to
the Management Contracts or the Administration Contracts or "interested persons"
of any such party (as defined in the 1940 Act), cast in person at a meeting
called for the specific purpose of voting on such approval. The Management
Contracts provide that with respect to the Government Income Fund, the Strategic
Income Fund, the Growth & Income Fund and the Portfolio, and the Administration
Contracts provide that with respect to the High Income Fund, either the Trust,
the Portfolio or each of AIM or the Sub-adviser may terminate the Contracts
without penalty upon sixty days' written notice to the other party. The
Management Contracts and the Administration Contracts terminate automatically in
the event of their assignment (as defined in the 1940 Act).
In each of the last three fiscal years the Government Income Fund paid
investment management and administration fees to the Sub-adviser in the
following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 2,403,043
1996....................................................................................................... 3,672,503
1995....................................................................................................... 4,946,971
</TABLE>
Statement of Additional Information Page 35
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
In each of the last three fiscal years the Strategic Income Fund paid investment
management and administration fees to the Sub-adviser in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 3,474,804
1996....................................................................................................... 3,807,689
1995....................................................................................................... 4,293,053
</TABLE>
In each of the last three fiscal years the Growth & Income Fund paid investment
management and administration fees to the Sub-adviser in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 6,900,695
1996....................................................................................................... 6,282,438
1995....................................................................................................... 6,301,399
</TABLE>
In each of the last three fiscal years the High Income Portfolio paid investment
management and administration fees to the Sub-adviser in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 2,971,167
1996....................................................................................................... 3,014,924
1995....................................................................................................... 2,411,786
</TABLE>
In each of the last three fiscal years the High Income Fund paid administration
fees to the Sub-adviser in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 1,136,471
1996....................................................................................................... 1,015,220
1995....................................................................................................... 860,884
</TABLE>
DISTRIBUTION SERVICES
Each Fund's Advisor Class shares are offered continuously through each Fund's
principal underwriter and distributor, AIM Distributors, on a "best efforts"
basis pursuant to a distribution contract between the Trust and AIM Distributors
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agency and Service Agreement between the Trust and A I M Fund
Services, Inc. ("AFS"), a registered transfer agent and wholly-owned subsidiary
of AIM, provides that AFS will perform certain shareholder services for the
Funds for a fee per account serviced. The Transfer Agency and Service Agreement
provides that AFS will receive a per account fee plus out-of-pocket expenses to
process orders for purchases, redemptions and exchanges of shares; prepare and
transmit payments for dividends and distributions declared by the Funds;
maintain shareholder accounts and provide shareholders with information
regarding the Funds and their accounts. The Transfer Agency and Service
Agreement became effective on September 8, 1998. The Sub-adviser also serves as
each Fund's pricing and accounting agent. As of October 31, 1997, October 31,
1996 and October 31, 1995, the Fund paid accounting services fees to the
Sub-adviser of Government Income Fund, Strategic Income Fund, High Income Fund
and Growth & Income Fund of $85,149, $127,205, $40,218 and $183,323; $123,309,
$131,517, $34,980 and $162,035; and $116,607, $101,697, $22,563 and $40,735,
respectively.
EXPENSES OF THE FUNDS AND THE PORTFOLIO
Each Fund and the Portfolio pays all expenses not assumed by AIM, the
Sub-adviser, AIM Distributors and other agents. These expenses include, in
addition to the advisory, distribution, transfer agency, pricing and accounting
agent and brokerage fees discussed above, legal and audit expenses, custodian
fees, trustees' fees, organizational fees, fidelity bond and other insurance
premiums, taxes, extraordinary expenses and the expenses of reports and
prospectuses sent to existing investors. The allocation of general Company
expenses and expenses shared by the Funds and other funds organized as series of
the Trust are allocated on a basis deemed fair and equitable, which may be based
on the relative net assets of the Funds or the nature of the services performed
and relative applicability to each Fund. Expenditures, including costs incurred
in connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and
Statement of Additional Information Page 36
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
not as expenses. The ratio of each Fund's and the Portfolio's expenses to its
relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
each Fund and the Portfolio generally are higher than the comparable expenses of
such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
The net asset value per share of each Fund and Portfolio is normally determined
daily as of the close of trading of the New York Stock Exchange ("NYSE")
(generally 4:00 p.m. Eastern time) on each business day of the Fund and
Portfolio. 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 or Portfolio is
determined as of the close of the NYSE on such day. Net asset value per share is
determined by dividing the value of a Fund's or the Portfolio's securities, cash
and other assets (including interest accrued but not collected) attributable to
a particular class, less all its liabilities (including accrued expenses and
dividends payable) attributable to that class, by the total number of shares
outstanding of that class. Determination of a Fund's or the Portfolio's net
asset value per share is made in accordance with generally accepted accounting
principles.
Each equity security is valued at its last sales price on the exchange where the
security is principally traded or, lacking any sales on a particular day, the
security is valued at the mean between the closing bid and asked prices on that
day. Each security traded in the over-the-counter market (but not including
securities reported on the NASDAQ National Market System) is valued at the mean
between the last bid and asked prices based upon quotes furnished by market
makers for such securities. Each security reported on the NASDAQ National Market
System is valued at the last sales price on the valuation date or absent a last
sales price, at the mean between the closing bid and asked prices on that day.
Debt securities are valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate factors
such as institution-size trading in similar groups of securities, developments
related to special securities, yield, quality, coupon rate, maturity, type of
issue, individual trading characteristics and other market data. Securities for
which market quotations are not readily available or are questionable are valued
at fair value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued on the
basis of amortized cost. For purposes of determining net asset value per share,
futures and options contracts generally will be valued 15 minutes after the
close of trading of the NYSE.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of each Fund's or Portfolio's shares are
determined at such times. Foreign currency exchange rates are also generally
determined prior the close of the NYSE. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the times at
which such values are determined and the close of the NYSE which will not be
reflected in the computation of a Fund's or Portfolio's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as determined
in good faith by or under the supervision of the Board of Trustees of the Fund.
Statement of Additional Information Page 37
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
HOW TO PURCHASE AND REDEEM SHARES
- --------------------------------------------------------------------------------
A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
For purposes of a Letter of Intent entered into prior to June 1, 1998, any
registered investment adviser, trust company or bank trust department which
exercises investment discretion and which intends within thirteen months to
invest $500,000 or more can be treated as a single purchaser, provided further
that such entity places all purchases and redemption orders. Such entities
should be prepared to establish their qualifications for such treatment.
Complete information concerning the method of exchanging shares of the Funds for
shares of the other AIM Funds is set forth in the Prospectuses under the heading
"Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "How to Redeem Shares." 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 Funds at (800) 959-4246 and guarantee delivery of all
required documents in good order. A repurchase is effected at the net asset
value per share of the applicable Fund next determined after the repurchase
order is received. Such an arrangement is subject to timely receipt by A I M
Fund Services, Inc., the Funds' transfer agent, of all required documents in
good order. If such documents are not received within a reasonable time after
the order is placed, the order is subject to cancellation. While there is no
charge imposed by a Fund or by AIM Distributors (other than any applicable
contingent deferred sales charge) 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 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.
PROGRAMS AND SERVICES FOR SHAREHOLDERS. The Funds provide certain services for
shareholders and certain investment or redemption programs. See "Exchange
Privilege" and "How to Redeem Shares" in the Prospectus. All inquiries
concerning these programs should be made directly to A I M Fund Services, Inc.,
P.O. Box 4739, Houston, Texas 77210-4739, toll free at (800) 959-4246.
DIVIDEND ORDER. Dividends may be paid to someone other than the registered
owner, or sent to an address other than the address of record. (Please note that
signature guarantees are required to effect this option.) An investor also may
direct that his or her dividends be invested in one of the other A I M Funds and
there is no sales charge for these investments; initial investment minimums
apply. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions" in the Prospectus. To effect this option, please contact your
authorized dealer. For more information concerning AIM Funds other than the
Funds, please obtain a current prospectus by contacting your authorized dealer,
by writing to A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas
77210-4739, or by calling toll free (800) 959-4246.
Statement of Additional Information Page 38
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
To continue to qualify for treatment as a regulated investment company ("RIC")
under the Code, each Fund must distribute to its shareholders for each taxable
year at least 90% of its investment company taxable income (consisting generally
of net investment income, net short-term capital gain and net gains from certain
foreign currency transactions) ("Distribution Requirement") and must meet
several additional requirements. With respect to each Fund, these requirements
include the following: (1) the Fund must derive at least 90% of its gross income
each taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. government securities, securities of
other RICs and other securities, with these other securities limited, in respect
of any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets and that does not represent more than 10% of the issuer's
outstanding voting securities; and (3) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its total assets may be
invested in securities (other than U.S. government securities or the securities
of other RICs) of any one issuer. The High Income Fund, as an investor in the
Portfolio, is deemed to own a proportionate share of the Portfolio's assets, and
to earn a proportionate share of the Portfolio's income, for purposes of
determining whether that Fund satisfies the requirements described above to
qualify as a RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See "Taxation of Certain Investment Activities" below for a discussion of the
tax consequences to the High Income Fund of hedging transactions engaged in, and
investments in passive foreign investment companies ("PFICs") and other foreign
securities by, the Portfolio.
TAXATION OF THE PORTFOLIO -- GENERAL
The Portfolio is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership." As a result, the Portfolio is not subject
to federal income tax; instead, the High Income Fund, as an investor in the
Portfolio, is required to take into account in determining its federal income
tax liability its share of the Portfolio's income, gains, losses, deductions and
credits, without regard to whether it has received any cash distributions from
the Portfolio. The Portfolio also is not subject to Delaware income or franchise
tax.
Because, as noted above, the High Income Fund is deemed to own a proportionate
share of the Portfolio's assets, and to earn a proportionate share of the
Portfolio's income, for purposes of determining whether that Fund satisfies the
requirements to qualify as a RIC, the Portfolio intends to conduct its
operations so that the High Income Fund will be able to continue to satisfy all
those requirements.
Distributions to the High Income Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in that Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds that
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of that
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. The High Income Fund's basis for its interest in the
Portfolio generally will equal the amount of cash and the basis of any property
that Fund invests in the Portfolio, increased by that Fund's share of the
Portfolio's net income and gains and decreased by (a) the amount of cash and the
basis of any property the Portfolio distributes to that Fund and (b) that Fund's
share of the Portfolio's losses.
Statement of Additional Information Page 39
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
TAXATION OF CERTAIN INVESTMENT ACTIVITIES
For purposes of the following discussion, "Investor Funds" means the Government
Income Fund, the Strategic Income Fund, the Growth & Income Fund and the
Portfolio.
FOREIGN TAXES. Interest and dividends received by an Investor Fund, and
gains realized thereby, may be subject to income, withholding or other taxes
imposed by foreign countries and U.S. possessions ("foreign taxes") that would
reduce the yield and/or total return on its securities. Tax conventions between
certain countries and the United States may reduce or eliminate foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of an
Investor Fund's total assets (taking into account, in the case of the High
Income Fund, its proportionate share of the Portfolio's assets) at the close of
its taxable year consists of securities of foreign corporations, the Fund will
be eligible to, and may, file an election with the Internal Revenue Service that
will enable its shareholders, in effect, to receive the benefit of the foreign
tax credit with respect to any foreign taxes paid by it (taking into account, in
the case of the High Income Fund, its proportionate share of any foreign taxes
paid by the Portfolio) (a "Fund's foreign taxes"). Pursuant to the election, an
Investor Fund would treat those taxes as dividends paid to its shareholders and
each shareholder would be required to (1) include in gross income, and treat as
paid by him, his proportionate share of the Fund's foreign taxes, (2) treat his
share of those taxes and of any dividend paid by the Fund that represents its
income from foreign and U.S. possessions sources (taking into account, in the
case of the High Income Fund, its proportionate share of the Portfolio's income
from those sources) as his own income from those sources and (3) either deduct
the taxes deemed paid by him in computing his taxable income or, alternatively,
use the foregoing information in calculating the foreign tax credit against his
federal income tax. Each Investor Fund will report to its shareholders shortly
after each taxable year their respective shares of the Fund's foreign taxes and
income (taking into account, in the case of the High Income Fund, its
proportionate share of the Portfolio's income) from sources within foreign
countries and U.S. possessions if it makes this election. Pursuant to the
Taxpayer Relief Act of 1997 ("Tax Act"), individuals who have no more than $300
($600 for married persons filing jointly) of creditable foreign taxes included
on Form 1099 and all of whose foreign source income is "qualified passive
income" may elect each year to be exempt from the extremely complicated foreign
tax credit limitation and will be able to claim a foreign tax credit without
having to file the detailed Form 1116 that otherwise is required.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Investor Fund may invest in the
stock of PFICs. A PFIC is a foreign corporation -- other than a "controlled
foreign corporation" (I.E., a foreign corporation in which, on any day during
its taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly or constructively, at least 10% of that
voting power) as to which the Investor Fund is a U.S. shareholder (effective
with respect to each Investor Fund for its taxable year beginning November 1,
1998) -- that, in general, meets either of the following tests: (1) at least 75%
of its gross income is passive or (2) an average of at least 50% of its assets
produce, or are held for the production of, passive income. Under certain
circumstances, an Investor Fund will be subject to federal income tax on a part
(or, in the case of the High Income Fund, its proportionate share of a part) of
any "excess distribution" received by it (or, in the case of the High Income
Fund, by the Portfolio) on the stock of a PFIC or of any gain on the Fund's (or,
in the case of the High Income Fund, the Portfolio's) disposition of that stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent it
distributes that income to its shareholders.
If an Investor Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Investor Fund (or, in the case of the Portfolio, the
High Income Fund) would be required to include in income each year its pro rata
share (taking into account, in the case of the High Income Fund, its
proportionate share of the Portfolio's pro rata share) of the QEF's ordinary
earnings and net capital gain (I.E., the excess of net long-term capital gain
over net short-term capital loss) -- which most likely would have to be
distributed by the Investor Fund (or, in the case of the Portfolio, the High
Income Fund) to satisfy the Distribution Requirement and avoid imposition of the
Excise Tax -- even if those earnings and gain were not received thereby from the
QEF. In most instances it will be very difficult, if not impossible, to make
this election because of certain requirements thereof.
Effective for its taxable year beginning November 1, 1998, each Investor Fund
may elect to "mark to market" its stock in any PFIC. "Marking-to-market," in
this context, means including in ordinary income each taxable year the excess,
if any, of the fair market value of the stock over an Investor Fund's adjusted
basis therein as of the end of that year. Pursuant to
Statement of Additional Information Page 40
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
the election, an Investor Fund also will be allowed to deduct (as an ordinary,
not capital, loss) the excess, if any, of its adjusted basis in PFIC stock over
the fair market value thereof as of the taxable year-end, but only to the extent
of any net mark-to-market gains with respect to that stock included in income by
the Fund for prior taxable years. An Investor Fund's adjusted basis in each
PFIC's stock subject to the election will be adjusted to reflect the amounts of
income included and deductions taken thereunder. Regulations proposed in 1992
provided a similar election with respect to the stock of certain PFICs.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Investors Funds' use
of hedging transactions, such as selling (writing) and purchasing options and
Futures Contracts and entering into Forward Contracts, involves complex rules
that will determine, for federal income tax purposes, the amount, character and
timing of recognition of the gains and losses an Investor Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by an Investor Fund with respect
to its business of investing in securities or foreign currencies, will qualify
as permissible income under the Income Requirement for that Investor Fund (or,
in the case of the Portfolio, the High Income Fund).
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by an Investor Fund at the end of its taxable year
generally will be deemed to have been sold at that time at market value for
federal income tax purposes. Sixty percent of any net gain or loss recognized on
these deemed sales, and 60% of any net gain or loss realized from any actual
sales of Section 1256 Contracts, will be treated as long-term capital gain or
loss, and the balance will be treated as short-term capital gain or loss. That
60% portion will qualify for the reduced maximum tax rates on noncorporate
taxpayers' net capital gain enacted by the Tax Act -- 20% (10% for taxpayers in
the 15% marginal tax bracket) for gain recognized on capital assets held for
more than 18 months -- instead of the 28% rate in effect before that
legislation, which now applies to gain recognized on capital assets held for
more than one year but not more than 18 months.
Section 988 of the Code also may apply to gains and losses from transactions in
foreign currencies, foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains and
losses). Each Section 988 gain or loss generally is computed separately and
treated as ordinary income or loss. In the case of overlap between sections 1256
and 988, special provisions determine the character and timing of any income,
gain or loss. Each Investor Fund attempts to monitor section 988 transactions to
minimize any adverse tax impact.
If an Investor Fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, Futures or Forward Contract
or short sale) with respect to any stock, debt instrument (other than "straight
debt") or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Fund will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that time.
A constructive sale generally consists of a short sale, an offsetting notional
principal contract or Futures or Forward Contract entered into by an Investor
Fund or a related person with respect to the same or substantially similar
property. In addition, if the appreciated financial position is itself a short
sale or such a contract, acquisition of the underlying property or substantially
similar property will be deemed a constructive sale.
The Strategic Income Fund and the Portfolio each may acquire zero coupon or
other securities issued with original issue discount ("OID"). As a holder of
those securities, that Fund and the Portfolio (and, through it, the High Income
Fund) each must include in its income the portion of the OID that accrues on the
securities during the taxable year, even if no corresponding payment on them is
received during the year. Similarly, the Strategic Income Fund and the Portfolio
each must include in its gross income securities it receives as "interest" on
payment-in-kind securities. Because each Fund annually must distribute
substantially all of its investment company taxable income, including any OID
and other non-cash income, to satisfy the Distribution Requirement and avoid
imposition of the Excise Tax, the Strategic Income Fund or the High Income Fund,
or both, may be required in a particular year to distribute as a dividend an
amount that is greater than the total amount of cash it actually receives (or,
in the case of the High Income Fund, its share of the total amount of cash the
Portfolio actually receives). Those distributions will be made from the Fund's
(or, in the case of the High Income Fund, its, or its share of the Portfolio's)
cash assets or, if necessary, from the proceeds of sales of portfolio
securities. A Fund may (directly or through the Portfolio) realize capital gains
or losses from those sales, which would increase or decrease its investment
company taxable income and/or net capital gain.
Statement of Additional Information Page 41
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Growth & Income Fund's investment company
taxable income (whether paid in cash or reinvested in additional shares) may be
eligible for the dividends-received deduction allowed to corporations. The
eligible portion may not exceed the aggregate dividends received by that Fund
from U.S. corporations. However, dividends received by a corporate shareholder
and deducted by it pursuant to the dividends-received deduction are subject
indirectly to the federal alternative minimum tax. The Funds other than the
Growth & Income Fund are not expected to pay dividends eligible for that
deduction.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds, their shareholders and the Portfolio.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
AIM was organized in 1976, and along with its subsidiaries, manages or advises
approximately 90 investment company 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. AIM is the sole
shareholder of the Funds' principal underwriter, AIM Distributors. 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 that has a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 02110, acts as custodian of each Fund's and the Portfolio's assets.
State Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Funds and the Portfolio to be
held in separate accounts outside the United States in the custody of non-U.S.
banks.
INDEPENDENT ACCOUNTANTS
The Funds' and the Portfolio's independent accountants are ,
. conducts audits of each Fund's and the
Portfolio's financial statements, assists in the preparation of the Funds' and
the
Statement of Additional Information Page 42
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
Portfolio's federal and state income tax returns and consults with the Trust,
the Funds and the Portfolio as to matters of accounting, regulatory filings, and
federal and state income taxation.
The audited financial statements of the Funds and the Portfolio included in this
Statement of Additional Information have been examined by , as
stated in their opinion appearing herein and are included in reliance upon such
opinion given upon the authority of that firm as experts in accounting and
auditing.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations
extended to shareholders of private, for-profit corporations. There is a remote
possibility, however, that under certain circumstances shareholders of the Trust
may be held personally liable for the Trust's obligations. However, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or a trustee. The
Trust Agreement provides for indemnification from the Trust property for all
losses and expenses of any shareholder held personally liable for the Trust's
obligations. Thus, the risk of a shareholder incurring financial loss on account
of such liability is limited to circumstances in which the Trust itself would be
unable to meet its obligations and where the other party was held not to be
bound by the disclaimer.
NAMES
Prior to May 29, 1998, AIM Global High Income Fund operated under the name of GT
Global High Income Fund; AIM Strategic Income Fund operated under the name of GT
Global Strategic Income Fund; AIM Global Government Income Fund operated under
the name of GT Global Government Income Fund; and AIM Global Growth & Income
Fund operated under the name of GT Global Growth & Income Fund.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
P(1+T)to the power of n=ERV
<TABLE>
<S> <C> <C>
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable maximum sales load is deducted at
the beginning of the 1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the 1, 5, or 10
year periods (or fractional portions of such period).
</TABLE>
The standardized returns for the [Class A and] Advisor Class shares of the
Strategic Income Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC
INCOME INCOME
FUND FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ---------------------------------------- --------- ---------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997......... [4.21% 9.86%
October 31, 1992 through Oct. 31,
1997................................... 10.14% n/a
May 31, 1995 (commencement of
operations) through Oct. 31, 1997...... n/a 15.13%
March 29, 1988 (commencement of
operations) through Oct. 31, 1997...... 9.01% n/a]
</TABLE>
Statement of Additional Information Page 43
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The standardized returns for the [Class A and] Advisor Class shares of the
Government Income Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
GOVERNMENT GOVERNMENT
INCOME INCOME
FUND FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ---------------------------------------- ---------- ---------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997......... [(0.20)% 5.15%
Oct. 31, 1992 through Oct. 31, 1997..... 5.34% n/a
May 31, 1995 (commencement of
operations) through Oct. 31, 1997...... n/a 5.55%
March 29, 1988 (commencement of
operations) through Oct. 31, 1997...... 6.52% n/a]
</TABLE>
The standardized returns for the [Class A and] Advisor Class shares of the High
Income Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
HIGH HIGH
INCOME INCOME
FUND FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ---------------------------------------- --------- ---------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997......... [9.03% 14.72%
May 31, 1995 (commencement of
operations) through Oct. 31, 1997...... n/a 24.63%
Oct. 22, 1992 (commencement of
operations) through Oct. 31, 1997...... 15.85% n/a]
</TABLE>
The standardized returns for the [Class A and] Advisor Class shares of the
Growth & Income Fund, stated as average annualized total returns, for the
periods shown, were:
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND
INCOME FUND INCOME FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ------------------------------------------------------------------------------------------ --------------- -----------------
<S> <C> <C>
Fiscal year ended Oct. 31, 1997........................................................... [12.46% 19.23%
Oct. 31, 1992 through Oct. 31, 1997....................................................... 12.49% n/a
June 1, 1995 (commencement of operations) through Oct. 31, 1997........................... n/a 16.63%
Sept. 25, 1990 (commencement of operations) through Oct. 31, 1997......................... 11.82% n/a]
</TABLE>
NON-STANDARDIZED RETURNS
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
P(1+U)to the power of n=ERV
<TABLE>
<S> <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>
Cumulative total return across a stated period may be calculated as follows:
P(1+V)to the power of n=ERV
<TABLE>
<S> <C> <C>
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a stated portion of, or none of, the
applicable maximum sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the end of the stated period.
</TABLE>
Statement of Additional Information Page 44
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Strategic Income Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC
INCOME INCOME
FUND FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ---------------------------------------- --------- ---------------
<S> <C> <C>
May 31, 1995 (commencement of
operations) through Oct. 31, 1997...... [n/a 40.60%
March 29, 1988 (commencement of
operations) through Oct. 31, 1997...... 140.06% n/a]
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Government Income Fund, stated
as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
GOVERNMENT GOVERNMENT
INCOME INCOME
FUND FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ---------------------------------------- ---------- ---------------
<S> <C> <C>
May 31, 1995 (commencement of
operations) through Oct. 31, 1997...... [n/a 13.96%
March 29, 1988 (commencement of
operations) through Oct. 31, 1997...... 92.49% n/a]
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the High Income Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
HIGH HIGH
INCOME INCOME
FUND FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ---------------------------------------- --------- ---------------
<S> <C> <C>
May 31, 1995 (commencement of
operations) through Oct. 31, 1997...... [n/a 70.35%
Oct. 22, 1992 (commencement of
operations) through Oct. 31, 1997...... 119.88% n/a]
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Growth & Income Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND
INCOME FUND INCOME FUND
PERIOD (CLASS A) (ADVISOR CLASS)
- ------------------------------------------------------------------------------------------ --------------- -----------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through Oct. 31, 1997........................... [n/a 45.09%
Sept. 25, 1990 (commencement of operations) through Oct. 31, 1997......................... 133.95% n/a]
</TABLE>
YIELD QUOTATIONS
The standard formula for calculating yield for each Fund, as described in the
Prospectus, is as follows:
YIELD = 2[((a-b)/(cXd)+1)to the power of 6-1]
<TABLE>
<S> <C> <C>
Where a = dividends and interest earned during a stated 30-day period. For purposes of this
calculation, dividends are accrued rather than recorded on the ex-dividend date. Interest
earned under this formula must generally be calculated based on the yield to maturity of
each obligation (or, if more appropriate, based on yield to a call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during the period.
d = the maximum offering price per share on the last day of the period.
</TABLE>
The Yields of the Class A shares of the Strategic Income Fund, Government Income
Fund and the High Income Fund for the one-month period ended October 31, 1996
were [6.58%, 6.23% and 7.29%], respectively. The current yields of the Class B
shares of Strategic Income Fund, Government Income Fund and High Income Fund for
the one-month period ended October 31, 1996 were [6.23%, 5.87% and 7.00%],
respectively. The Yields of the Advisor Class shares of the Strategic Income
Fund, Government Income Fund and High Income Fund for the one-month period ended
October 31, 1996 were 7.27%, 6.74% and 8.04%, respectively.
PERFORMANCE INFORMATION
Total return and yield figures for the Funds are neither fixed nor guaranteed,
and no Fund's principal is insured. Performance quotations reflect historical
information and should not be considered representative of a Fund's performance
for any period in the future. Performance is a function of a number of factors
which can be expected to fluctuate. The Funds may provide performance
information in reports, sales literature and advertisements. The Funds may also,
from
Statement of Additional Information Page 45
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
time to time, quote information about the Funds published or aired by
publications or other media entities which contain articles or segments relating
to investment results or other data about one or more of the Funds. Such
publications or media entities may include the following, among others:
Advertising Age
Barron's
Best's Review
Broker World
Business Week
Changing Times
Christian Science Monitor
Consumer Reports
Economist
EuroMoney
FACS of the Week
Financial Planning
Financial Product News
Financial World
Forbes
Fortune
Global Finance
Hartford Courant Inc.
Institutional Investor
Insurance Forum
Insurance Week
Investor's Daily
Journal of the American
Society of CLU & ChFC
Kiplinger Letter
Money
Mutual Fund Forecaster
Mutual Fund Magazine
Nation's Business
New York Times
Pension World
Pensions & Investments
Personal Investor
Financial Services Week
Philadelphia Inquirer
Smart Money
USA Today
U.S. News & World Report
Wall Street Journal
Washington Post
CNN
CNBC
PBS
Statement of Additional Information Page 46
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
The Funds and AIM Distributors may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
each Fund with the following, or compare each Fund's performance to performance
data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services
(data and mutual fund rankings and comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and
Development (publications)
International Finance Corporation Emerging
Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Analytical Data Services, Inc. (data and
mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings
and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All Country
(AC) World Index
Morgan Stanley Capital International World
Indices
Morningstar, Inc. (data and mutual fund rankings
and comparisons)
NASDAQ
Organization for Economic Cooperation and
Development (publications)
Salomon Brothers Global Telecommunications
Index
Salomon Brothers World Government Bond
Index-Non-U.S.
Salomon Brothers World Government Bond
Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price
Index
Stangar
Wilshire Associaties
World Bank (publications and reports)
The World Bank Publication of Trends in
Developing Countries
Worldscope
Each Fund may also compare its performance to rates on Certificates of Deposit
and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or AIM
Distributors. Advertising for the Funds may from time to time include
discussions of general economic conditions and interest rates. Advertising for
the Funds may also include reference to the use of those Funds as part of an
individual's overall retirement investment program. From time to time, sales
literature and/or advertisements for any of the Funds may disclose (i) the
largest holdings in the Fund's portfolio, (ii) certain selling group members
and/or (iii) certain institutional shareholders.
From time to time, the Funds' sales literature and/or advertisements may discuss
generic topics pertaining to the mutual fund industry. This includes, but is not
limited to, literature addressing general information about mutual funds,
variable annuities, dollar-cost averaging, stocks, bonds, money markets,
certificates of deposit, retirement, retirement plans, asset allocation,
tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when comparing
a Fund's performance with other funds and other potential investments, investors
should note that the methods of computing performance of other potential
investments are not necessarily comparable to the methods employed by a Fund.
Statement of Additional Information Page 47
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. rates the debt securities issued by various
entities from "Aaa" to "C". Investment grade ratings are the first four
categories:
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 edged." 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 risk appear somewhat
larger than the 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
some time 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.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are 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 which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Statement of Additional Information Page 48
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc., rates the
securities debt of various entities in categories ranging from "AAA" to "D"
according to quality. Investment grade ratings are the first four categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative
Statement of Additional Information Page 49
<PAGE>
AIM GLOBAL GOVERNMENT INCOME FUND
AIM STRATEGIC INCOME FUND
AIM GLOBAL HIGH INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
capitalization structure with moderate reliance on debt and ample asset
protection; broad margins in earnings coverage of fixed financial charges and
high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issues rated
Prime-2 have a strong ability for repayment of senior short-term debt
obligations. This normally will be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage ratios, while
sound, may be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds as of October 31, 1997 and for the
fiscal year then ended, and the unaudited financial statements as of April 30,
1998 and for the six months then ended, appear on the following pages.
Statement of Additional Information Page 50
<PAGE>
AIM INVESTMENT FUNDS, INC.
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS -- To be Filed.
(b) EXHIBITS REQUIRED BY PART C, ITEM 24 OF FORM N-1A.
(1) Agreement and Declaration of Trust -- To be Filed.
(2) By-Laws -- To be Filed.
(3) Not applicable.
(4) To be Filed.
(5)(a) Form of Investment Management and Administration Contract --
To be Filed.
(5)(b) Form of Investment Sub-Advisory and Sub-Administration
Contract -- To be Filed.
(6)(a) Form of Distribution Agreement with respect to Class A
shares -- To be Filed.
(6)(b) Form of Distribution Agreement with respect to Class B
shares -- To be Filed.
(6)(c) Form of Distribution Agreement with respect to Advisor Class
shares -- To be Filed.
(7) Not applicable.
(8)(a) Custodian Agreement between Registrant and State Street Bank
and Trust Company (1).
(8)(b) Letter Agreement assigning Custodian Agreement -- To be
Filed.
(9)(a) Transfer Agency Contract -- To be Filed.
(9)(b) Form of Fund Accounting and Pricing Agent Agreement -- Filed
herewith.
(9)(c) Other material contracts:
(i) Form of Selected Dealer Agreement (8).
(ii) Form of Bank Sales Contract (8).
(iii) Form of Shareholder Service Agreement (8).
(iv) Form of Bank Shareholder Service Agreement (8).
(v) Form of Service Agreement for Bank Trust Department and
for Broker -- To be Filed.
(vi) Form of Administration Agreement (8).
(vii) Form of Sub-Administration Agreement (8).
(10)(a) Opinion and Consent of Counsel -- To be Filed.
(10)(b) Opinion and Consent of Delaware Counsel -- To be Filed.
(11) Consents of Coopers & Lybrand L.L.P., Independent
Accountants, relating to:
(i) AIM Global Consumer Products and Services Fund, AIM Global
Financial Services Fund, AIM Global Health Care Fund, AIM
Global Infrastructure Fund, AIM Global Resources Fund, AIM
Global Telecommunications Fund -- To be Filed.
(ii) AIM Global Government Income Fund, AIM Strategic Income
Fund and AIM Global High Income Fund -- To be Filed.
(iii) AIM Global Growth & Income Fund -- To be Filed.
(iv) AIM Latin American Growth Fund and AIM Emerging Markets
Fund -- To be Filed.
(v) AIM Developing Markets Fund -- To be Filed.
C-1
<PAGE>
(12) Not applicable.
(13) Not applicable.
(14)(a) IRA Application (8).
(14)(b) SEP and SARSEP IRA Adoption Agreement (8).
(14)(c) Profit Sharing/Money Purchase Pension Plan (8).
(14)(d) 403(b) Plan (8).
(14)(e) SIMPLE IRA Application (8).
(14)(f) Roth IRA Application (8).
(15)(a) Form of Distribution Plan adopted pursuant to Rule 12b-1
with respect to Class A shares (8).
(15)(b) Form of Distribution Plan adopted pursuant to Rule 12b-1
with respect to Class B shares (8).
(16) Schedules of Computation of Performance Data relating to the
Class A, Class B and Advisor Class shares of:
(i) AIM Global Government Income Fund (5).
(ii) AIM Strategic Income Fund (5).
(iii) AIM Global Health Care Fund (5).
(iv) AIM Global Growth & Income Fund (8).
(v) AIM Latin American Growth Fund (5).
(vi) AIM Global Telecommunications Fund (5).
(vii) AIM Emerging Markets Fund (5).
(viii) AIM Global High Income Fund (5).
(ix) AIM Global Financial Services Fund (5).
(x) AIM Global Infrastructure Fund (5).
(xi) AIM Global Resources Fund (5).
(xii) AIM Global Consumer Products and Services Fund (5).
(xiii) AIM Developing Markets Fund (2).
(17) Financial Data Schedules (4).
(18) Multiple Class Plan adopted pursuant to Rule 18f-3 -- Filed
herewith.
Other Exhibits:
(a) Power of Attorney for Helge K. Lee and Michael A. Silver for
AIM Investment Funds, Inc. (2).
(b) Power of Attorney for Helge K. Lee and Michael A. Silver for
Global Investment Portfolio (8).
(c) Power of Attorney for Helge K. Lee and Michael A. Silver for
Global High Income Portfolio (8).
- ------------------------
(1) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A,
filed on December 30, 1996.
(2) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 49 to the Registration Statement on Form N-1A,
filed on October 30, 1997.
(3) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 50 to the Registration Statement on Form N-1A,
filed on December 24, 1997.
(4) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 51 to the Registration Statement on Form N-1A,
filed on January 30, 1998.
C-2
<PAGE>
(5) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 44 to the Registration Statement on Form N-1A,
filed on February 28, 1996.
(6) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 47 to the Registration Statement on Form N-1A,
filed on February 26, 1997.
(7) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 42 to the Registration Statement on Form N-1A,
filed on June 30, 1995.
(8) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 53 to the Registration Statement on Form N-1A,
filed on May 29, 1998.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF MAY 7, 1998.
<TABLE>
<CAPTION>
NUMBER OF RECORD
TITLE OF CLASS HOLDERS
- ------------------------------------------------------------------------------------------------ ----------------
<S> <C>
Capital Stock, $0.01 par value, of:
AIM Global Growth & Income Fund Class A................................................... 20,064
AIM Global Growth & Income Fund Class B................................................... 31,652
AIM Global Growth & Income Fund Advisor Class............................................. 363
AIM Strategic Income Fund Class A......................................................... 9,390
AIM Strategic Income Fund Class B......................................................... 17,184
AIM Strategic Income Fund Advisor Class................................................... 89
AIM Global Government Income Fund Class A................................................. 10,304
AIM Global Government Income Fund Class B................................................. 6,811
AIM Global Government Income Fund Advisor Class........................................... 41
AIM Global High Income Fund Class A....................................................... 8,062
AIM Global High Income Fund Class B....................................................... 12,605
AIM Global High Income Fund Advisor Class................................................. 289
AIM Global Health Care Fund Class A....................................................... 34,047
AIM Global Health Care Fund Class B....................................................... 11,738
AIM Global Health Care Fund Advisor Class................................................. 174
AIM Latin American Growth Fund Class A.................................................... 18,144
AIM Latin American Growth Fund Class B.................................................... 15,388
AIM Latin American Growth Fund Advisor Class.............................................. 186
AIM Global Telecommunications Fund Class A................................................ 84,748
AIM Global Telecommunications Fund Class B................................................ 78,836
AIM Global Telecommunications Fund Advisor Class.......................................... 228
AIM Global Financial Services Fund Class A................................................ 3,907
AIM Global Financial Services Fund Class B................................................ 5,452
AIM Global Financial Services Fund Advisor Class.......................................... 140
AIM Global Infrastructure Fund Class A.................................................... 4,661
AIM Global Infrastructure Fund Class B.................................................... 5,952
AIM Global Infrastructure Fund Advisor Class.............................................. 107
AIM Global Resources Fund Class A......................................................... 5,659
AIM Global Resources Fund Class B......................................................... 7,058
AIM Global Resources Fund Advisor Class................................................... 189
AIM Emerging Markets Fund Class A......................................................... 18,362
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF RECORD
TITLE OF CLASS HOLDERS
- ------------------------------------------------------------------------------------------------ ----------------
<S> <C>
AIM Emerging Markets Fund Class B......................................................... 20,470
AIM Emerging Markets Fund Advisor Class................................................... 227
AIM Global Consumer Products and Services Fund Class A.................................... 7,675
AIM Global Consumer Products and Services Fund Class B.................................... 9,675
AIM Global Consumer Products and Services Fund Advisor Class.............................. 251
AIM Developing Markets Fund Class A....................................................... 19,010
AIM Developing Markets Fund Class B....................................................... 19
AIM Developing Markets Fund Advisor Class................................................. 18
</TABLE>
ITEM 27. INDEMNIFICATION
Article VII(g) of the Registrant's Articles of Incorporation provides for
indemnification of certain persons acting on behalf of the Registrant.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended ("1933 Act"), may be permitted to Directors, Officers and
Controlling Persons by the Registrant's Articles of Incorporation, By-Laws, 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 1933 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 1933 Act
and will be governed by the final adjudication of such issues.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND SUB-ADVISER
See the material under the heading "Management" included in Part A
(Prospectus) of this Amendment and the material appearing under the headings
"Trustees and Officers" and "Management" included in Part B (Statement of
Additional Information) of this Amendment. Information as to the Directors and
Officers of A I M Advisors, Inc. and INVESCO (NY), Inc. is included in Schedule
A and Schedule D of Part I of each entity's Form ADV (File No. 801-12313 and
File No. 801-10254, respectively), filed with the Securities and Exchange
Commission, which are incorporated herein by reference thereto.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) A I M Distributors, Inc. is also the principal underwriter for the
following other investment companies: AIM Advisor Funds, Inc. (which includes
five funds: 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); AIM Equity Funds, Inc. (which includes six funds: AIM Aggressive
Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund,
AIM Constellation Fund and AIM Weingarten Fund); AIM Funds Group (which includes
nine funds: AIM Balanced Fund, AIM Global Utilities Fund, AIM High Yield Fund,
AIM Income Fund, AIM Intermediate Government Fund, AIM Money Market Fund, AIM
Municipal Bond Fund, AIM Select Growth Fund and AIM Value Fund); AIM
International Funds, Inc. (which includes six funds: AIM Asian Growth Fund, AIM
European Development Fund, AIM International Equity Fund, AIM Global Aggressive
Growth Fund, AIM Global Growth Fund and AIM Global Income Fund); AIM Investment
Securities Funds (which includes one fund: AIM Limited
C-4
<PAGE>
Maturity Treasury Fund); AIM Summit Fund, Inc.; AIM Tax-Exempt Funds, Inc.
(which includes four funds: AIM High Income Municipal Fund, AIM Tax-Exempt Bond
Fund of Connecticut, AIM Tax-Exempt Cash Fund and AIM Tax-Free Intermediate
Fund); AIM Variable Insurance Funds, Inc. (which includes thirteen funds: AIM
V.I. Aggressive Growth Fund, AIM V.I. Balanced Fund, AIM V.I. Capital
Appreciation Fund, AIM V.I. Capital Development Fund AIM V.I. Diversified Income
Fund, AIM V.I. Global Utilities Fund, AIM V.I. Government Securities Fund, AIM
V.I. Growth and Income Fund, AIM V.I. Growth Fund, AIM V.I. High Yield Fund, AIM
V.I. International Equity Fund, AIM V.I. Money Market Fund, and AIM V.I. Value
Fund); AIM Growth Series (which includes eight funds: AIM America Value Fund,
AIM Small Cap Equity Fund, AIM Mid Cap Growth Fund, AIM Europe Growth Fund, AIM
International Growth Fund, AIM Japan Growth Fund, AIM New Pacific Growth Fund
and AIM Worldwide Growth Fund); AIM Investment Portfolios, Inc. (which includes
one fund: AIM Dollar Fund); AIM Series Trust (which includes one fund: AIM
Global Trends Fund); and GT Global Floating Rate Fund, Inc.
(b) Directors and Officers of A I M Distributors, Inc.
The business address of each person listed is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS PRINCIPAL UNDERWRITER
- -------------------------------------- ---------------------------------------------------------------------------
<S> <C>
Charles T. Bauer Chairman of the Board of Directors
Michael J. Cemo President & Director
Gary T. Crum Director
Robert H. Graham Senior Vice President & Director
William G. Littlepage Senior Vice President & Director
John J. Caldwell Senior Vice President
Marilyn M. Miller Senior Vice President
James L. Salners Senior Vice President
Gordon J. Sprague Senior Vice President
Michael C. Vessels Senior Vice President
B.J. Thompson First Vice President
James R. Anderson Vice President
John J. Arthur Vice President & Treasurer
Mary K. Coleman Vice President
Melville B. Cox Vice President & Chief Compliance Officer
Charles R. Dewey Vice President
Sidney M. Dilgren Vice President
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS PRINCIPAL UNDERWRITER
- -------------------------------------- ---------------------------------------------------------------------------
<S> <C>
Tony D. Green Vice President
William H. Kleh Vice President
Ofelia M. Mayo Vice President, General Counsel & Assistant Secretary
Terri L. Ransdell Vice President
Carol F. Relihan Vice President
Kamala C. Sachidanandan Vice President
Frank V. Serebrin Vice President
Christopher T. Simutis Vice President
Robert D. Van Sant, Jr. Vice President
Gary K. Wendler Vice President
David E. Hessel Assistant Vice President, Assistant Treasurer & Controller
Kathleen J. Pflueger Secretary
Luke P. Beausoleil Assistant Vice President
Tisha B. Christopher Assistant Vice President
Glenda A. Dayton Assistant Vice President
Kathleen M. Douglas Assistant Vice President
Terri N. Fiedler Assistant Vice President
Mary E. Gentempo Assistant Vice President
Jeffrey L. Horne Assistant Vice President
Melissa E. Hudson Assistant Vice President
Jodie L. Johnson Assistant Vice President
Kathryn A. Jordan Assistant Vice President
Wayne W. LaPlante Assistant Vice President
Kim T. Lankford Assistant Vice President
Ivy B. McLemore Assistant Vice President
David B. O'Neil Assistant Vice President
Patricia M. Shyman Assistant Vice President
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS PRINCIPAL UNDERWRITER
- -------------------------------------- ---------------------------------------------------------------------------
<S> <C>
Nicholas D. White Assistant Vice President
Norman W. Woodson Assistant Vice President
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Stephen I. Winer Assistant Secretary
</TABLE>
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended, are maintained and held in the
offices of the Registrant and its sub-adviser, INVESCO (NY), Inc., 50 California
Street, 27th Floor, San Francisco, CA 94111.
Records covering shareholder accounts and portfolio transactions are also
maintained and kept by the Registrant's Transfer Agent, A I M Fund Services,
Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046, and by the
Registrant's Custodian, State Street Bank and Trust Company, 225 Franklin
Street, Boston, MA 02110.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
None.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Post-Effective Amendment to this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of San
Francisco, and State of California, on the 6th day of July, 1998.
AIM INVESTMENT FUNDS, INC.
By: William J. Guilfoyle*
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment has been signed below by the following persons in the
capacities indicated on the 6th day of July, 1998.
William J. Guilfoyle* President, Director and
Chairman of the Board
(Principal Executive Officer)
/s/ KENNETH W. CHANCEY Vice President and Principal
- ---------------------------------------- Accounting Officer
Kenneth W. Chancey
C. Derek Anderson* Director
Arthur C. Patterson* Director
Frank S. Bayley* Director
Ruth H. Quigley* Director
*By: /s/ MICHAEL A. SILVER
-----------------------------------
Michael A. Silver
Attorney-in-Fact, pursuant to
Power of Attorney previously filed
C-8
<PAGE>
SIGNATURES
Global Investment Portfolio has duly caused this Post-Effective Amendment to
be signed on its behalf by the undersigned, thereto duly authorized, in the City
of San Francisco, and the State of California, on the 6th day of July, 1998.
GLOBAL INVESTMENT PORTFOLIO
By: William J. Guilfoyle*
President
This Post-Effective Amendment has been signed below by the following persons
in the capacities indicated on the 6th day of July, 1998.
William J. Guilfoyle* President, Trustee and
Chairman of the Board
(Principal Executive Officer)
/s/ KENNETH W. CHANCEY Vice President and Principal
- ---------------------------------------- Accounting Officer
Kenneth W. Chancey
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
*By: /s/ MICHAEL A. SILVER
-----------------------------------
Michael A. Silver
Attorney-in-Fact, pursuant to
Power of Attorney previously filed
C-9
<PAGE>
SIGNATURES
Global High Income Portfolio has duly caused this Post-Effective Amendment
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of San Francisco, and the State of California, on the 6th day of July,
1998.
GLOBAL HIGH INCOME PORTFOLIO
By: William J. Guilfoyle*
President
This Post-Effective Amendment has been signed below by the following persons
in the capacities indicated on the 6th day of July, 1998.
William J. Guilfoyle* President, Trustee and
Chairman of the Board
(Principal Executive Officer)
/s/ KENNETH W. CHANCEY Vice President and Principal
- ---------------------------------------- Accounting Officer
Kenneth W. Chancey
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
*By: /s/ MICHAEL A. SILVER
-----------------------------------
Michael A. Silver
Attorney-in-Fact, pursuant to
Power of Attorney previously filed
C-10
<PAGE>
FUND ACCOUNTING AND PRICING AGENT AGREEMENT
This Fund Accounting and Pricing Agent Agreement (the "Agreement") is made
as of May 29, 1998, by and between AIM Investment Funds (the "Company") and
INVESCO (NY), INC. ("INVESCO (NY)").
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company;
WHEREAS, the Company currently operates 13 separate mutual funds, each
organized as a separate and distinct series consisting of shares of beneficial
interest (such existing funds and such funds as may hereafter be established
being referred to in this Agreement as the "Funds" and singly as a "Fund");
WHEREAS, the Company is part of a complex of investment companies that are
sub-advised and/or sub-administered by INVESCO (NY) and with which INVESCO (NY)
has entered into Fund Accounting and Pricing Agent Agreements (the "INVESCO (NY)
Funds");
WHEREAS, the Company desires to retain INVESCO (NY) to act as its
accounting and pricing agent, and INVESCO (NY) is willing to act in such
capacities.
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions hereinafter set forth, the Company and INVESCO (NY) hereby agree as
follows:
SECTION 1. APPOINTMENT. The Company hereby appoints INVESCO (NY) to
act as the accounting and pricing agent for each Fund for the period and on the
terms and conditions set forth in this Agreement. INVESCO (NY) hereby accepts
such appointment and agrees to render the services set forth for the
compensation herein provided.
SECTION 2. DEFINITIONS. As used in this Agreement and in addition to
the terms defined elsewhere herein, the following terms shall have the meanings
assigned to them in this Section:
(a) "Authorized Person" means any officer of the Company and any
other person, whether or not any such person is an officer or employee of
the Company, duly authorized by the Board of Trustees (the "Board"), the
President or any Vice President of the Fund to give Oral and/or Written
Instructions on behalf of the Company or any Fund.
(b) "Commission" means the Securities and Exchange Commission.
(c) "Custodian" means the custodian or custodians employed by
the Company to maintain custody of the Fund's assets.
<PAGE>
(d) "Governing Documents" means the Articles of Incorporation,
By-Laws and other applicable charter documents of the Company, all as they
may be amended from time to time.
(e) "Oral Instruction" means oral instructions actually received
by INVESCO (NY) from an Authorized Person or from a person reasonably
believed by INVESCO (NY) to be an Authorized Person, provided that, any
Oral Instruction shall be promptly confirmed by Written Instructions.
(f) "Prospectus" means the current prospectus and statement of
additional information of a Fund, taken together.
(g) "Shares" means shares of beneficial interest of any of the
Funds.
(h) "Shareholder" means any owner of Shares.
(i) "Written Instructions" means written instructions delivered
by hand, mail, tested telegram or telex, cable or facsimile sending device
received by INVESCO (NY) and signed by an Authorized Person.
SECTION 3. COMPLIANCE WITH LAWS, ETC. In performing its
responsibilities hereunder, INVESCO (NY) shall comply with all terms and
provisions of the Governing Documents, the Prospectus and all applicable state
and federal laws including, without limitation, the 1940 Act and the rules and
regulations promulgated by the Commission thereunder.
SECTION 4. SERVICES. In consideration of the compensation payable
hereunder and subject to the supervision and control of the Company's Boards,
INVESCO (NY) shall provide the following services to the Funds:
(a) PRICING AGENT. As pricing agent, INVESCO (NY) shall:
(1) Obtain security market quotes from services approved by the
investment manager of the Funds or, if such quotes are unavailable,
then obtain such prices from the investment manager of the Funds or
from such sources as the investment manager may direct, and, in either
case, calculate the market value of the Funds' investments; and
(2) Value the assets of the Funds and compute the net asset
value per Share of the Funds at such dates and times and in the manner
specified in the then currently effective Prospectus and transmit to
the Funds' investment manager.
(b) ACCOUNTING AGENT. As fund accounting agent, INVESCO (NY) shall:
- 2 -
<PAGE>
(1) Calculate the net income of each Fund;
(2) Calculate capital gains or losses for each Fund from the
sale or disposition of assets, if any;
(3) Maintain the general ledger and other accounts, books and
financial records of the Company, as required under Section 31(a) of
the 1940 Act and the rules promulgated by the Commission thereunder in
connection with the services provided by INVESCO (NY);
(4) Perform the following functions on a daily basis:
(A) journalize each Fund's investment, capital share
and income and expense activities;
(B) reconcile cash and investment balances of each Fund
with the Custodian and provide the Funds' investment manager with
the beginning cash balance available for investment purposes and
update the cash availability throughout the day as required by
the investment manager;
(C) verify investment buy/sell trade tickets received from
a Fund's investment manager and transmit trades to a Fund's
Custodian for proper settlement;
(D) maintain individual ledgers for investment securities;
(E) maintain historical tax lots for investment securities;
(F) calculate various contractual expenses (e.g., advisory
and custody fees);
(G) post to and prepare the Funds' statement of assets and
liabilities and statement of operations; and
(H) monitor expense accruals and notify an Authorized
Person of any proposed adjustments;
(5) Receive and act upon notices, Oral and Written Instructions,
certificates, instruments or other communications from a Fund's
shareholder servicing and transfer agent;
(6) Assist in the preparation of financial statements
semiannually
- 3 -
<PAGE>
which will include the following items:
(A) schedule of investments;
(B) statement of assets and liabilities;
(C) statement of operations;
(D) changes in net assets;
(E) cash statement; and
(F) schedule of capital gains and losses;
(7) Prepare monthly security transaction listings;
(8) Prepare quarterly broker security transactions summaries;
and
(9) At the reasonable request of the Company, assist in the
preparation of various reports or other financial documents required
by federal, state and other appropriate laws and regulations.
SECTION 5. COMPENSATION. As compensation for the services rendered
by INVESCO (NY) hereunder during the term of the Agreement, each Fund shall pay
to INVESCO (NY) monthly such fees as shall be agreed to from time to time by the
Company and INVESCO (NY), in writing and attached hereto as Schedule A. In
addition, as may be agreed to from time to time in writing by the Company and
INVESCO (NY), each Fund shall reimburse INVESCO (NY) for certain expenses that
it incurs in rendering services with respect to that Fund under this Agreement.
SECTION 6. RELIANCE BY INVESCO (NY) ON INSTRUCTIONS. Unless
otherwise provided in this Agreement, INVESCO (NY) shall act only upon Oral or
Written Instructions. INVESCO (NY) shall be entitled to rely upon any such
Instructions actually received by it under this Agreement. The Company agrees
that INVESCO (NY) shall incur no liability to the Company or any of the Funds in
acting upon Oral or Written Instructions given to INVESCO (NY) hereunder,
provided that, such Instructions reasonably appear to have been received from an
Authorized Person.
SECTION 7. COOPERATION WITH AGENTS OF THE COMPANY. INVESCO (NY)
shall cooperate with the Company's agents and employees, including, without
limitation, their independent accountants, and shall take all reasonable action
in the performance of its obligations under this Agreement to assure that all
necessary information is made available to such agents to the extent necessary
in the performance of their duties to the Company.
- 4 -
<PAGE>
SECTION 8. CONFIDENTIALITY. INVESCO (NY), on behalf of itself and
its employees, agrees to treat confidentially all records and other information
relating to the Company and the Funds except when requested to divulge such
information by duly constituted authorities provided that notification and prior
approval is obtained from the Company, which approval shall not be unreasonably
withheld and may not be withheld if INVESCO (NY), in its judgment, may be
subject to civil or criminal contempt proceedings for failure to comply.
SECTION 9. STANDARD OF CARE. In the performance of its
responsibilities hereunder, INVESCO (NY) shall exercise care and diligence in
the performance of its duties and act in good faith and use its best efforts to
ensure the accuracy and completeness of all services under this Agreement. In
performing services hereunder, INVESCO (NY):
(a) shall be under no duty to take any action on behalf of the
Company or the Funds except as specifically set forth herein or as may be
specifically agreed to by INVESCO (NY) in writing, and in computing the net
asset value per Share of a Fund, INVESCO (NY) may rely upon any information
furnished to it including, without limitation, information (1) as to the
accrual of liabilities of a Fund and as to liabilities of a Fund not
appearing on the books of account kept by INVESCO (NY), (2) as to the
existence, status and proper treatment of reserves, if any, authorized by a
Fund, (3) as to the sources of quotations to be used in computing net asset
value, (4) as to the fair value to be assigned to any securities or other
property for which price quotations are not readily available and (5) as to
the sources of information with respect to "corporate actions" affecting
portfolio securities of a Fund (information as to "corporate actions" shall
include information as to dividends, distributions, interest payments,
prepayments, stock splits, stock dividends, rights offerings, conversions,
exchanges, recapitalizations, mergers, redemptions, calls, maturity dates
and similar actions, including ex-dividend and record dates and the amounts
and terms thereof);
(b) shall be responsible and liable for all losses, damages and
costs (including reasonable attorneys' fees) incurred by the Company or any
Fund which is due to or caused by INVESCO (NY)'s negligence in the
performance of its duties under this Agreement or for INVESCO (NY)'s
negligent failure to perform such duties as are specifically assumed by
INVESCO (NY) in this Agreement, provided that, to the extend that duties,
obligations and responsibilities are not expressly set forth in this
Agreement, INVESCO (NY) shall not be liable for any act or omission that
does not constitute willful misfeasance, bad faith or negligence on the
part of INVESCO (NY) or reckless disregard by INVESCO (NY) of such duties,
obligations and responsibilities; and
(c) without limiting the generality of the foregoing, INVESCO
(NY) shall not, in connection with INVESCO (NY)'s duties under this Agreement,
be under any duty or obligation to inquire into and shall not be liable for or
in respect of:
(1) the validity or invalidity or authority or lack of
authority of any Oral or Written Instruction, notice or other
instrument which conforms
- 5 -
<PAGE>
to the applicable requirements of this Agreement, if any and that
INVESCO (NY) reasonably believes to be genuine; and
(2) delays or errors or loss of data occurring by reason of
circumstances beyond INVESCO (NY)'s control including, without
limitation, acts of civil or military authorities, national
emergencies, labor difficulties, fire, mechanical breakdown,
denial of access, earthquake, flood or catastrophe, acts of God,
insurrection, war, riots, or failure of the mails,
transportation, communication or power supply.
Notwithstanding any other provisions of this Agreement, the following provisions
shall apply with respect to INVESCO (NY)'s computation of a Fund's net asset
value: INVESCO (NY) shall be held to the exercise of reasonable care in
computing and determining net asset value as provided in Section 4(a), above,
but shall not be held accountable or liable for any losses, damages or expenses
of a Fund or any Shareholder or former Shareholder may incur arising from or
based upon errors or delays in the determination of such net asset value unless
such error or delay was due to INVESCO (NY)'s negligence or willful misfeasance
in the computation and determination of such net asset value. The parties
hereto acknowledge, however, that INVESCO (NY) causing an error or delay in the
determination of net asset value may, but does not in an of itself, constitute
negligence or willful misfeasance. In no event shall INVESCO (NY) be liable or
responsible to the Company or a Fund or any other party for any error or delay
which continued or was undetected after the date of an audit of the Company or
any Fund performed by the certified public accountants employed by the Company
if, in the exercise of reasonable care in accordance with generally accepted
accounting principles, such accountants should have become aware of such error
or delay in the course of performing such audit. INVESCO (NY)'s liability for
any such negligence or willful misfeasance which results in an error in
determination of such net asset value be limited to the direct out-of-pocket
loss a Fund and/or any Shareholder or former Shareholder shall actually incur.
Without limiting the generality of the foregoing, INVESCO (NY) shall
not be held accountable or liable to a Fund a Shareholder or former Shareholder
or any other person for any delays or losses, damages or expenses any of them
may suffer or incur resulting from (1) INVESCO (NY)'s failure to receive timely
and suitable notification concerning quotations, corporate actions or similar
matters relating to or affecting portfolio securities of a Fund or (2) any
errors in the computation of a net asset value based upon or arising out of
quotations or information as to corporate actions if received by INVESCO (NY)
from a source that INVESCO (NY) was authorized to rely upon. Nevertheless,
INVESCO (NY) will use its best judgment in determining whether to verify through
other sources any information that it has received as to quotations or corporate
actions if INVESCO (NY) has reason to believe that any such information is
incorrect.
SECTION 10. RECEIPT OF ADVICE. If INVESCO (NY) is in doubt as to any
action to be taken or omitted by it, INVESCO (NY) may request, and shall be
entitled to rely upon, directions and advice from the Company, including Oral or
Written Instructions where
- 6 -
<PAGE>
appropriate, or from counsel of its own choosing (who may also be counsel for
the Company or any Fund), with respect to any question of law. In case of
conflict between directions, advice or Oral and Written Instructions received by
INVESCO (NY) pursuant to this Section, INVESCO (NY) shall be entitled to rely on
and follow the advice received from counsel as described above. INVESCO (NY)
shall be protected in any action or in action that it takes in reliance on any
directions, advice or Oral or Written Instructions received pursuant to this
Section that INVESCO (NY), after the receipt of the same, in good faith believes
to be consistent with such directions, advice or Oral or Written Instructions,
as the case may be. Notwithstanding the foregoing, nothing in this Section
shall be construed as imposing on INVESCO (NY) any obligation to seek such
directions, advice or Oral or Written Instruction, or to act in accordance with
them when received, unless the same is a condition to INVESCO (NY)'s properly
taking or omitting to take such action under the terms of this Agreement.
SECTION 11. INDEMNIFICATION OF INVESCO (NY). The Company agrees to
indemnify and hold harmless INVESCO (NY) and its officers, directors, employees,
nominees and subcontractors, if any, from all taxes, charges, expenses,
assessments, claims and liabilities, including, without limitation, liabilities
arising under the 1940 Act, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the Commodities Exchange Act and
any state or foreign securities or blue sky laws, and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, arising
directly or indirectly from any action or thing that INVESCO (NY) takes or omits
to take or do:
(a) at the request or on the direction of or in reliance upon
the advice of the Company;
(b) upon Oral or Written Instructions; or
(c) in the performance by INVESCO (NY) of its responsibilities
under this Agreement;
provided that, INVESCO (NY) shall not be indemnified against any liability to
the Company or the Funds, or any expenses incident thereto, arising out of
INVESCO (NY)'s own willful misfeasance, bad faith or negligence or reckless
disregard of its duties in connection with the performance of its duties and
obligations specifically described in this Agreement.
SECTION 12. INDEMNIFICATION OF THE COMPANY. INVESCO (NY) agrees to
indemnify and hold harmless the Company and its officers, trustees, directors
and employees, from all taxes, charges, expenses, assessments, claims and
liabilities, including, without limitation, liabilities arising under the 1940
Act, the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, the Commodities Exchange Act and any state or foreign
securities or blue sky laws, and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or omission of INVESCO (NY) that does not meet the standard of
care to which INVESCO (NY) is subject under Section 9, above.
- 7 -
<PAGE>
SECTION 13. LIMITATION OF LIABILITY OF SHAREHOLDERS AND TRUSTEES OF
THE COMPANY. It is expressly agreed that the obligations of the Company
hereunder shall not be binding upon any of the shareholders, trustees,
directors, officers, nominees, agents or employees of the Company personally,
but shall only bind the assets and property of the applicable Funds, as provided
in the Governing Documents. The execution and delivery of this Agreement has
been authorized by the Board of the Company, and this Agreement has been
executed and delivered by an authorized officer of the Company acting as such,
and neither such authorization by the Board nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the assets
and property of the applicable Fund as provided in the Governing Documents.
SECTION 14. DURATION AND TERMINATION. This Agreement shall continue
with respect to the Company and each Fund until termination with respect to the
Company, or with respect to one or more Funds, is effected by the Company or
INVESCO (NY) upon sixty days' prior written notice to the other. In the event
of the "assignment" of this Agreement within the meaning of the 1940 Act, this
Agreement shall terminate automatically.
SECTION 15. NOTICES. All notices and other communications hereunder,
including Written Instructions, shall be in writing or by confirming telegram,
cable, telex or facsimile sending device. Notices with respect to a party shall
be directed to such address as may from time to time be designated by that party
to the other.
SECTION 16. FURTHER ACTIONS. The Company and INVESCO (NY) agree to
perform such further acts and to execute such further documents as may be
necessary or appropriate to effect the purposes of this Agreement.
SECTION 17. AMENDMENTS. This Agreement, or any part thereof, may be
amended only by an instrument in writing signed by the Company and INVESCO (NY).
SECTION 18. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
SECTION 19. SHAREHOLDER LIABILITY. It is expressly agreed that the
obligations of the Company hereunder shall not be binding upon any of the
Trustees, Shareholders, nominees, officers, agents or employees of the Company
personally, but shall only bind the assets and property of the Funds, as
provided in the Company's Agreement and Declaration of Trust. The execution and
delivery of this Agreement has been authorized by the Trustees of the Company
and this Agreement has been executed and delivered by an authorized officer of
the Company acting as such; neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the assets
- 8 -
<PAGE>
and property of the Funds, as provided in the Company's Agreement and
Declaration of Trust.
SECTION 20. MISCELLANEOUS. This Agreement embodies the entire
agreement and understanding between the Company and INVESCO (NY) and supersedes
all prior agreements and understandings relating to the subject matter hereof,
provided that the Company and INVESCO (NY) may embody in one or more separate
documents their agreement or agreements with respect to such matters that this
Agreement provides may be later agreed to by and between the Company and INVESCO
(NY) from time to time. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement shall be governed by and construed in accordance with California law.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding upon and shall inure to
the benefit of the Company and INVESCO (NY) and their respective successors.
IN WITNESS WHEREOF, the Company and INVESCO (NY) have caused this
Agreement to be executed by their officers designated below as of this day,
month and year first above written.
AIM INVESTMENT FUNDS
By:
-----------------------------
Attest:
------------------------
INVESCO (NY), INC.
By:
-----------------------------
Attest:
------------------------
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<PAGE>
SCHEDULE A
FUND ACCOUNTING AND PRICING AGENT FEES
The Fund shall pay a Fee to INVESCO (NY) determined as a percentage of
the Fund's net assets. The annualized rate at which the fee is paid (the Fee
Rate) and the Fee shall be calculated as set forth below:
- - An ASSET MULTIPLIER is determined by multiplying .0003 times the first $5
billion in average net assets of the INVESCO (NY) Funds plus .0002 times the
net assets over $5 billion.
- - The FEE RATE is determined by dividing the Asset Multiplier by the net
assets of the INVESCO (NY) Funds.
- - The MONTHLY FEE is determined then by multiplying the average daily Fee Rate
by the number of days in the month and by the Fund's average daily net
assets then dividing by 365/or 366
Example: For Fund X having $100 million in average net assets during December
1997, in which the INVESCO (NY) Funds have average net assets of $8 billion:
Asset Multiplier = (.0003) ($5 billion) + (.0002) ($3 billion) = $2.1 million
Fee Rate = $2.1 Million = .0002625
------------
$8 billion
Monthly Fee = ( 31 ) (.0002625) ($100 million) = $2,229.45
------
( 365 )
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<PAGE>
MULTIPLE CLASS PLAN
OF
AIM INVESTMENT FUNDS
AIM INVESTMENT PORTFOLIOS
AIM GROWTH SERIES
AIM SERIES TRUST
1. This Multiple Class Plan ("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. ADVISOR CLASS SHARES - shall mean those Shares of a Fund designated as
Advisor Class Shares in the Fund's organizing documents.
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, as well as those Shares deemed to
be Class A Shares for purposes of this Plan.
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, as well as those Shares deemed to
be Class C Shares for purposes of this Plan. Class C Shares may not
be available for each Fund.
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.
<PAGE>
l. DISTRIBUTOR - A I M Distributors, Inc. or Fund Management Company, as
applicable.
m. FUND - each of AIM Investment Funds, AIM Investment Portfolios, AIM
Growth Series, and AIM Series Trust.
n. PLAN OF DISTRIBUTION - any plan adopted under Rule 12b-1 under the Act
with respect to payment of a Distribution Fee.
o. PORTFOLIO - a series of the Shares of a Fund constituting a separate
investment portfolio of the Fund.
p. SERVICE FEE - a fee paid to financial intermediaries for the ongoing
provision of personal services to Fund shareholders and/or the
maintenance of shareholder accounts.
q. SHARE - a share of common stock or of beneficial interest in a Fund,
as applicable.
3. ALLOCATION OF INCOME AND EXPENSES.
a. DISTRIBUTION AND SERVICE FEES - Each Class shall bear directly any and
all Distribution Fees and/or Service Fees payable by such Class
pursuant to a Plan of Distribution adopted by the Fund with respect to
such Class.
b. 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.
c. 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.
d. 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.
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 may be reduced
or eliminated for certain money market fund shares, for larger
purchases, under a combined purchase privilege, under a right of
accumulation, under a letter of intent or for certain categories of
purchasers as permitted by Rule 22(d)
2
<PAGE>
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) to the extent provided for in the Fund's
prospectus, 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, except that Class B
Shares of AIM Series Trust which were acquired prior to June 1, 1998
shall convert to Class A Shares as of the close of business on the
last business day of the month in which the seventh anniversary of the
initial issuance of such Class B Shares occurs.
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. ADVISOR CLASS SHARES. Advisor Class Shares shall be (i) offered at net
asset value and (ii) offered only to certain categories of investors
as approved from time to time by the Trustees and as set forth in the
Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that do
not incur a front-end sales charge and of Class B Shares and Class C Shares
as follows:
a. CLASS A SHARES. The CDSC Period for Class A Shares shall be the period
set forth in the Fund's prospectus. The CDSC Rate shall be as set
forth in the Fund's prospectus, the relevant portions of which are
incorporated herein by this reference. No CDSC shall be imposed on
Class A Shares unless so provided in a Fund's prospectus.
b. CLASS B SHARES. The CDSC Period for the Class B Shares shall be six
years. The CDSC Rate for the Class B Shares shall be as set forth in
the Fund's prospectus, the relevant portions of which are incorporated
herein by this reference.
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.
3
<PAGE>
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 CDSC shall be imposed on increases in the
net asset value of the Shares being redeemed above the initial
purchase price. No CDSC shall be assessed on Shares derived from
reinvestment of dividends or capital gains distributions. The order in
which Shares are to be redeemed when not all of such Shares would be
subject to a CDSC shall be determined by the Distributor in accordance
with the provisions of Rule 6c-10 under the Act.
e. WAIVER. The Distributor may in its discretion waive a CDSC otherwise
due upon the redemption of Shares and disclosed in the Fund's
prospectus or statement of additional information and, for the Class A
Shares, as allowed under Rule 6c-10 under the Act.
6. EXCHANGE PRIVILEGES. Exchanges of Shares shall be permitted as follows:
a. Class A Shares may be exchanged for Class A Shares of such other
mutual funds as are disclosed in the Fund's prospectus, subject to
such terms and limitations as disclosed in the Fund's prospectus and
statement of additional information.
b. Class B Shares may be exchanged for Class B Shares of such other
mutual funds as are disclosed in the Fund's prospectus, subject to
such terms and limitations as disclosed in the Fund's prospectus and
statement of additional information.
c. Class C Shares may be exchanged for Class C Shares of such other
mutual funds as are disclosed in the Fund's prospectus, subject to
such terms and limitations as disclosed in the Fund's prospectus and
statement of additional information.
d. Advisor Class Shares may be exchanged for Advisor Class Shares of such
other mutual funds as are disclosed in the Fund's prospectus, subject
to such terms and limitations as disclosed in the Fund's prospectus
and statement of additional information.
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.
f. CDSC Computation. The CDSC payable upon redemption of Class A Shares,
Class B Shares, and Class C Shares subject to a CDSC shall be computed
in the manner described in the Fund's prospectus.
7. SERVICE AND DISTRIBUTION FEES. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's prospectus,
relevant portions of which are incorporated herein by this reference. All
other terms and conditions with respect to Service Fees and Distribution
Fees shall be governed by the Plan of Distribution adopted by the Fund with
respect to such fees and Rule 12b-1 under the Act.
4
<PAGE>
8. CONVERSION OF CLASS B SHARES.
a. SHARES RECEIVED UPON REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -
Shares purchased through the reinvestment of dividends and
distributions paid on Shares subject to conversion shall be treated as
if held in a separate sub-account. Each time any Shares in a
shareholder's account (other than Shares held in the sub-account)
convert to Class A Shares, a proportionate number of Shares held in
the sub-account shall also convert to Class A Shares.
b. CONVERSIONS ON BASIS OF RELATIVE NET ASSET VALUE - All conversions
shall be effected on the basis of the relative net asset values of the
two Classes without the imposition of any sales load or other charge.
c. AMENDMENTS TO PLAN OF DISTRIBUTION FOR CLASS A SHARES - If any
amendment is proposed to the Plan of Distribution under which Service
Fees and Distribution Fees are paid with respect to Class A Shares of
a Fund that would increase materially the amount to be borne by those
Class A Shares, then no Class B Shares shall convert into Class A
Shares of that Fund until the holders of Class B Shares of that Fund
have also approved the proposed amendment. If the holders of such
Class B Shares do not approve the proposed amendment, the Directors of
the Fund and the Distributor shall take such action as is necessary to
ensure that the Class voting against the amendment shall convert into
another Class identical in all material respects to Class A Shares of
the Fund as constituted prior to the amendment.
9. This Plan shall not take effect until a majority of the Directors of a
Fund, including a majority of the Directors who are not interested persons
of the Fund, shall find that the Plan, as proposed and including the
expense allocations, is in the best interests of each Class individually
and the Fund as a whole.
10. This Plan may not be amended to materially change the provisions of this
Plan unless such amendment is approved in the manner specified in Section 9
above.
5
