<PAGE> 1
As filed with the Securities and Exchange Commission on November 21, 1996
1933 Act Reg. No. 33-39519
1940 Act Reg. No. 811-5686
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---
Pre-Effective Amendment No.
---
---
Post-Effective Amendment No. 7 X
--- ---
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 11
----
(Check appropriate box or boxes.)
AIM INVESTMENT SECURITIES FUNDS
------------------------------------------------------
(Exact name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 1919, Houston, TX 77046
------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
--------------
Charles T. Bauer
11 Greenway Plaza, Suite 1919, Houston, TX 77046
------------------------------------------------------
(Name and Address of Agent for Service)
Copy to:
David L. Kite, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll
11 Greenway Plaza, Suite 1919 1735 Market Street, 51st Floor
Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Amendment
It is proposed that this filing will become effective (check appropriate box)
X immediately upon filing pursuant to paragraph (b)
-----
on (date) pursuant to paragraph (b)
-----
60 days after filing pursuant to paragraph (a)(i)
-----
on (date), pursuant to paragraph (a)(i)
-----
75 days after filing pursuant to paragraph a(ii)
-----
on (date) pursuant to paragraph (a)(ii) of rule 485.
-----
(Continued on Next Page)
<PAGE> 2
If appropriate, check the following box:
this post-effective amendment designates a new effective date
----- for a previously filed post-effective amendment.
Registrant continues its election to register an indefinite number of
its shares pursuant to Rule 24f-2 under the Investment Company Act of 1940 and
filed its Rule 24f-2 Notice for the fiscal year ended July 31, 1996 on
September 26, 1996.
<PAGE> 3
CROSS-REFERENCE SHEET
(AS REQUIRED BY RULE 495)
I. LIMITED MATURITY TREASURY PORTFOLIO - AIM LIMITED MATURITY TREASURY
SHARES
PART A - PROSPECTUS
<TABLE>
<CAPTION>
Item No. Prospectus Location
- -------- -------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary; Table of Fees and Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Summary; Investment Program;
Management; Organization of the Trust;
Dividends, Distributions and Tax Matters;
General Information
5. Management of the Fund Summary; Management; General Information
5A. Management's Discussion of Fund Performance [included in annual report]
6. Capital Stock and Other Securities Cover Page; Summary; Management;
Organization of the Trust; Dividends,
Distributions and Tax Matters
7. Purchase of Securities Being Offered Summary; How to Purchase Shares; Terms and
Conditions of Purchase of the AIM Funds;
Special Plans; Exchange Privilege;
Determination of Net Asset Value
8. Redemption or Repurchase Summary; How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
PART B - STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
Statement of Additional
Item No. Information Location
- -------- --------------------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Introduction; General Information About the
Trust; Miscellaneous Information
13. Investment Objectives and Policies Portfolio Transactions and Brokerage
Allocation-Portfolio Turnover; Investment
Objectives and Policies; Investment
Restrictions
14. Management of the Fund Management
15. Control Persons and Principal Holders of Securities Miscellaneous Information
16. Investment Advisory and Other Services Management
17. Brokerage Allocation and Other Practices Portfolio Transactions and Brokerage
Allocation
18. Capital Stock and Other Securities General Information About the Trust;
Description of Fund Shares
19. Purchase, Redemption and Pricing of How to Purchase and Redeem Shares; Net Asset
Securities Being Offered Value Determination
20. Tax Status Dividends, Distributions and Tax Matters
21. Underwriters Management; The Distribution Agreement
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
<PAGE> 4
II. LIMITED MATURITY TREASURY PORTFOLIO - INSTITUTIONAL SHARES
PART A - PROSPECTUS
<TABLE>
<CAPTION>
Item No. Prospectus Location
- -------- -------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary; Table of Fees and Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Summary; Suitability For
Investors; General Information; Investment
Program
5. Management of the Fund Management of the Trust; Portfolio
Transactions and Brokerage Allocation;
General Information
5A. Management's Discussion of Fund Performance [included in annual report]
6. Capital Stock and Other Securities Suitability for Investors; General
Information; Dividends and Distributions;
Taxes
7. Purchase of Securities Being Offered Summary; Purchase of Shares; Net Asset Value
8. Redemption or Repurchase Summary; Redemption of Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
PART B - STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
Statement of Additional
Item No. Information Location
- -------- --------------------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information About the Fund
13. Investment Objectives and Policies Investment Program and Restrictions
14. Management of the Fund General Information About the Fund -
Trustees and Officers
15. Control Persons and Principal Holders of Securities General Information About the Fund -
Principal Holders of Securities
16. Investment Advisory and Other Services General Information About the Fund
17. Brokerage Allocation and Other Practices Portfolio Transactions
18. Capital Stock and Other Securities General Information About the Fund - The
Fund and its Shares
19. Purchase, Redemption and Pricing of Securities Purchase and Redemptions
Being Offered
20. Tax Status Taxes
21. Underwriters Purchases and Redemptions - The Distribution
Agreement
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
<PAGE> 5
APPLICATION INSIDE
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
AIM Investment Securities Funds
AIM LIMITED MATURITY TREASURY SHARES
PROSPECTUS
NOVEMBER 21, 1996
AIM INVESTMENT SECURITIES FUNDS (the "Trust") is an open-end, series,
management investment company. Pursuant to this Prospectus, the Trust offers
shares of beneficial interest in one portfolio:
LIMITED MATURITY TREASURY PORTFOLIO (the "Fund") is a portfolio whose
investment objective is to seek liquidity with minimum fluctuation of
principal value, and, consistent with this objective, the highest total
return achievable. The Fund seeks to achieve this objective by investing
in an actively managed portfolio of U.S. Treasury notes and other direct
obligations of the U.S. Treasury.
THERE CAN BE NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS OBJECTIVES. THE NET
ASSET VALUE OF THE FUND VARIES DEPENDING ON THE MARKET VALUE OF ITS ASSETS.
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.
This Prospectus sets forth basic 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 November 21,
1996, has been filed with the United States 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 P.O. Box 4739, Houston, TX 77210-4739 or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference,
and other information regarding the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY............................... 2 How to Purchase Shares.............. A-1
THE FUND.............................. 4 Terms and Conditions of Purchase of
Table of Fees and Expenses.......... 4 the AIM Funds.................... A-2
Financial Highlights................ 5 Special Plans....................... A-7
Performance......................... 6 Exchange Privilege.................. A-8
Investment Program.................. 6 How to Redeem Shares................ A-10
Management.......................... 8 Determination of Net Asset Value.... A-13
Organization of the Trust........... 9 Dividends, Distributions and Tax
INVESTOR'S GUIDE TO THE AIM FAMILY OF Matters.......................... A-13
FUNDS............................... A-1 General Information................. A-16
Introduction to The AIM Family of APPLICATION INSTRUCTIONS.............. B-1
Funds............................ A-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND. AIM Investment Securities Funds (the "Trust") is a Delaware
business trust organized as an open-end, series, management investment company.
Currently, the Trust offers one investment portfolio: LIMITED MATURITY TREASURY
PORTFOLIO ("the "Fund"). The Fund consists of two classes: AIM Limited Maturity
Treasury Shares (the "Retail Class") and the Institutional Shares (the
"Institutional Class"). This Prospectus relates solely to shares of the Retail
Class of the Fund.
Shares of the Institutional Class of the Fund are offered to investors
pursuant to a separate prospectus. The Retail Class and the Institutional Class
may have differing fees and expenses, which may affect performance. To obtain
information about the Institutional Class, please call (800) 659-1005.
The investment objective of the Fund is to seek liquidity with minimum
fluctuation in principal value and, consistent with this investment objective,
the highest total return achievable. To achieve its objective, the Fund will
invest in U.S. Treasury notes and other direct obligations of the U.S. Treasury
and may (but does not currently intend to) engage in repurchase agreement
transactions with respect to such obligations. THERE IS NO ASSURANCE THAT THE
INVESTMENT OBJECTIVES OF THE FUND WILL BE ACHIEVED. For more complete
information on the Fund's investment objective and policies, see "Investment
Program."
THE ADVISOR. A I M Advisors, Inc. ("AIM") serves as the Fund's investment
advisor pursuant to a Master Investment Advisory Agreement (the "Advisory
Agreement"). AIM, together with its affiliates, manages or advises 43 investment
company portfolios. As of November 1, 1996, the total assets advised or managed
by AIM or its affiliates were approximately $58 billion. Under the terms of the
Advisory Agreement AIM supervises all aspects of the Fund's operations and
provides investment advisory services to the Fund. As compensation for these
services, AIM receives a fee based on the Fund's average daily net assets. Under
a Master Administrative Services Agreement, AIM may be reimbursed by the Fund
for its costs in performing, or arranging for the performance of, certain
accounting, shareholder servicing and other administrative services for the
Fund. Under a Transfer Agency and Service Agreement, A I M Fund Services, Inc.
("AFS"), AIM's wholly-owned subsidiary and a registered transfer agent, receives
a per account fee for its provision of transfer agency, dividend distribution
and disbursement, and shareholder services to the Fund. See "Management."
On November 4, 1996, A I M Management Group Inc. ("AIM Management")
announced that it had entered into an Agreement and Plan of Merger among INVESCO
plc ("INVESCO"), INVESCO Group Services Inc. and AIM Management, pursuant to
which AIM Management will be merged with INVESCO Group Services Inc. Subject to
a number of conditions being met, it is currently anticipated that the
transaction will occur in the early part of 1997. The Trust's investment
advisor, AIM, is a wholly owned subsidiary of AIM Management.
The proposed transaction may be deemed to cause an "assignment" (as that
term is defined under the Investment Company Act of 1940 (the "1940 Act")) of
the investment advisory agreement between the Trust and AIM. Under the 1940 Act
and the investment advisory agreement, an assignment results in the automatic
termination of the investment advisory agreement. The completion of the
transaction is contingent upon, among other things, the approval of both the
Board of Directors of the Trust and the shareholders of the Trust of a new
investment advisory agreement between the Trust and AIM. Management of the Trust
anticipates that the essential terms of the new investment advisory agreement,
including the investment advisory fees, would be the same as those under the
current investment advisory agreement between the Trust and AIM. It is also
anticipated that the investment advisory personnel responsible for the Trust
will remain unchanged. Upon consummation of the proposed transaction, employees
of INVESCO Group Services, Inc. and affiliated companies will be able to
purchase shares of The AIM Family of Funds at net asset value.
PURCHASING SHARES. Shares of the Retail Class are offered by this
Prospectus at the net asset value of the Fund plus a maximum sales charge of
1.00% of the public offering price, which sales charge is reduced on purchases
of $100,000 or more. Initial in-
2
<PAGE> 7
vestments in the Retail Class generally must be at least $500, and subsequent
investments must be at least $50. The distributor of the shares of the Retail
Class is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston,
Texas 77210-4739. See "How to Purchase Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Retail Class is one of several mutual funds
distributed by AIM Distributors (collectively, "The AIM Family of Funds").
Shares of the Retail Class may be exchanged for shares of any 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. Shareholders may redeem all or a portion of their shares
at their net asset value, generally without charge. See "How to Redeem Shares."
If the value of a shareholder's account is less than $500, the Trust may cause
the shares in the account to be redeemed at their net asset value.
DISTRIBUTIONS. The Fund currently declares dividends from net investment
income on a daily basis and pays such dividends on a monthly basis.
Distributions by the Fund from short-term capital gains and long-term capital
gains, if any, are paid annually. Dividends and distributions of the Fund may be
reinvested at their net asset value (without payment of a sales charge) in the
Fund's shares or, subject to certain conditions, in shares of another fund in
The AIM Family of Funds. See "Dividends, Distributions and Tax Matters" and
"Special Plans."
AIM, AIM Institutional Funds, AIM LINK, The AIM Family of Funds, The AIM
Family of Funds and Design (i.e., the AIM logo), and AIM and Design are
registered service marks and La Familia AIM de Fondos and La Familia AIM de
Fondos and Design are service marks of A I M Management Group Inc.
3
<PAGE> 8
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Retail Class of
the Fund understand the various costs that the investor will bear, both directly
and indirectly. The fees and expenses set forth in this table are based on the
average net assets of the Retail Class of the Fund for the fiscal year ended
July 31, 1996. The rules and regulations of the SEC require that the maximum
sales charge be reflected in the table, even though certain investors may
qualify for reduced sales charges. See "How to Purchase Shares."
<TABLE>
<CAPTION>
RETAIL
CLASS
-------
<S> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as a % of offering price)........ 1.00%
Maximum sales load on reinvested dividends and distributions (as a %
of offering price).............................................................. None
Deferred sales load (as a % of original purchase price or redemption proceeds,
as applicable).................................................................. None
Redemption fee (as a % of amount redeemed, as applicable).......................... None
Exchange fee*...................................................................... None
Annual Operating Expenses
(as a % of average net assets)
Management fees.................................................................... 0.20%
Rule 12b-1 Fees**.................................................................. 0.15%
Other expenses..................................................................... 0.19%
Total operating expenses........................................................ 0.54%
</TABLE>
- ------------
* No fee will be charged for exchanges among The AIM Family of Funds.
** It is possible that as a result of Rule 12b-1 fees, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted under rules of the National Association of Securities
Dealers, Inc. Given the Rule 12b-1 fee of the Retail Class, however, it is
estimated that it would take a substantial number of years for a shareholder
to exceed such maximum front-end sales charges.
EXAMPLES. An investor in the Fund would pay the following expenses on a $1,000
investment in shares of the Retail Class of the Fund, assuming (1) a 5% annual
return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
RETAIL
CLASS
-------
<S> <C>
1 year...................................................... $15
3 years..................................................... $27
5 years..................................................... $40
10 years..................................................... $77
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED TO BE REPRESENTATIVE OF THE
SHARES OF THE RETAIL CLASS OF THE FUND'S ACTUAL OR FUTURE EXPENSES, WHICH MAY BE
GREATER OR LESS THAN THOSE SHOWN. IN ADDITION, WHILE THE EXAMPLES ASSUME A 5%
ANNUAL RETURN, THE ACTUAL PERFORMANCE OF THE RETAIL CLASS WILL VARY AND MAY
RESULT IN AN ACTUAL RETURN THAT IS GREATER OR LESS THAN 5%. THE EXAMPLES ASSUME
REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND THAT THE PERCENTAGE AMOUNTS
FOR TOTAL FUND OPERATING EXPENSES REMAIN THE SAME FOR EACH YEAR.
4
<PAGE> 9
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights during each of the
fiscal years ended July 31, 1996 and 1995, the eleven months ended July 31,
1994, each of the years in the five-year period ended August 31, 1993 and for
the period December 15, 1987 (date operations commenced) through August 31,
1988. All data have been audited by KPMG Peat Marwick LLP, independent auditors,
whose report on the financial statements and notes appears in the Statement of
Additional Information.
<TABLE>
<CAPTION>
JULY 31, AUGUST 31,
-------------------------------- --------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period........... $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78 $ 9.80 $ 9.92
Income from
investment
operations:
Net investment
income......... 0.55 0.54 0.35 0.42 0.58 0.72 0.77 0.84 0.52
Net gains
(losses) on
securities
(both realized
and unrealized) (0.06) 0.07 (0.20) 0.05 0.29 0.22 0.01 (0.02) (0.12)
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total from
investment
operations. 0.49 0.61 0.15 0.47 0.87 0.94 0.78 0.82 0.40
-------- -------- -------- -------- -------- ------- ------- ------- -------
Less
distributions:
Dividends from
net investment
income......... (0.55) (0.54) (0.35) (0.42) (0.58) (0.72) (0.77) (0.84) (0.52)
Distributions
from net
realized
capital gains.. -- -- (0.08) (0.02) (0.09) -- -- -- --
-------- -------- -------- -------- -------- ------- ------- -------
Total
distributions. (0.55) (0.54) (0.43) (0.44) (0.67) (0.72) (0.77) (0.84) (0.52)
-------- -------- -------- -------- -------- ------- ------- -------
Net asset value,
end of period.... $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78 $ 9.80
======== ======== ======== ======== ======== ======= ======= ======= =======
Total return(a)... 4.98% 6.36% 1.52% 4.65% 8.93% 9.95% 8.32% 8.71% 4.11%
======== ======== ======== ======== ======== ======= ======= ======= =======
Ratios/supplemental
data
Net assets, end
of period (000s
omitted)........ $359,048 $274,480 $329,942 $348,937 $260,454 $131,880 $79,871 $70,781 $62,342
======== ======== ======== ======== ======== ======= ======= ======= =======
Ratio of expenses
to average net
assets.......... 0.54%(b) 0.51% 0.47%(c) 0.46% 0.48% 0.54% 0.50%(d) 0.45%(e) 0.35%(c)(e)
======== ======== ======== ======== ======== ======= ======= ======= =======
Ratio of net
investment
income to
average net
assets.......... 5.45%(b) 5.44% 3.75%(c) 4.07% 5.60% 7.25% 7.90%(d) 8.59%(e) 7.02%(c)(e)
======== ======== ======== ======== ======== ======= ======= ======= =======
Portfolio
turnover rate... 117.09% 120.01% 120.40% 122.99% 119.62% 214.74% 192.46% 219.53% 140.83%
======== ======== ======== ======== ======== ======= ======= ======= =======
Borrowings for the
period:
Amount of debt
outstanding at
end of period
(000s
omitted)........ -- -- -- -- -- -- -- $ 9,943 $19,232
Average amount of
debt outstanding
during the
period (000s
omitted)(f)..... -- -- -- -- -- -- $ 5,101 $14,301 $ 4,110
Average number of
shares
outstanding
during the
period (000s
omitted)(f)..... 32,350 28,337 34,101 30,416 18,378 10,559 7,389 7,295 2,429
Average amount of
debt per share
during the
period.......... -- -- -- -- -- -- $ 0.69 $ 1.96 $1.69
</TABLE>
- ------------
(a) Does not deduct sales charges and for periods of less than one year, total
return is not annualized.
(b) Ratios are based on average net assets of $325,704,724.
(c) Annualized.
(d) After waiver of advisory fees.
(e) After waiver of advisory fees and expense reimbursements.
(f) Averages computed on a daily basis.
5
<PAGE> 10
- --------------------------------------------------------------------------------
PERFORMANCE
The Fund's performance may be quoted in advertising in terms of yield or
total return. Both types of performance are based on historical results and are
not intended to indicate future performance. All advertisements of the Fund will
disclose the maximum sales charge imposed on purchases of the Fund's shares. If
any advertised performance data does not reflect the maximum sales charge, 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.
A Fund's yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the share price. In order to calculate yield, a
Fund takes the interest income earned from its portfolio of investments for a
30-day period (net of expenses), divides such interest by the number of the
Fund's shares, and expresses the result as an annualized percentage rate based
on the Fund's offering price (including the 1.00% maximum sales charge) at the
end of the 30-day period. Yields are calculated according to accounting methods
that are standardized for all stock and bond funds. Because yield accounting
methods differ from the methods used for other accounting purposes, a Fund's
yield may not equal the income paid to an investor's account or the income
reported in the Fund's financial statements.
A Fund may also quote its distribution rate, which is calculated by
dividing dividends declared during a specified period by the Fund's maximum
offering price at the end of the period and annualizing the result.
A Fund's total return shows its overall change in value, including changes
in share price assuming all of 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 annually compounded 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, a 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 a practice
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. A Fund's performance is a function
of its portfolio management in selecting the type and quality of portfolio
securities and is affected by the operating expenses of the Fund and general
market conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek
liquidity with minimum fluctuation in principal value, and, consistent with this
objective, the highest total return achievable. There can be no assurance that
the Fund will achieve its investment objective. The Fund's investment objective
is a fundamental policy, which may be changed only by the affirmative vote of
the holders of a majority of the outstanding shares of beneficial interest of
the Fund.
INVESTMENT POLICIES. The Fund will attempt to achieve its objective by
investing in an actively managed portfolio of U.S. Treasury notes and other
direct obligations of the U.S. Treasury.
The Fund will attempt to enhance its total return through capital
appreciation when market factors, such as economic and market conditions and the
prospects for interest rate changes, indicate that capital appreciation may be
available without significant risk to principal. The Fund will only purchase
securities whose maturities do not exceed three (3) years. The Fund's policy of
investing in securities with remaining maturities of three (3) years or less
will result in high portfolio turnover. Under normal circumstances, the average
portfolio maturity of the Fund will range between one-and-one-half (1 1/2) and
two (2) years. Since brokerage commissions are not normally paid on investments
of the type made by the Fund, the high turnover rate should not adversely affect
the net income of the Fund.
U.S. TREASURY SECURITIES. The Fund may invest in U.S. Treasury obligations,
which are direct obligations of the U.S. Treasury and which differ only in their
interest rates, maturities, and times of issuance, including U.S. Treasury
bills, U.S. Treasury notes and U.S. Treasury bonds.
LOANS OF PORTFOLIO SECURITIES. The Fund may from time to time loan
securities from its portfolio to brokers, dealers and financial institutions and
receive collateral in cash or U.S. Treasury obligations which will be maintained
at all times in an amount equal to at least 100% of the current market value of
the loaned securities; provided, however, that such loans are made according to
the guidelines of the SEC and the Trust's Board of Trustees. The Fund will be
entitled to the interest paid upon investment of the cash collateral in its
permitted investments or to the payment of a premium or fee for the loan. The
Fund may at any time call such loans
6
<PAGE> 11
and obtain the securities loaned. However, if the borrower of the securities
should default on its obligation to return the securities borrowed, the value of
the collateral may be insufficient to permit the Fund to reestablish its
position by making a comparable investment due to changes in market conditions.
The Fund may pay reasonable fees to persons unaffiliated with the Fund in
connection with the arranging of such loans. The Fund will only engage in
securities lending transactions with broker-dealers registered with the SEC, or
with federally-supervised banks or savings and loan associations.
WHEN-ISSUED OR DELAYED DELIVERY TRADING. The Fund may purchase U.S.
Treasury obligations on a when-issued basis, and it may purchase or sell such
securities for delayed delivery. These transactions occur when securities are
purchased or sold by the Fund with payment and delivery to take place in the
future in order to secure what is considered an advantageous yield and price to
the Fund at the time of entering into the transaction. The value of the security
on the delivery date may be more or less than its purchase price. The Fund's
custodian bank will segregate cash or short-term U.S. Treasury obligations in an
aggregate amount equal to the amount of its commitments in connection with such
delayed delivery and when-issued purchase transactions. No delayed delivery or
when-issued commitments will be made if, as a result, more than 25% of the
Fund's net assets would be so committed.
BORROWING. Subject to its investment restrictions (see "Investment
Restrictions"), the Fund may borrow money from banks for temporary or emergency
purposes to meet redemption requests which might otherwise require the untimely
disposition of securities. The Fund may not borrow for the purpose of increasing
income. If there are unusually heavy redemptions because of changes in interest
rates or for any other reason, the Fund may have to sell a portion of its
investment portfolio at a time when it may be disadvantageous to do so. Selling
Fund securities under these circumstances may result in a lower net asset value
per share or decreased dividend income, or both. The Fund believes that, in the
event of abnormally heavy redemption requests, its borrowing provisions would
help to mitigate any such effects and could make the forced sale of its
portfolio securities less likely.
REVERSE REPURCHASE AGREEMENTS. A reverse repurchase agreement involves the
sale of securities held by the Fund, with an agreement that the Fund will
repurchase such securities at an agreed-upon price, date and interest payment.
It is the current operating policy of the Fund to enter into reverse repurchase
agreements (which are considered to be borrowings under the 1940 Act) only for
temporary or emergency purposes and not as a means to increase income, even
though the Fund's investment restrictions permit the Fund to engage in reverse
repurchase agreements for income enhancement. The Fund will enter into a reverse
repurchase agreement only when the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction. During the time a reverse repurchase agreement is
outstanding, the Fund will maintain a segregated custodial account containing
U.S. Treasury obligations having a value equal to the repurchase price under
such reverse repurchase agreement. Any investment gains made by the Fund with
monies borrowed through reverse repurchase agreements will cause the net asset
value of the Fund's shares to rise faster than would be the case if the Fund had
no such borrowings. On the other hand, if the investment performance resulting
from the investment of borrowings obtained through reverse repurchase agreements
fails to cover the cost of such borrowings to the Fund, the net asset value of
the Fund will decrease faster than would otherwise be the case.
ILLIQUID SECURITIES. The Fund will limit its investment in illiquid
securities to no more than 15% of its net assets, including repurchase
agreements with remaining maturities in excess of seven (7) days.
The investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Fund.
INVESTMENT RESTRICTIONS. The Fund's investment program is subject to a
number of investment restrictions which reflect self-imposed standards as well
as federal and state regulatory limitations. These restrictions are designed to
minimize certain risks associated with investing in certain types of securities
or engaging in certain transactions. The most significant of these restrictions
provide that the Fund will not:
(1) purchase any security unless the security is a direct obligation
of the U.S. Treasury or is a repurchase agreement with respect to a direct
obligation of the U.S. Treasury;
(2) issue senior securities in the form of indebtedness, borrow money,
except from banks for temporary or emergency purposes, such as to meet
redemption requests (not for the purpose of increasing income), or borrow
through reverse repurchase agreements (which may be entered into for the
purpose of increasing income) if, as a result of any such borrowings, the
amount borrowed would exceed 33 1/3% of the value of the Fund's assets
(including the proceeds of such securities issued or money borrowed) less
its liabilities (not including the liabilities incurred in connection with
such issuance or borrowing);
(3) make loans of money other than (a) through the purchase of debt
securities in accordance with the Fund's investment program, and (b) by
entering into repurchase agreements; or
(4) lend any portfolio securities if the value of the securities
loaned by it would exceed an amount equal to one-third of its total assets.
The foregoing investment restrictions (as well as certain others set forth in
the Statement of Additional Information) are matters of fundamental policy which
may not be changed without the affirmative vote of the holders of a majority of
the outstanding shares of beneficial interest of the Fund.
7
<PAGE> 12
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Fund is vested in
the Trust's Board of Trustees. The Board of Trustees approves all significant
agreements between the Fund and persons or companies furnishing services to the
Fund, including the investment advisory agreement with AIM, the administrative
services agreement with AIM, the distribution agreement with AIM Distributors
regarding distribution of shares of the Retail Class, the agreement with The
Bank of New York as custodian and the agreement with AFS as transfer agent for
the Retail Class of the Fund. The day-to-day operations of the Fund are
delegated to the Trust's officers and to AIM, subject always to the objectives
and policies of the Fund and to the general supervision of the Trust's Board of
Trustees. Certain trustees and officers of the Trust are affiliated with AIM and
A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM.
AIM Management is a holding company engaged in the financial services business.
Information concerning the Board of Trustees may be found in the Statement of
Additional Information.
INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046, serves as the investment advisor to the Fund pursuant to a
Master Investment Advisory Agreement, dated October 18, 1993 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its affiliates,
manages or advises 43 investment company portfolios (including the Fund). As of
November 1, 1996, the total assets of the investment company portfolios were
approximately $58 billion. AIM is a wholly-owned subsidiary of AIM Management.
Under the terms of the Advisory Agreement, AIM supervises all aspects of
the Fund's operations and provides investment advisory services to the Fund. AIM
obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Fund. The Advisory Agreement
also provides that, upon the request of the Board of Trustees, AIM may perform
or arrange for the performance of certain accounting, shareholder servicing and
other administrative services for the Fund which are not required to be
performed by AIM under the Advisory Agreement. The Board of Trustees has made
such a request. As a result, AIM and the Fund have entered into a Master
Administrative Services Agreement, dated as of October 18, 1993, pursuant to
which AIM is entitled to receive from the Fund reimbursement of its costs or
such reasonable compensation as may be approved by the Board of Trustees.
Currently, AIM is reimbursed for the services of the Fund's principal financial
officer and his staff, and any expenses related to such services, as well as the
services of staff responding to various shareholder inquires. In addition, the
Fund and A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM and registered transfer agent, receives a fee
pursuant to a Transfer Agency and Service Agreement for its provision of
transfer agency, dividend distribution and disbursement, and shareholder
services to the Fund.
For a discussion of AIM's brokerage allocation policies and practices, see
"Portfolio Transactions and Brokerage Allocation" in the Statement of Additional
Information. In accordance with policies established by the trustees, AIM may
take into account sales of shares of the Fund and other funds advised by AIM in
selecting broker-dealers to effect portfolio transactions on behalf the Fund.
FEES AND EXPENSES. Pursuant to the Advisory Agreement, the Trust pays AIM a
fee with respect to the Fund calculated at the annual rate of 0.20% of the first
$500 million of the Fund's average daily net assets plus 0.175% of the Fund's
average daily net assets in excess of $500 million. For the year ended July 31,
1996, the Fund paid 0.20% of its average daily net assets to AIM for its
advisory services, and the Retail Class' total expenses of the same period,
stated as a percentage of average daily net assets of the Retail Class, was
0.54%.
For the year ended July 31, 1996, the Fund paid 0.01% of its average daily
net assets to AIM for reimbursement for administrative services.
FEE WAIVERS. In order to increase the yield to investors, AIM may from time
to time voluntarily waive or reduce its fee, while retaining its ability to be
reimbursed for such fee prior to the end of such fiscal year. Fee waivers or
reductions and waivers of expense reimbursements, other than those set forth in
the Advisory Agreement, may be rescinded at any time without notice to
investors.
PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Fund. AIM's investment staff consists of 118 individuals. While
individual members of AIM's investment staff are assigned primary responsibility
for the day-to-day management of each of AIM's accounts, all accounts are
reviewed on a regular basis by AIM's Investment Policy Committee to ensure that
they are being invested in accordance with the accounts' and AIM's investment
policies. The individuals on the investment team who are primarily responsible
for the day-to-day management of the Fund are Karen Dunn Kelley, Meggan M. Walsh
and Paula A. Permenter. Ms. Kelley is Senior Vice President of A I M Capital
Management, Inc. ("AIM Capital"), a wholly-owned subsidiary of AIM; Vice
President of AIM and of the Trust; and has been responsible for the Fund since
1992. Ms. Kelly has been associated with AIM since 1989 and has a total of 14
years of experience as an investment professional. Ms. Walsh is Vice President
of AIM Capital and has been responsible for the Fund since 1992. Ms. Walsh has
been associated with AIM since 1991 and has a total of nine years of experience
as an investment professional. Prior to 1991, Ms. Walsh was Manager of
Short-Term U.S. Commercial Paper and Euro-Commercial Paper Programs at
Nationale-Nederlanden North America Corporation. Paula A. Permenter has been
responsible for the Fund since 1996. Ms. Permenter has been associated with AIM
since 1996 and has eight years of experience as an investment professional.
Prior to joining AIM, she was an Associate Trader and Investment Assistant with
Van Kampen American Capital Asset Management, Inc.
8
<PAGE> 13
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement,
dated October 15, 1993, relating to the shares of the Retail Class (the
"Distribution Agreement") with AIM Distributors, a registered broker-dealer and
a wholly-owned subsidiary of AIM, to act as the distributor of shares of the
Retail Class. The address of AIM Distributors is P.O. Box 4739, Houston, Texas
77210-4739. Certain trustees and officers of the Trust are affiliated with AIM
Distributors. The Distribution Agreement provides AIM Distributors with the
exclusive right to distribute shares of the Retail Class through affiliated
broker-dealers and through other broker-dealers with whom AIM Distributors has
entered into selected dealer agreements.
DISTRIBUTION PLAN. The Trust has adopted a Master Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the Retail
Class. Under the Plan the Fund with respect to the Retail Class will pay
compensation of 0.15% per annum of the average daily net assets of the Retail
Class to AIM Distributors for the purpose of financing any activity which is
primarily intended to result in the sale of shares of the Retail Class. The Plan
is designed to compensate AIM Distributors for certain promotional and other
sales-related costs, and to implement an incentive program which provides for
periodic payments to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
shares of the Retail Class.
Under the Plan, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or a portion of its fee, while retaining its
ability to be reimbursed for such fee prior to the end of the fiscal year.
Activities that may be financed under the Plan include, but are not limited
to, the following: preparation and distribution of advertising material and
sales literature, printing of prospectuses and statements of additional
information (and supplements thereto) and reports for other than existing
shareholders, supplemental payments made to dealers and other institutions such
as asset-based sales charges or as payments of service fees under shareholder
services arrangements and the cost of administering the Plan.
The Plan does not obligate the Retail Class to reimburse AIM Distributors
for the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Plan. Thus, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Retail Class will
not be obligated to pay more than that fee, but if AIM Distributors' expenses
are less than the fee it receives, AIM Distributors will retain the full amount
of the fee.
The Plan provides that it will continue in effect so long as it is
specifically approved at least annually by a majority of the Trust's entire
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 Plan or in any agreements
related to the Plan ("Qualified Trustees"), unless terminated by vote of a
majority of the Qualified Trustees, or by vote of the holders of a majority of
the outstanding shares of the Retail Class. The Plan may not be amended to
increase materially the limit upon distribution expenses described above unless
approved by shareholders of the Retail Class, as applicable, and no other
material amendment to the Plan may be made unless approved by a majority of the
Board of Trustees, including a majority of the Qualified Trustees. While the
Plan is in effect, the selection and nomination of Qualified Trustees will be at
the discretion of the Qualified Trustees.
Under the Plan, certain financial institutions which have entered into
service agreements and which sell shares of the Retail Class on an agency basis,
may receive payments from the Retail Class pursuant to the Plan. AIM
Distributors does not act as principal, but rather as agent, for the Retail
Class in making such payments. The Retail Class 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.
Payments pursuant to the Plan are subject to any applicable limitations
imposed by rules of the National Association of Securities Dealers, Inc.
("NASD"). The Plan conforms 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
Retail Class to no more than 0.25% per annum of the average daily net assets of
the Retail Class attributable to the customers of such dealers of financial
institutions. The Plan also imposes a cap on the total amount of sales charges,
including asset-based sales charges, that may be paid by the Retail Class. The
Plan requires the officers of the Trust to provide the Board of Trustees at
least quarterly with a written report of the amounts expended pursuant to the
Plan and the purposes for which such expenditures were made. The Board of
Trustees shall review these reports in connection with their decisions with
respect to the Plan.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust is organized as a Delaware business trust pursuant to an
Agreement and Declaration of Trust, dated May 5, 1993, as amended (the "Trust
Agreement"). The Trust is an open-end, series, management investment company,
and may consist of one or more series portfolios as authorized from time to time
by the Board of Trustees. The Trust was originally organized as a Maryland
corporation on November 4, 1988 and on October 15, 1993 was reorganized as a
Delaware business trust.
All shares of the Trust have equal rights with respect to voting, except
that (i) the holders of shares of all classes of a particular portfolio of the
Trust (a "Portfolio") voting together will have the exclusive right to vote on
matters (such as advisory fees) pertaining solely to that Portfolio, and (ii)
the holders of shares of a particular class will have the exclusive right to
vote on matters pertain-
9
<PAGE> 14
ing to distribution plans or shareholder service plans, if any such plans are
adopted, relating solely to such class. There are no preemptive or conversion
rights applicable to any of the Trust's shares. The Trust's shares, when issued,
will be fully paid and non-assessable.
The Retail Class and Institutional Class have different shareholders and
are allocated certain differing class expenses, such as distribution and/or
service fees related to their respective shares. The difference between the
expenses of the Retail Class and Institutional Class may affect performance. To
obtain information about the Institutional Class, please call Fund Management
Company ("FMC"), a registered broker-dealer and a wholly-owned subsidiary of
AIM, at (800) 659-1005. FMC is the exclusive distributor of the Institutional
Class.
The Trust is not required to hold annual or regular meetings of
shareholders. Meetings of shareholders of a class will be held from time to time
to consider matters requiring a vote of such shareholders in accordance with the
requirements of the 1940 Act, state law or the provisions of the Trust
Agreement. It is not expected that shareholder meetings will be held annually.
The Trust Agreement provides that the trustees of the Trust shall hold
office during the existence of the Trust, except as follows: (a) any trustee may
resign or retire; (b) any trustee may be removed by a vote of the majority of
the outstanding shares of the Trust, or at any time by written instrument signed
by at least two-thirds of the trustees and specifying when such removal becomes
effective; or (c) any trustee who has died or become incapacitated and is unable
to serve may be removed by a written instrument signed by a majority of the
trustees.
Under Delaware law, a shareholder of the Trust enjoys the same limitations
of liability 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.
10
<PAGE> 15
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION
AND SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 5:30 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 AGGRESSIVE GROWTH FUND AIM INCOME FUND+
AIM BALANCED FUND+ AIM INTERMEDIATE GOVERNMENT FUND+
AIM BLUE CHIP FUND+ AIM INTERNATIONAL EQUITY FUND+
AIM CAPITAL DEVELOPMENT FUND+ AIM LIMITED MATURITY TREASURY SHARES
AIM CHARTER FUND+ AIM MONEY MARKET FUND*+
AIM CONSTELLATION FUND AIM MUNICIPAL BOND FUND+
AIM GLOBAL AGGRESSIVE GROWTH FUND+ AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GROWTH FUND+ AIM TAX-EXEMPT CASH FUND*
AIM GLOBAL INCOME FUND+ AIM TAX-FREE INTERMEDIATE SHARES
AIM GLOBAL UTILITIES FUND+ AIM VALUE FUND+
AIM GROWTH FUND+ AIM WEINGARTEN FUND+
AIM HIGH YIELD FUND+
</TABLE>
* Shares of AIM TAX-EXEMPT CASH FUND, and Class C Shares of AIM MONEY MARKET
FUND, are offered to investors at net asset value, without payment of a sales
charge, as described below.
+ Shares of different classes of these funds, including the Class A and Class B
Shares of AIM MONEY MARKET FUND, are offered to investors at different sales
charges pursuant to a Multiple Distribution System. For more information
consult the prospectus of any of these funds.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement arrangement ("IRA") is $250. There are
no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account. A Salary Reduction SEP ("SARSEP")
may not be established after December 31, 1996; however existing SARSEP accounts
can remain in effect.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
RET 11/96
A-1
<PAGE> 16
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS, as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character
limit)
OBI: Shareholder Name, Shareholder Account
Number
(70 character limit)
</TABLE>
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds may be purchased at their respective net asset value
plus a sales charge as indicated below, except that shares of AIM TAX-EXEMPT
CASH FUND and Class C Shares of AIM MONEY MARKET FUND (the "No Load Funds") are
sold without a sales charge. For information on purchasing any of the AIM Funds
and to receive a prospectus, please call (800) 347-4246. As described below, the
sales charge otherwise applicable to a purchase of shares of a fund may be
reduced if certain conditions are met. In order to take advantage of a reduced
sales charge, the prospective investor or his dealer must advise AIM
Distributors that the conditions for obtaining a reduced sales charge have been
met. Net asset value is determined in the manner described under the caption
"Determination of Net Asset Value." The following tables show the sales charge
and dealer concession at various investment levels for the AIM Funds.
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 AGGRESSIVE GROWTH FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND,
AIM MONEY MARKET FUND, AIM VALUE FUND and AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
--------------------------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ----------------------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." Purchases of $1,000,000 or more are
at net asset value, subject to a contingent deferred sales charge of 1% if
shares are redeemed prior to 18 months from the date such shares were purchased,
as described under the caption "How to Redeem Shares -- Contingent Deferred
Sales Charge Program for Large Purchases."
RET 11/96
A-2
<PAGE> 17
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 AIM TAX-EXEMPT BOND FUND OF CONNECTICUT; and the Class A
shares of each of AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME
FUND, AIM INTERMEDIATE GOVERNMENT FUND, and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
--------------------------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ----------------------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." Purchases of $1,000,000 or more are
at net asset value, subject to a contingent deferred sales charge of 1% if
shares are redeemed prior to 18 months from the date such shares were purchased,
as described under the caption "How to Redeem Shares -- Contingent Deferred
Sales Charge Program for Large Purchases."
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 AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE
INTERMEDIATE SHARES.
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE DEALER
--------------------------------------------- CONCESSION
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE PUBLIC OF THE NET OF THE PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ----------------------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
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 reallowed may be deemed to be "underwriters" as that
term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE
SHARES 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 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 shares
RET 11/96
A-3
<PAGE> 18
of AIM LIMITED MATURITY TREASURY SHARES, and in an amount up to 0.25% of such
purchases of shares of AIM TAX-FREE INTERMEDIATE SHARES.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, 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.
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 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 and NYSE Close on each business day of AIM
MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that either 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.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds (except for
the No Load Funds, which are sold without payment of a sales charge) provided
that such purchases are made by a "purchaser" as hereinafter defined. Purchases
of shares of AIM TAX-EXEMPT CASH FUND, Class C shares of AIM MONEY MARKET FUND
and Class B shares of funds offered pursuant to a Multiple Distribution System
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
o an individual and his or her spouse and minor children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
RET 11/96
A-4
<PAGE> 19
o a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), 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;
o a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
o a SEP, SARSEP where the employer has notified AIM Distributors in writing
that all of its related employee SEP or SARSEP accounts should be linked;
o any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
o 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 as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for (i) the No
Load Funds and (ii) Class B Shares of funds offered pursuant to a Multiple
Distribution System) within the following 13 consecutive months. By marking the
LOI section on the account application and by signing the account application,
the purchaser indicates that he understands and agrees to the terms of the LOI
and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney-in-fact
to surrender for redemption any or all escrowed shares, to make up such
difference within 60 days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) the No Load Funds
and (ii) Class B Shares
RET 11/96
A-5
<PAGE> 20
of funds offered pursuant to a Multiple Distribution System) 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) the No Load Funds and (ii) Class B Shares of funds offered
pursuant to a Multiple Distribution System) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; and (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the initial amount invested in
the fund(s) 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 omnibus account per fund and the financial institution or service
organization 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 up to 1.00% of the net asset value of
any shares of the Load Funds (as defined on page A-8 herein), up to 0.10% of the
net asset value of any shares of AIM LIMITED MATURITY TREASURY SHARES, and up to
0.25% of the net asset value of any shares of all other AIM Funds 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 Obli-
RET 11/96
A-6
<PAGE> 21
gations"). Class A shares of such funds may also be purchased at net asset value
by other unit investment trusts approved by the Board of Directors of AIM Equity
Funds, Inc. Unit holders of such trusts may elect to invest cash distributions
from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION
FUND at net asset value, including: (a) distributions of any dividend
income or other income received by such trusts; (b) distributions of any net
capital gains received in respect of Class A shares of AIM WEINGARTEN FUND or
AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
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
can arrange for monthly, quarterly or annual checks in any amount (but not less
than $50) to be drawn against the balance of his account in the designated AIM
Fund. 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.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares, 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 monthly or quarterly
investments may establish an Automatic Investment Plan. Under this plan, on or
about the tenth and/or the twenty-fifth day of each month, a draft is drawn on
the shareholder's bank account in the amount specified by the shareholder
(minimum $50 per investment, per account). The proceeds of the draft are
invested in shares of the designated AIM Fund at the applicable offering price
determined on the date of the draft. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. 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 pay-
RET 11/96
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<PAGE> 22
ing fund of at least $5,000; (b) the account must be held in the name of the
shareholder (i.e., the account may not be held in nominee name); and (c) the
shareholder must have requested and completed an authorization relating to the
reinvestment of dividends into another AIM Fund. An authorization may be given
on the account application or on an authorization form available from AIM
Distributors. An AIM Fund will waive the $5,000 minimum account value
requirement if the shareholder has an account in the fund selected to receive
the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND 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; and SEP plans
(collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).
- --------------------------------------------------------------------------------
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, 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; shares of certain of the AIM Funds, 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 shares of certain other funds, referred to herein as the "No Load
Funds," are sold at net asset value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
----------- -----------------
AIM AGGRESSIVE GROWTH FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A AIM LIMITED MATURITY TREASURY
AIM BALANCED FUND -- CLASS A AIM INCOME FUND -- CLASS A SHARES
AIM BLUE CHIP FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM TAX-FREE INTERMEDIATE SHARES
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
FUND -- CLASS A AIM INTERNATIONAL EQUITY NO LOAD FUNDS:
AIM CHARTER FUND -- CLASS A FUND -- CLASS A --------------
AIM CONSTELLATION FUND -- CLASS A AIM MONEY MARKET FUND -- CLASS A AIM MONEY MARKET FUND -- CLASS C
AIM GLOBAL AGGRESSIVE GROWTH AIM MUNICIPAL BOND AIM TAX-EXEMPT CASH FUND
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL INCOME FUND -- CLASS A OF CONNECTICUT
AIM GLOBAL UTILITIES FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GROWTH FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund,
except that (i) Load Funds share purchases of $1,000,000 or more which are
subject to a contingent deferred sales charge may not be exchanged for Lower
Load Funds or for AIM TAX-EXEMPT CASH FUND, (ii) Lower Load Funds share
purchases of $1,000,000 or more and No Load Fund purchases may be exchanged for
Load Fund shares in amounts of $1,000,000 or more which will then be subject to
a contingent deferred sales charge; however, for purposes of calculating the
contingent deferred sales charge on the Load Fund shares acquired, the 18-month
period shall be computed from the date of such exchange, and (iii) if the fund
offers more than one class of shares, the exchange must be between the same
class of shares. DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE
IS BEING MADE, SHARES
RET 11/96
A-8
<PAGE> 23
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>
LOWER LOAD NO LOAD
FROM: TO: LOAD FUNDS FUNDS FUNDS
- -------------------- --------------------------------------------- ----------------- -------------
<S> <C> <C> <C>
Load Funds.......... Net Asset Value Net Asset Value Net Asset Value
Lower Load Funds.... Net Asset Value Net Asset Value Net Asset Value
No Load Funds....... Offering Price if No Load Fund shares were Net Asset Value Net Asset Value
directly purchased. Net Asset Value if No if No Load shares
Load Fund shares were acquired upon exchange were acquired
of shares of any Load Fund or any Lower Load upon exchange of
Fund. shares of any
Load Fund or any
Lower Load Fund;
otherwise, Of-
fering Price.
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS
REVISED AS FOLLOWS:
<TABLE>
<CAPTION>
LOWER LOAD NO LOAD
FROM: TO: LOAD FUNDS FUNDS FUNDS
- -------------------- --------------------------------------------- ----------------- -------------
<S> <C> <C> <C>
Load Funds.......... Net Asset Value Net Asset Value Net Asset Value
Lower Load Funds.... Net Asset Value if shares were acquired upon Net Asset Value Net Asset Value
exchange of any Load Fund. Otherwise,
difference in sales charge will apply.
</TABLE>
<TABLE>
<S> <C> <C> <C>
No Load Funds....... Offering Price if No Load Fund shares were Net Asset Value Net Asset Value
directly purchased. Net Asset Value if No if No Load Fund
Load Fund shares were acquired upon exchange shares were
of shares of any Load Fund. Difference in acquired upon
sales charge will apply if No Load Fund exchange of
shares were acquired upon exchange of Lower shares of any
Load Fund shares. Load Fund or any
Lower Load Fund;
otherwise, Of-
fering Price.
</TABLE>
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 fund acquired through such exchange; (b) the
shares of the 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 Internal Revenue Service ("IRS") Form W-8
(certificate of foreign status) or Form W-9 (certifying exempt status) must have
been received by the fund; (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; (g) certificates representing shares must be returned before shares
can be exchanged; and (h) if the fund offers more than one class of shares, the
exchange must be between the same class of shares. There is no fee for exchanges
among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (see "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," be-
RET 11/96
A-9
<PAGE> 24
low), 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.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of shares of Lower Load Funds and No Load Funds, a contingent deferred
sales charge of 1% applies to purchases of $1,000,000 or more that are redeemed
within 18 months of the date of purchase. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-month period (i) shares of any Load
Fund or Class C shares of AIM MONEY MARKET FUND which were acquired through an
exchange of shares which previously were subject to the 1% contingent deferred
sales charge will be credited with the period of time such exchanged shares were
held, and (ii) shares of any Load Fund which are subject to the 1% contingent
deferred sales charge and which were acquired through an exchange of shares of a
Lower Load Fund or a No Load Fund which previously were not subject to the 1%
contingent deferred sales charge will not be credited with the period of time
such exchanged shares were held. The charge will be waived in the following
circumstances:
(1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under
Section 403(b) of the Code and sponsored by nonprofit organizations as
defined under Section 501(c)(3) of the Code, where shares (not the entire
Plan) are being redeemed, and (a) the initial amount invested by a Plan in
one or more of the AIM Funds 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;
RET 11/96
A-10
<PAGE> 25
(2) redemptions of shares following the registered shareholder's (or
in the case of joint accounts, all registered joint owners') death or
disability, as defined in Section 72(m)(7) of the Code;
(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; and
(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."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information; and (e) the proceeds
of the redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth at that item of the account application if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will be generally transmitted on the next business day.
REDEMPTIONS BY CHECK (NO LOAD FUNDS). After completing the appropriate
authorization form, shareholders may use checks to effect redemptions from the
No Load Funds. This privilege does not apply to retirement accounts or qualified
plans. Checks may be drawn in any amount of $250 or more. Checks drawn against
insufficient shares in the account, against shares held less than ten business
days, or in amounts of less than the applicable minimum will be returned to the
payee. The payee of the check may cash or deposit it in the same way as an
ordinary bank check. When a check is presented to the Transfer Agent for
payment, the Transfer Agent will cause a sufficient number of shares of such
fund to be redeemed to cover the amount of the check. Shareholders are entitled
to dividends on the shares redeemed through the day on which the check is
presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares which are subject to the contingent
deferred sales charge program for large purchases described above may be subject
to the imposition of deferred sales charges that will be deducted from the
redemption proceeds. See "Contingent Deferred Sales Charge Program for Large
Purchases."
RET 11/96
A-11
<PAGE> 26
Orders for the redemption of shares received in proper form prior to NYSE Close
on any business day of an AIM Fund will be confirmed at the price determined as
of the close of that day. Orders received after NYSE Close will be confirmed at
the price determined on the next business day of an AIM Fund. Redemptions of
shares of AIM MONEY MARKET FUND received prior to 12:00 noon or NYSE Close on
any business day of the fund will be confirmed at the price next determined. It
is the responsibility of the dealer to ensure that all orders are transmitted on
a timely basis. Any resulting loss from the dealer's failure to submit a request
for redemption within the prescribed time frame will be borne by that dealer.
Telephone redemption requests must be made by NYSE Close on any business day of
an AIM Fund and will be confirmed at the price determined as of the close of
that day. No AIM Fund will accept requests which specify a particular date for
redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the United States
Securities and Exchange Commission (the "SEC"), and further provided that such
guarantor institution is listed in one of the reference guides contained in the
Transfer Agent's current Signature Guarantee Standards and Procedures, such as
certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in 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 AIM LIMITED MATURITY TREASURY SHARES or AIM TAX-FREE INTERMEDIATE
SHARES, the reinvested proceeds will be subject to the difference in sales
charge between the shares redeemed and the shares the proceeds are reinvested
in. The shareholder must ask the Transfer Agent for such privilege at the time
of reinvestment. A realized gain on the redemption is taxable, and reinvestment
may alter any capital gains payable. If there has been a loss on the redemption
and shares of the same fund are repurchased, all of the loss may not be tax
deductible, depending on the timing and amount reinvested. Under the Code, if
the redemption proceeds of fund shares on which a sales charge was paid are
reinvested in (or exchanged for) shares of another AIM Fund at a reduced sales
charge within 90 days of the payment of the sales charge, the shareholder's
basis in the fund shares redeemed may not include the amount of the sales charge
paid, thereby reducing the loss or increasing the gain recognized from the
redemption; however, the shareholder's basis in the fund shares purchased will
include the sales charge. Each AIM Fund may amend, suspend or cease offering
this privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation. This privilege may only be exercised once
each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of shares of any AIM Fund, and who subsequently reinvest a
portion or all of the value of the redeemed shares in 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.
RET 11/96
A-12
<PAGE> 27
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund other than AIM
MONEY MARKET FUND will be determined as of NYSE Close, on each business day of a
fund. The net asset value (or share price) of AIM MONEY MARKET FUND will be
determined as of 12:00 noon and NYSE Close 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 an AIM Fund's share will be determined as
of the close of the NYSE on such day. For purposes of determining net asset
value per share, futures and options contract closing prices which are available
15 minutes after the close of trading of the NYSE will generally be used. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the Money Market Funds, are valued at amortized cost as
reflecting fair value. AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE SHARES 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.
- --------------------------------------------------------------------------------
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 AGGRESSIVE 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 GLOBAL AGGRESSIVE GROWTH FUND....... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................. declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................. declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND............... declared daily; paid monthly annually annually
AIM GROWTH FUND......................... declared and paid annually annually annually
AIM HIGH YIELD FUND..................... declared daily; paid monthly annually annually
AIM INCOME FUND......................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND........ declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND........... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY SHARES.... declared daily; paid monthly annually annually
AIM MONEY MARKET FUND................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................. declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT. declared daily; paid monthly annually annually
</TABLE>
RET 11/96
A-13
<PAGE> 28
<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 TAX-EXEMPT CASH FUND................ declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE SHARES........ declared daily; paid monthly annually annually
AIM VALUE FUND.......................... declared and paid annually annually annually
AIM WEINGARTEN FUND..................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment. 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. 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.
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 or intends to qualify for treatment as a regulated
investment company under Subchapter M of the Code. As long as a fund qualifies
for this tax treatment, it is not subject to federal income taxes on net
investment income and capital gains that are distributed to shareholders. Each
fund, for purposes of determining taxable income, distribution requirements and
other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE
FUND SHARES (the "Tax-Exempt Funds") which are exempt from federal tax.
Dividends paid by a fund (other than capital gain distributions) may qualify for
the federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM LIMITED MATURITY TREASURY SHARES, AIM MONEY MARKET FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND or AIM TAX-FREE INTERMEDIATE SHARES will qualify for this dividends
received deduction. Shortly after the end of each year, shareholders will
receive information regarding the amount and federal income tax treatment of all
distributions paid during the year.
Certain states exempt from state income taxes dividends paid by mutual funds
out of interest on U.S. Treasury and certain other U.S. Government obligations,
and investors should consult with their own tax advisors concerning the
availability of such exemption.
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.
RET 11/96
A-14
<PAGE> 29
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and long-term capital gain dividends) and return
of capital distributions. Under applicable treaty law, residents of treaty
countries may qualify for a reduced rate of withholding or a withholding
exemption.
Foreign persons who file a United States tax return after December 31, 1996
for a U.S. tax refund and who are not eligible to obtain a social security
number, must apply to the IRS for an individual taxpayer identification number
("ITIN"), using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying
instructions, please contact your tax advisor or the Transfer Agent.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and other taxable securities. For additional
information concerning the alternative minimum tax and certain collateral tax
consequences of the receipt of exempt-interest dividends, see the Statements of
Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX
INFORMATION. For taxable years in which it is eligible to do so, each of these
funds may elect to pass through to shareholders credits for foreign taxes paid.
If the fund makes such an election, a shareholder who receives a distribution
(1) will be required to include in gross income his proportionate share of
foreign taxes allocable to the distribution and (2) may claim a credit or
deduction for such share for his taxable year in which the distribution is
received, subject to the general limitations imposed on the allowance of foreign
tax credits and deductions. Shareholders should also note that certain gains or
losses attributable to fluctuations in exchange rates or foreign currency
forward contracts may increase or decrease the amount of income of the fund
available for distribution to shareholders, and should note that if such losses
exceed other income during a taxable year, the fund would not be able to pay
ordinary income dividends.
RET 11/96
A-15
<PAGE> 30
- --------------------------------------------------------------------------------
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 LIMITED MATURITY
TREASURY SHARES, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AND AIM TAX-FREE INTERMEDIATE SHARES, for
which The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, serves as custodian. Texas Commerce Bank National Association, 712 Main
Street, Houston, Texas 77002, 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 as
dividend payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and has passed
upon the legality of the shares offered pursuant to this Prospectus.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an AFS Client Services Representative by calling (800) 959-4246.
The Transfer Agent may impose certain copying charges for requests for copies of
shareholder account statements and other historical account information older
than the current year and the immediately preceding year.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by 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.
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.
RET 11/96
A-16
<PAGE> 31
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ ---------- ------------ ----------
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for Form W-9 (which can be obtained from the IRS)
and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three
RET 11/96
B-1
<PAGE> 32
calendar years beginning with the calendar year in which it is received by the
Fund. Such shareholders may, however, be subject to appropriate withholding as
described in the Prospectus under "Dividends, Distributions and Tax Matters."
For United States tax returns filed after December 31, 1996 by foreign persons
for a U.S. tax refund, eligible foreign persons, who do not require a social
security number for any other purpose, must apply to the IRS for an individual
taxpayer identification number ("ITIN"). An ITIN application is made using IRS
Form W-7. See "Dividends, Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice.
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
RET 11/96
B-2
<PAGE> 33
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
The Bank of New York
90 Washington Street, 11th Floor
New York, NY 10286
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Building
Houston, TX 77002
For more complete information about any other fund in The AIM Family of Funds,
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> 34
STATEMENT OF
ADDITIONAL INFORMATION
AIM INVESTMENT SECURITIES FUNDS
-----------------------
AIM LIMITED MATURITY TREASURY SHARES
(A CLASS OF THE LIMITED MATURITY TREASURY PORTFOLIO)
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TEXAS 77046-1173
(713) 626-1919
-----------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE ABOVE-NAMED FUND,
A COPY OF WHICH MAY BE OBTAINED FREE OF CHARGE FROM AUTHORIZED DEALERS OR
BY WRITING
A I M DISTRIBUTORS, INC., P.O. BOX 4739,
HOUSTON, TEXAS 77210- 4739
OR BY CALLING (800) 347-4246.
-----------------------
STATEMENT OF ADDITIONAL INFORMATION DATED: NOVEMBER 21, 1996
RELATING TO PROSPECTUS DATED: NOVEMBER 21, 1996
<PAGE> 35
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE TRUST . . . . . . . . . . . . . . . . . . . . 1
The Trust and its Shares . . . . . . . . . . . . . . . . . . . . . 1
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Yield Calculations . . . . . . . . . . . . . . . . . . . . . . . . 2
Total Return Calculations . . . . . . . . . . . . . . . . . . . . 2
Historical Portfolio Results . . . . . . . . . . . . . . . . . . . 3
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION . . . . . . . . . . . . . . 4
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . 5
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . 5
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Additional Investment Restrictions of the Fund . . . . . . . . . . 7
Investing in Securities Owned by Trustees and Officers . . . . . . 7
Investing for Control . . . . . . . . . . . . . . . . . . . . . . 8
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . 8
Remuneration of Trustees . . . . . . . . . . . . . . . . . . . . . 11
AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . 12
Deferred Compensation Agreements . . . . . . . . . . . . . . . . . 12
Investment Advisory and Other Services . . . . . . . . . . . . . . 13
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . 15
THE DISTRIBUTION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 16
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . 17
NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . 18
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . 18
Reinvestment of Dividends and Distributions . . . . . . . . . . . 18
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Qualification as a Regulated Investment Company . . . . . . . . . 19
Excise Tax on Regulated Investment Companies . . . . . . . . . . . 21
Fund Distributions . . . . . . . . . . . . . . . . . . . . . . . . 21
Sale or Redemption of Fund Shares . . . . . . . . . . . . . . . . 22
Foreign Shareholders . . . . . . . . . . . . . . . . . . . . . . . 23
Effect of Future Legislation; Local Tax Considerations . . . . . . 23
DESCRIPTION OF FUND SHARES . . . . . . . . . . . . . . . . . . . . . . . . 23
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 24
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . 24
</TABLE>
i
<PAGE> 36
<TABLE>
<S> <C>
Principal Holders of Securities . . . . . . . . . . . . . . . . . 24
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
ii
<PAGE> 37
INTRODUCTION
AIM Investment Securities 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
with certain information concerning the activities of the fund being considered
for investment. This information is included in a Prospectus (the
"Prospectus"), dated November 21, 1996, which relates to the Trust's AIM Limited
Maturity Treasury Shares (the "Retail Class"), a class of the Limited Maturity
Treasury Portfolio (the "Fund"). Copies of the Prospectus and additional copies
of this Statement of Additional Information may be obtained without charge by
writing the principal distributor of the shares of the Retail Class, A I M
Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, Texas
77210-4739, or by calling (800) 347-4246. Investors must receive and should
read a Prospectus before they invest in any Fund.
This Statement of Additional Information is intended to furnish
investors with additional information concerning the Fund. Some of the
information set forth in this Statement of Additional Information is also
included in the Prospectus. Additionally, the Prospectus and this Statement of
Additional Information omit certain information contained in the Trust's
Registration Statement filed with the SEC. Copies of the Registration
Statement including items omitted from the Prospectus and this Statement of
Additional Information, may be obtained from the SEC by paying the charges
prescribed under its rules and regulations. 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.
GENERAL INFORMATION ABOUT THE TRUST
THE TRUST AND ITS SHARES
The Trust was previously incorporated as a Maryland corporation on
November 4, 1888. Pursuant to an Agreement and Plan of Reorganization, the
Fund was reorganized on October 15, 1993, as a portfolio of AIM Investment
Securities Funds, a Delaware business trust. A copy of the Trust's Agreement
and Declaration of Trust dated May 5, 1993, as amended (the "Trust Agreement")
is on file with the SEC. Under the Trust Agreement, the Board of Trustees is
authorized to create new series of shares without the necessity of a vote of
shareholders of the Trust.
On October 15, 1993, the Fund succeeded to the assets and assumed the
liabilities of a fund with a corresponding name (the "Predecessor Fund") of
Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant
to an Agreement and Plan of Reorganization between the Trust and STIC. All
historical financial information and other information contained in this
Statement of Additional Information for periods prior to October 15, 1993
relating to the Fund (or a class thereof) is that of the Predecessor Fund (or
corresponding class thereof). Shares of beneficial interest of the Trust are
redeemable at their net asset value at the option of the shareholder or at the
option of the Trust in certain circumstances. For information concerning the
methods of redemption and the rights of share ownership, investors should
consult the Prospectus under the captions "Organization of the Trust" and "How
to Redeem Shares."
The assets received by the Trust for the issuance or sale of shares of
each class, and all income, earnings, profits, losses and proceeds therefrom,
subject only to the rights of creditors, will be allocated to that Fund. They
constitute the underlying assets of the Fund, are required to be segregated on
the Trust's books of account, and are to be charged with the expenses with
respect to the Fund and its respective classes. Any general expenses of the
Trust not readily identifiable as belonging to a particular Fund are allocated
by or under the direction of the Board of Trustees, primarily on the basis of
relative net assets, or other relevant factors.
1
<PAGE> 38
Each share of beneficial interest of the Fund represents an equal
proportionate interest in the Fund with each other share and is entitled to
such dividends and distributions out of the income belonging to the Fund as are
declared by the Board. The Fund offers two separate classes of shares: AIM
Limited Maturity Treasury Shares, a retail class, and Institutional Shares, an
institutional class. Each class represents interests in the same portfolio of
investments but, as further described in the Prospectus, each such class is
subject to differing sales charges (if applicable) and expenses, which
differences will result in differing net asset values and dividends and
distributions. Upon any liquidation of the Trust, shareholders of each class
are entitled to share pro rata in the net assets belonging to the Fund
available for distribution.
PERFORMANCE INFORMATION
YIELD CALCULATIONS
Yields for the Fund used in advertising are computed as follows: (a)
divide the Fund's income for a given 30 day or one-month period, net of
expenses, by the average number of shares entitled to receive dividends during
the period; (b) divide the figure arrived at in step (a) by the Fund's offering
price (including the maximum sales charge) at the end of the period; and (c)
annualize the result (assuming compounding of income) in order to arrive at an
annual percentage rate. For purposes of yield quotation, income is calculated
in accordance with standardized methods applicable to all stock and bond mutual
funds. In general, interest income is reduced with respect to bonds trading at
a premium over their par value by subtracting a portion of the premium from
income on a daily basis, and is increased with respect to bonds trading at a
discount by adding a portion of the discount to daily income. Capital gains
and losses are excluded from the calculation.
The Fund may also quote its distribution rate, which expresses the
historical amount of income the Fund paid as dividends to its shareholders as a
percentage of the Fund's offering price. The distribution rate for the Retail
Class for the thirty day period ended July 31, 1996, was 5.11%. This
distribution rate was calculated by dividing dividends declared over the thirty
days ended July 31, 1996, as applicable, by the applicable Fund's maximum
offering price at the end of the period and annualizing the result.
Income calculated for the purposes of calculating the Fund's yield
differs from income as determined for other accounting purposes. Because of
the different accounting methods used, and because of the compounding assumed
in yield calculations, the yield quoted for the Fund may differ from the rate
of distributions the Fund paid over the same period or the rate of income
reported in the Fund's financial statements.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the Fund's
return, including the effect of reinvesting dividends and capital gain
distributions, and any changes in the Fund's net asset value per share over the
period. Average annual returns are calculated by determining the growth or
decline in value of a hypothetical investment in the Fund over a stated period,
and then calculating the annual compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. While average annual returns are a convenient means
of comparing investment alternatives, investors should realize that the Fund's
performance is not constant over time, but changes from year to year, and that
average annual returns do not represent the actual year-to-year performance of
the Fund.
In addition to average annual total return, the Fund may quote
unaveraged or cumulative total return reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions over any time period. Total returns may be broken down into their
components of income and capital (including capital gains and changes in share
price) in order to illustrate the relationship of these factors and their
contributions to total return. Total returns,
2
<PAGE> 39
yields and other performance information may be quoted numerically or in a
table, graph or similar illustration. Total returns may be quoted with or
without taking any applicable maximum sales charge into account. If quoted
without the sales charge, the performance quotation will be noted by an
asterisk or other conspicuous footnote disclosing this fact. Excluding the
Fund's sales charge from a total return calculation produces a higher total
return figure.
HISTORICAL PORTFOLIO RESULTS
The Fund's performance may be compared in advertising to the
performance of other mutual funds in general, or of particular types of mutual
funds, especially those with similar objectives. Such performance data may be
prepared by Lipper Analytical Services, Inc. and other independent services
which monitor the performance of mutual funds. The Fund may also advertise
mutual fund performance rankings which have been assigned to it by such
monitoring services.
The Fund's performance may also be compared in advertising and other
materials to the performance of comparative benchmarks such as the Consumer
Price Index, the Standard & Poor's 500 Stock Index, and fixed-price investments
such as bank certificates of deposit and/or savings accounts. In addition, the
Fund's long-term performance may be described in advertising in relation to
historical, political and/or economic events. An investor should be aware that
an investment in the Fund is subject to risks not present in ownership of a
certificate of deposit, due to possible greater risk of loss of capital.
From time to time, the Fund's sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. These
topics include, but are 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.
From time to time sales literature and/or advertisements may disclose
(i) top holdings included in the Fund's portfolio, (ii) certain selling group
members and/or (iii) certain institutional shareholders.
The following chart shows the total returns for the Retail Class for
the one and five year periods ended July 31, 1996, and the period beginning
December 15, 1987 (date operations commenced) through July 31, 1996.
<TABLE>
<CAPTION>
AVERAGE
ANNUAL RETURN CUMULATIVE RETURN
------------- -----------------
<S> <C> <C>
One year ended 07/31/96 3.93% 3.93%
Five year ended 07/31/96 5.30% 29.47%
12/15/87 through 07/31/96 6.52% 72.42%
</TABLE>
The 30-day yield for the Retail Class as of July 31, 1996, was 5.49%
During the one-year period ended July 31, 1996, a hypothetical $1,000
investment in the Retail Class at the beginning of such period would have been
worth $1,039. During the five-year period ended July 31, 1996, a hypothetical
$1,000 investment in the Retail Class at the beginning of such period would
have been worth $1,295. For the period from December 15, 1987 (date operations
commenced) through July 31, 1996, a hypothetical $1,000 investment in the
Retail Class would have been worth $1,724. Each of these figures assume the
maximum sales charge was paid and all distributions were reinvested.
3
<PAGE> 40
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
Subject to policies established by the Board of Trustees of the Trust,
A I M Advisors, Inc. ("AIM") is responsible for decisions to buy and sell
securities for the Fund, for the selection of broker-dealers, for the execution
of the Fund's investment portfolio transactions, for the allocation of
brokerage fees in connection with such transactions, and where applicable, for
the negotiation of commissions and spreads on transactions. Since purchases
and sales of portfolio securities by the Fund are usually principal
transactions, the Fund incurs little or no brokerage commissions. Portfolio
securities are normally purchased directly from the issuer or from a market
maker for the securities. The purchase price paid to dealers serving as market
makers may include a spread between the bid and asked prices. The Fund may
also purchase securities from underwriters at prices that include a commission
paid by the issuer to the underwriter.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To
the extent that the execution and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which AIM deems
to be beneficial to the Fund's investment program. Such research services
supplement AIM's own research. Research services may include the following:
statistical and background information on the U.S. economy, industry groups and
individual companies; forecasts and interpretations with respect to the U.S.
money market, fixed income markets, equity markets, specific industry groups
and individual companies; information on federal, state, local and foreign
political developments; portfolio management strategies; performance
information on securities, indices and investment accounts; information
concerning prices of securities; the providing of equipment used to communicate
research information; the arranging of meetings with management of companies;
and the providing of access to consultants who supply research information.
Certain research services furnished by dealers may be useful to AIM with
clients other than the Fund. Similarly, any research services received by AIM
through placement of portfolio transactions of other clients may be of value to
AIM in fulfilling its obligations to the Fund. AIM is of the opinion that the
material received is beneficial in supplementing AIM's research and analysis;
and therefore, it may benefit the Fund by improving the quality of AIM's
investment advice. The advisory fee paid by the Fund is not reduced because
AIM receives such services, however, because AIM must evaluate information
received as a result of such services, and receipt of such services does not
reduce AIM's workload.
Provisions of the Investment Company Act of 1940, as amended (the
"1940 Act") and rules and regulations thereunder have been construed to
prohibit the Fund from purchasing securities or instruments from, or selling
securities or instruments to, any holder of 5% or more of the voting securities
of any investment company managed or advised by AIM. The Fund has obtained an
order of exemption from the SEC which permits the Fund to engage in certain
transactions with such 5% holder, if the Fund complies with conditions and
procedures designed to ensure that such transactions are executed at fair
market value and present no conflicts of interest.
AIM and its affiliates manage several other investment companies (the
"AIM Funds"), some of which may have investment objectives similar to those of
the Fund. It is possible that, at times, identical securities will be
appropriate for investment by the Fund and by one or more of the AIM Funds.
The position of each account, however, in the securities of the same issue, may
vary and the length of time that each account may choose to hold its investment
in the securities of the same issue may likewise vary. The timing and amount
of purchase by each account will also be determined by its cash position. If
the purchase or sale of securities consistent with the investment policies of
the Fund and one or more of the AIM Funds is considered at or about the same
time, transactions in such securities will be allocated among the Fund and the
AIM Funds in a manner deemed equitable by AIM. AIM may combine such
transactions, in accordance with applicable laws and regulations, in order to
obtain the best net price and most favorable execution. Simultaneous
transactions could, however, adversely affect the ability of the Fund to obtain
or dispose of the full amount of a security which it seeks to purchase or sell.
Under the 1940 Act, persons affiliated with the Fund are prohibited
from dealing with the Fund as principal in any purchase or sale of securities
unless an exemptive order allowing such transactions is obtained
4
<PAGE> 41
from the SEC. The Board of Trustees has adopted procedures pursuant to Rule
17a-7 under the 1940 Act related to portfolio transactions between the Fund and
the AIM Funds and the Fund may from time to time enter into transactions in
accordance with such Rule and procedures.
From time to time, an identical security may be sold by an AIM Fund or
another investment account advised by AIM or A I M Capital Management, Inc.
("AIM Capital") and simultaneously purchased by another investment account
advised by AIM or AIM Capital, when such transactions comply with applicable
rules and regulations and are deemed consistent with the investment
objective(s) and policies of the investment accounts advised by AIM or AIM
Capital. Procedures pursuant to Rule 17a-7 under the 1940 Act regarding
transactions between investment accounts advised by AIM or AIM Capital have
been adopted by the Boards of Directors/Trustees of the various AIM Funds,
including the Fund. Although such transactions may result in custodian, tax or
other related expenses, no brokerage commissions or other direct transaction
costs are generated by transactions among the investment accounts advised by
AIM or AIM Capital.
In some cases, the procedure for allocating portfolio transactions
among the Fund and the AIM Funds could have an adverse effect on the price or
amount of securities available to the Fund. In making such allocations, the
main factors considered by AIM are the respective investment objectives and
policies of the Fund and the AIM Funds, the relative size of portfolio holdings
of the same or comparable securities, the availability of cash for investment,
the size of investment commitments generally held and the judgments of the
persons responsible for recommending the investment.
Subject to the overall objective of obtaining the best price and most
favorable execution for the Fund, AIM may also consider sales of shares of the
Fund and of the other AIM Funds as a factor in the selection of broker-dealers
to execute portfolio transactions for the Fund.
The Fund paid no brokerage commissions to brokers affiliated with the
Fund during the past three fiscal years of the Fund.
PORTFOLIO TURNOVER
High portfolio turnover involves corresponding greater transaction
costs which are borne directly by the Fund, and may increase capital gains
which are taxable as ordinary income when distributed to shareholders.
Changes in the portfolio holdings of the Fund are made without regard
to whether a sale would result in a profit or loss. The turnover rates of the
Fund for the fiscal years ended July 31, 1996, 1995, and the eleven-month
period ended July 31, 1994, were 117.09%, 120.01%, and 120.40%, respectively.
INVESTMENT OBJECTIVES AND POLICIES
The following discussion of investment policies supplements the
discussion of the investment objectives and policies set forth in the
Prospectus under the heading "Investment Programs" and should be read only in
conjunction with the Prospectus. There can be no assurance that the Fund will
achieve its investment objective. The values of the securities in which the
Fund invests fluctuate based upon interest rates and market factors.
REPURCHASE AGREEMENTS. The Fund's investment policies permit it to
invest in repurchase agreements with banks and broker-dealers pertaining to
U.S. Treasury obligations. However, in order to maximize the Fund's dividends
which are exempt from state income taxation, as a matter of operating policy,
the Fund does not currently invest in repurchase agreements. A repurchase
agreement involves the purchase by the Fund of an investment contract from a
financial institution, such as a bank or broker-dealer, which contract is
secured by U.S. Treasury obligations of the type described above whose value is
equal to or greater than the value of the repurchase agreement, including the
agreed-upon interest. The agreement provides that
5
<PAGE> 42
the seller will repurchase the underlying securities at an agreed-upon time and
price. The total amount received on repurchase will exceed the price paid by
the Fund, reflecting the agreed-upon rate of interest for the period from the
date of the repurchase agreement to the settlement date. This rate of return
is not related to the interest rate on the underlying securities. The
difference between the total amount received upon the repurchase of the
securities and the price paid by the Fund upon their acquisition is accrued
daily as interest. Investments in repurchase agreements may involve risks not
associated with investments in the underlying securities. If the seller
defaulted on its repurchase obligations, the Fund would incur a loss to the
extent that the proceeds from a sale of the underlying securities were less
than the repurchase price under the agreement. The Fund will limit repurchase
agreements to transactions with sellers believed by AIM to present minimal
credit risk. Securities subject to repurchase agreements will be held by the
Fund's custodian or in the custodian's account with the Federal Reserve
Treasury Book-Entry System. Although the securities subject to repurchase
agreements might bear maturities in excess of one year, the Fund will not enter
into a repurchase agreement with an agreed-upon repurchase date in excess of
seven (7) calendar days from the date of acquisition by the Fund, unless the
Fund has the right to require the selling institution to repurchase the
underlying securities within seven (7) days of the date of acquisition.
INVESTMENT RESTRICTIONS
The most significant investment restrictions applicable to the Fund's
investment program are set forth in the Prospectus. The percentage limitations
set forth in such restrictions are calculated by giving effect to the purchase
in question and are based upon values at the time of purchase. The Fund may,
however, retain any security purchased in accordance with such restrictions
irrespective of changes in the values of the Fund's assets occurring subsequent
to the time of purchase.
Additionally, as a matter of fundamental policy which may not be
changed without the affirmative vote of the holders of a majority of the
outstanding shares of beneficial interest of all classes of the Fund, the Fund
will not:
(1) mortgage, pledge or hypothecate any assets except to
secure permitted borrowings of money from banks for temporary or
emergency purposes and then only in amounts not in excess of 33 1/3%
of the value of its total assets at the time of such borrowing;
(2) underwrite securities issued by any other person, except
to the extent that the purchase of securities and the later
disposition of such securities in accordance with the Fund's
investment program may be deemed an underwriting;
(3) invest in real estate;
(4) purchase or sell commodities or commodity futures
contracts, engage in arbitrage transactions, purchase securities on
margin, make short sales or invest in puts or calls;
(5) purchase oil, gas or mineral interests;
(6) invest in any obligation not payable as to principal and
interest in United States currency;
(7) invest 25% or more of the value of its total assets in
securities of issuers engaged in any one industry (excluding
securities which are a direct obligation of the U.S. Treasury or are
repurchase agreements with respect to a direct obligation of the U.S.
Treasury);
6
<PAGE> 43
(8) acquire any security having a remaining term to maturity
greater than three years; or
(9) acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets.
The Trust has obtained an opinion of Dechert Price & Rhoads, special
counsel to the Trust, that shares of the Fund are eligible for investment by a
federal credit union. In order to ensure that shares of the Fund meet the
requirements for eligibility for investment by federal credit unions, the Fund
has adopted the following policies:
(1) The Fund will enter into repurchase agreements only with:
(i) banks insured by the Federal Deposit Insurance Corporation (FDIC);
(ii) savings and loan associations insured by the FDIC; or (iii)
registered broker-dealers. The Fund will only enter into repurchase
transactions pursuant to a master repurchase agreement in writing with
the Fund's counterparty. Under the terms of a written agreement with
its custodian, the Fund receives on a daily basis written confirmation
of each purchase of a security subject to a repurchase agreement and a
receipt from the Fund's custodian evidencing each transaction. In
addition, securities subject to a repurchase agreement may be recorded
in the Federal Reserve Book-Entry System on behalf of the Fund by
its custodian. The Fund purchases securities subject to a repurchase
agreement only when the purchase price of the security acquired is
equal to or less than its market price at the time of the purchase.
(2) The Fund will only enter into reverse repurchase
agreements and purchase additional securities with the proceeds when
such proceeds are used to purchase other securities that either mature
on a date simultaneous with or prior to the expiration date of the
reverse repurchase agreement, or are subject to an agreement to resell
such securities within that same time period.
(3) The Fund will only enter into securities lending
transactions that comply with the same counterparty, safekeeping,
maturity and borrowing restrictions that the Fund observes when
participating in repurchase and reverse repurchase transactions.
(4) The Fund will enter into when-issued and delayed delivery
transactions only when the time period between trade date and
settlement date does not exceed 120 days, and only when settlement is
on a cash basis. When the delivery of securities purchased in such
manner is to occur within 30 days of the trade date, the Fund will
purchase the securities only at their market price as of the trade
date.
In addition, in order to comply with regulations governing the
liquidity requirements applicable to federal savings and loan associations, as
a matter of fundamental policy, the Fund will only invest in eligible
securities having a remaining term to maturity of three years or less.
ADDITIONAL INVESTMENT RESTRICTIONS OF THE FUND
The Fund's investment programs are also subject to a number of
investment restrictions which reflect self-imposed standards as well as federal
and state regulatory limitations. These restrictions are not matters of
fundamental policy and may be changed at any time by the trustees without the
approval of shareholders.
INVESTING IN SECURITIES OWNED BY TRUSTEES AND OFFICERS
The Fund will not purchase securities of an issuer if the officers and
trustees of the Trust and the officers and directors of the Fund's investment
advisor collectively own beneficially over 5% of the outstanding voting
securities of such issuer, in each case excluding holdings of any officer,
trustee or director of less than 1/2 of 1% of the outstanding voting securities
of such issuer.
7
<PAGE> 44
INVESTING FOR CONTROL
The Fund will not invest in companies for purposes of exercising
control or management.
In order to permit the sale of the Fund's shares in certain states,
the Fund may from time to time make commitments more restrictive than the
restrictions described herein. These restrictions are not matters of
fundamental policy, and should the Fund determine that any such commitment is
no longer in the best interest of their respective shareholders, they will
revoke the commitment by terminating sales of their shares in the states
involved.
MANAGEMENT
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations
during the last five years are set forth below. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046.
*CHARLES T. BAUER, Trustee and Chairman (77)
Director, Chairman and Chief Executive Officer, A I M Management Group
Inc.; and Chairman of the Board of Directors, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc.,
A I M Institutional Fund Services, Inc. and Fund Management Company.
BRUCE L. CROCKETT, Trustee (52)
906 Frome Lane
McLean, VA 22102
Formerly, Director, President and Chief Executive Officer, COMSAT
Corporation (includes COMSAT World Systems, COMSAT Mobile Communications,
COMSAT Video Enterprises and COMSAT RSI and COMSAT International Ventures),
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT; (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services company).
OWEN DALY II, Trustee (72)
Six Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly,
Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the Board of Equitable
Bancorporation.
- -------------------------
* A trustee who is an "interested person" of the Trust and AIM as
defined in the 1940 Act.
8
<PAGE> 45
**CARL FRISCHLING, Trustee (59)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis & Frankel (law firm). Formerly,
Partner, Reid & Priest (law firm); and, prior thereto, Partner, Spengler
Carlson Gubar Brodsky & Frischling (law firm).
*ROBERT H. GRAHAM, Trustee and President (49)
Director, President and Chief Operating Officer, A I M Management
Group Inc.; Director and President, A I M Advisors, Inc.; and Director and
Senior Vice President, A I M Capital Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc. and
Fund Management Company.
JOHN F. KROEGER, Trustee (72)
37 Pippins Way
Morristown, NJ 07960
Director, Flag Investors International Fund, Inc., Flag Investors
Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag
Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund,
Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities
Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government
Bond Fund, Inc. (investment companies). Formerly, Consultant, Wendell &
Stockel Associates, Inc. (consulting firm).
LEWIS F. PENNOCK, Trustee (54)
6363 Woodway, Suite 825
Houston, TX 77057
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Trustee (73)
183 River Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Services, Inc. (provider of centralized management
services to telephone companies); Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of Pennsylvania and Diamond State
Telephone Company.
LOUIS S. SKLAR, Trustee (57)
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
- --------------------------
** A trustee who is an "interested person" of the Trust as defined in the
1940 Act.
* A trustee who is an "interested person" of the Trust and AIM as
defined in the 1940 Act.
9
<PAGE> 46
***JOHN J. ARTHUR, Senior Vice President and Treasurer (52)
Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice
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., A I M Institutional
Fund Services, Inc. and Fund Management Company.
GARY T. CRUM, Senior Vice President (49)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc.; and
Director, A I M Distributors, Inc.
***CAROL F. RELIHAN, Senior Vice President and Secretary (42)
Senior Vice President, Secretary and General Counsel, A I M
Advisors, Inc.; Vice President, General Counsel and Secretary, A I M Management
Group Inc.; Vice President and General Counsel, Fund Management Company; and
Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and A I M Institutional Fund Services, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (37)
Vice President and Fund Controller, A I M Advisors, Inc.; and
Assistant Vice President and Assistant Treasurer, Fund Management Company.
MELVILLE B. COX, Vice President (53)
Vice President and Chief Compliance Officer, A I M Advisors, Inc.,
A I M Capital Management, Inc., A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc., A I M Distributors, Inc. and Fund Management Company.
Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary,
Charles Schwab Family of Funds and Schwab Investments; Chief Compliance
Officer, Charles Schwab Investment Management, Inc.; and Vice President,
Integrated Resources Life Insurance Co. and Capitol Life Insurance Co.
KAREN DUNN KELLEY, Vice President (36)
Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc.
The standing committees of the Board of Trustees are the Audit
Committee, the Investments Committee, and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger
(Chairman), Pennock and Robinson. The Audit Committee is responsible for
meeting with the Trust's auditors to review audit procedures and results and to
consider any matters arising from an audit to be brought to the attention of
the trustees as a whole with respect to the Trust's fund accounting or its
internal accounting controls, or for considering such matters as may from time
to time be set forth in a charter adopted by the Board of Trustees and such
committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible
for reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Trustees and such committee.
- --------------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
10
<PAGE> 47
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating
individuals to stand for election as trustees who are not interested persons as
long as the Trust maintains a distribution plan pursuant to Rule 12b-1 under
the 1940 Act, reviewing from time to time the compensation payable to the
disinterested trustees, and considering such matters as may from time to time
be set forth in a charter adopted by the Board of Trustees and such committee.
All of the trustees of the Trust also serve as directors or trustees
of some or all of the other AIM Funds. Certain of the Trust's executive
officers hold similar offices with some or all of the other AIM Funds.
REMUNERATION OF TRUSTEES
Each trustee is reimbursed for expenses incurred in connection with
each meeting of the Board of Trustees or any committee thereof. Each trustee
who is not also an officer of the Trust is compensated for his or her services
according to a fee schedule which recognizes the fact that such trustee also
serves as a trustee or director of the other AIM Funds. Each such trustee
receives a fee, allocated among the AIM Funds for which he or she serves as a
director or trustee, which consists of an annual retainer component and a
meeting fee component.
Set forth below is information regarding compensation paid or accrued
for each trustee of the Fund:
<TABLE>
<CAPTION>
==============================================================================
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM THE BY ALL FROM ALL
DIRECTOR FUND(1) AIM FUNDS(2) AIM FUNDS(3)
------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
------------------------------------------------------------------------------
Bruce L. Crockett 1,279 3,655 57,750
------------------------------------------------------------------------------
Owen Daly II 1,464 18,662 58,125
------------------------------------------------------------------------------
Carl Frischling 1,448 11,323 57,250
------------------------------------------------------------------------------
Robert H. Graham 0 0 0
------------------------------------------------------------------------------
John F. Kroeger 1,375 22,313 58,125
------------------------------------------------------------------------------
Lewis F. Pennock 1,237 5,067 58,125
------------------------------------------------------------------------------
Ian W. Robinson 1,283 15,381 56,750
------------------------------------------------------------------------------
Louis S. Sklar 1,460 6,632 57,250
==============================================================================
</TABLE>
- --------------------------
(1) The total amount of compensation deferred by all Trustees of the Fund
during the fiscal year ended July 31, 1996, including interest earned
thereon, was $5,261.
(2) During the fiscal year ended July 31, 1996, the total amount of
expenses allocated to the Fund in respect of such retirement benefits
was $2,759. Data reflects compensation estimated for the calendar
year ended December 31, 1995.
11
<PAGE> 48
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as a
Director or Trustee of a total of 11 AIM Funds. Messrs. Crockett,
Frischling, Robinson and Sklar each serves as a Director or Trustee of
a total of 10 AIM Funds. Data reflects compensation estimated for the
calendar year ended December 31, 1995.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each trustee (who is not an employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Trustees.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible trustee has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "Applicable
AIM Funds"). Each eligible trustee is entitled to receive an annual benefit
from the Applicable AIM Funds commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to 75% of the
retainer paid or accrued by the Applicable AIM Funds for such trustee during
the twelve-month period immediately preceding the trustee's retirement
(including amounts deferred under a separate agreement between the Applicable
AIM Funds and the trustee) for the number of such Trustee's years of service
(not in excess of 10 years of service) completed with respect to any of the AIM
Funds. Such benefit is payable to each eligible trustee in quarterly
installments. If an eligible trustee dies after attaining the normal
retirement date but before receipt of any benefits under the Plan commences,
the trustee's surviving spouse (if any) shall receive a quarterly survivor's
benefit equal to 50% of the amount payable to the deceased trustee, for no more
than ten years beginning the first day of the calendar quarter following the
date of the trustee's death. Payments under the Plan are not secured or funded
by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible trustee upon retirement assuming various compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar
are 9, 9, 19, 18, 14, 9, and 7 years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
Annual Compensation Paid By All AIM Funds
$55,000 $60,000 $65,000
==========================================================
<S> <C> <C> <C> <C>
10 $41,250 $45,000 $48,750
Number of ----------------------------------------------------------
Years of 9 $37,125 $40,500 $43,875
Service With ----------------------------------------------------------
the AIM Funds 8 $33,000 $36,000 $39,000
----------------------------------------------------------
7 $28,875 $31,500 $34,125
----------------------------------------------------------
6 $24,750 $27,000 $29,250
----------------------------------------------------------
5 $20,625 $22,500 $24,375
==========================================================
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring trustees") have each executed a Deferred
Compensation Agreement (collectively, the
12
<PAGE> 49
"Agreements"). Pursuant to the Agreements, the deferring trustees may elect to
defer receipt of up to 100% of their compensation payable by the Fund, and such
amounts are placed into a deferral account. Currently, the deferring trustees
may select various AIM Funds in which all or part of their deferral accounts
shall be deemed to be invested. Distributions from the deferring trustees'
deferral accounts will be paid in cash, in generally equal quarterly
installments over a period of ten years beginning on the date the deferring
trustee's retirement benefits commence under the Plan. The Fund's Board of
Trustees, in its sole discretion, may accelerate or extend the distribution of
such deferral accounts after the deferring trustee's termination of service as
a trustee of the Fund. If a deferring trustee dies prior to the distribution
of amounts in his deferral account, the balance of the deferral account will be
distributed to his designated beneficiary in a single lump sum payment as soon
as practicable after such deferring trustee's death. The Agreements are not
funded and, with respect to the payments of amounts held in the deferral
accounts, the deferring trustees have the status of unsecured creditors of the
Fund and of each other AIM Fund from which they are deferring compensation.
During the fiscal year ended July 31, 1996 the Fund paid $4,141 to
Kramer, Levin, Naftalis & Frankel, the law firm in which Mr. Frischling, a
trustee of the Trust, is a partner.
INVESTMENT ADVISORY AND OTHER SERVICES
AIM is a wholly-owned subsidiary of A I M Management Group Inc. ("AIM
Management"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. AIM
Management is a holding company that has been engaged in the financial services
business since 1976. Certain of the directors and officers of AIM are also
executive officers of the Fund and their affiliations are shown under "Trustees
and Officers". AIM Capital, a wholly-owned subsidiary of AIM, is engaged in
the business of providing investment advisory services to investment companies,
corporations, institutions and other accounts.
AIM was organized in 1976, and together with its affiliates advises or
manages 43 investment company portfolios. As of November 1, 1996, the total
assets of the investment company portfolios advised or managed by AIM and its
affiliates were approximately $58 billion.
AIM and the Fund have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear all personal
securities transactions subject to the Code of Ethics, (b) to file reports or
duplicate confirmations regarding such transactions (c) to refrain from
personally engaging in (i) short-term trading of a security, (ii) transactions
involving a security within seven days of an AIM Fund transaction involving the
same security, and (iii) transactions involving securities being considered for
investment by an AIM Fund and (d) to abide by certain other provisions under
the Code of Ethics. The Code of Ethics also prohibits investment personnel and
all other AIM employees from purchasing securities in an initial public
offering. Personal trading reports are reviewed periodically by AIM, and the
Board of Trustees reviews quarterly and annual reports (including information
on any substantial violations of the Code of Ethics). Violations of the Code
of Ethics may include censure, monetary penalties, suspension or termination of
employment.
The Trust, on behalf of the Fund, has entered into a Master Investment
Advisory Agreement (the "Advisory Agreement") and a Master Administrative
Services Agreement (the "Administrative Services Agreement") with AIM. See
"Management" in the Prospectus.
The Advisory Agreement provides that the Fund will pay or cause to be
paid all expenses of the Fund not assumed by AIM, including, without
limitation: brokerage commissions; taxes, legal, accounting, auditing or
governmental fees; the cost of preparing share certificates; custodian,
transfer and shareholder service agent costs; expenses of issue, sale,
redemption and repurchase of shares; expenses of registering and qualifying
shares for sale; expenses relating to trustees and shareholder meetings; the
cost of preparing and distributing reports and notices to shareholders; the
fees and other expenses incurred by the Trust on behalf of the Fund in
connection with membership in investment company organizations; the cost of
printing copies of prospectuses and statements of additional information
distributed to the Fund's shareholders; and all other charges and costs of the
Fund's operations unless otherwise explicitly provided.
13
<PAGE> 50
The Advisory Agreement provides that if, for any fiscal year, the
total of all ordinary business expenses of the Fund, including all investment
advisory fees, but excluding brokerage commissions and fees, taxes, interest
and extraordinary expenses, such as litigation costs, exceed the applicable
expense limitations imposed by state securities regulations in any state in
which the Fund's shares are qualified for sale, as such limitations may be
raised or lowered from time to time, the aggregate of all such investment
advisory fees shall be reduced by the amount of such excess. The amount of any
such reduction to be borne by AIM shall be deducted from the monthly investment
advisory fee otherwise payable to AIM during such fiscal year. If required
pursuant to such state securities regulations, AIM will reimburse the Fund, no
later than the last day of the first month of the next succeeding fiscal year,
for any such annual operating expenses (after reduction of all investment
advisory fees in excess of such limitation).
The Advisory Agreement became effective on October 18, 1993 and will
continue in effect until June 30, 1997 and from year to year thereafter only if
such continuance is specifically approved at least annually by the Trust's
Board of Trustees or the vote of a "majority of the outstanding voting
securities" of the Fund (as defined in the 1940 Act) and (ii) the affirmative
vote of a majority of the trustees who are not parties to the Advisory
Agreement or "interested persons" of any such party (the "Non-Interested
Trustees") by votes cast in person at a meeting called for such purpose. The
Fund or AIM may terminate the Advisory Agreement on sixty (60) days' written
notice without penalty. The Advisory Agreement terminates automatically in the
event of its assignment. Under the Advisory Agreement, AIM is entitled to
receive from the Fund a fee calculated at the annual rate of 0.20% of the first
$500 million of the average daily net assets, plus 0.175% of the average daily
net assets in excess of $500 million.
For the fiscal year ended July 31, 1996, the fiscal year ended July
31, 1995 and the eleven-month period ended July 31, 1994, AIM received advisory
fees from the Fund of $933,207, $809,449, and $942,205, respectively.
The Administrative Services Agreement for the Fund provides that AIM
may provide or arrange for the performance of certain accounting, shareholder
servicing and other administrative services to the Fund which are not required
to be performed by AIM under the Advisory Agreement. For such services, AIM
would be entitled to receive from the Fund reimbursement of AIM's costs or such
reasonable compensation as may be approved by AIM and the Board of Trustees.
The Administrative Services Agreement provides that such agreement will
continue in effect until June 30, 1997, and shall continue in effect from year
to year thereafter if such continuance is specifically approved at least
annually by (i) the Trust's Board of Trustees or the vote of a "majority of the
outstanding voting securities" of the Fund (as defined in the 1940 Act) and
(ii) the affirmative vote of a majority of the Non-Interested Trustees, by
votes cast in person at a meeting called for such purpose. The Administrative
Services Agreement was approved by the Board of Trustees (including the
Non-Interested Trustees) and became effective on October 18, 1993.
For the fiscal year ended July 31, 1996, the fiscal year ended July
31, 1995 and the eleven-month period ended July 31, 1994, the Fund reimbursed
AIM for certain accounting, shareholder servicing and administrative services
in the amounts of $60,857, $82,199, and $91,445, respectively.
In addition, a sub-contract effective October 18, 1993 through October
31, 1994 between AIM and A I M Funds Services, Inc. ("AFS"), a registered
transfer agent and a wholly-owned subsidiary of AIM, provided that AFS perform
certain shareholder services for the Fund which are not required to be
performed by AIM under the Advisory Agreement. For such services, AFS was
entitled to receive from AIM such reimbursement of its costs associated with
providing those services.
For the eleven-month period ended July 31, 1994 and the period August
1, 1994 through October 31, 1994, AFS received shareholder services fees from
AIM with respect to the Retail Class in the amounts of $47,173 and $21,079,
respectively.
In addition, the Transfer Agency and Service Agreement, which became
effective November 1, 1994, provides that AFS will perform certain shareholder
services for the Fund for a fee per account serviced. The
14
<PAGE> 51
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 Fund, maintain shareholder accounts
and provide shareholders with information regarding the Fund and other
accounts.
For the fiscal year ended July 31, 1996 and for the period November 1,
1994 through July 31, 1995, AFS received from the Fund transfer agency and
shareholder services fees with respect to the Retail Class in the amounts of
$160,400 and $91,753, respectively.
DISTRIBUTION PLAN
The Trust has adopted a Master Distribution Plan (the "Plan") pursuant
to Rule 12b-1 under the 1940 Act relating to the Retail Class. The Plan
provides that the Retail Class pay a fee to AIM Distributors for distribution-
related services performed by AIM Distributors, including, but not limited to,
expenses of organizing and conducting sales seminars, printing of prospectuses
and statements of additional information (and supplements thereto) and reports
for other than existing shareholders, preparation and distribution of
advertising material and sales literature and costs of administering the Plan.
Under the Plan, AIM Distributors is entitled to receive a distribution fee,
which is accrued daily and paid monthly, of 0.15% on an annualized basis of the
average daily net assets of the Retail Class. Such amounts are intended to
compensate AIM Distributors for expenses incurred by it in performing
activities which are primarily intended to result in the sale of shares of the
Retail Class. The terms of the Plan are discussed in the Prospectus.
AIM Distributors is a wholly-owned subsidiary of AIM, which is a
wholly-owned subsidiary of AIM Management.
The Plan requires the officers of the Trust to provide the Board of
Trustees at least quarterly with a written report of the amounts expended
pursuant to the Plan and the purposes for which such expenditures were made.
The Trust's Board of Trustees reviews these reports in connection with their
decisions with respect to the Plan.
As required by Rule 12b-1 under the 1940 Act, the Plan was 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 Plan or in any
agreements related to the Plan ("Qualified Trustees") on July 19, 1993. In
approving the Plan in accordance with the requirements of Rule 12b-1, the
trustees considered various factors and determined that there is a reasonable
likelihood that the Plan would benefit the Retail Class and its shareholders.
The Plan, unless terminated earlier in accordance with its terms,
shall continue in effect until June 30, 1997, and each year thereafter as long
as such continuance is specifically approved at least annually by the Trust's
Board of Trustees, including a majority of the Qualified Trustees.
The Plan may be terminated by a vote of a majority of the Qualified
Trustees, or, with respect to a Retail Class, by a vote of a majority of the
holders of the outstanding voting securities of the Retail Class. Any change
in the Plan that would increase materially the distribution expenses paid by
the Retail Class requires shareholder approval; otherwise the Plan may be
amended by the Trust's Board of 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 Plan is in effect, the selection or
nomination of the Qualified Trustees is committed to the discretion of the
Qualified Trustees.
For the fiscal year ended July 31, 1996, AIM Distributors received
fees in the amount of $488,557, which constituted 0.15%, of the average daily
net assets of the Retail Class. An estimate by category of actual fees paid
by the Retail Class during the fiscal year ended July 31, 1996, were allocated
as follows:
15
<PAGE> 52
<TABLE>
<CAPTION>
1996
----
<S> <C>
Advertising $ 16,941
Printing and mailing prospectuses, semi-annual reports 2,990
and annual reports
Seminars 5,979
Compensation to Dealers 462,647
</TABLE>
Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with investment dealers selected
by AIM Distributors from time to time to provide distribution assistance in
connection with the sale of the shares of the Retail Class to such dealers'
customers, and to provide continuing personal shareholder services to customers
who may, from time to time, directly or beneficially own shares of the Retail
Class. 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 Retail Class;
assisting customers in changing dividend options, account designations and
addresses, and in enrolling in any of several special investment plans offered
in connection with the purchase of the shares of the Retail Class; 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 shares of the Retail Class;
and providing such other information and services as the Retail Class or the
customer may reasonably request.
Under the Plan, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plan 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 a Retail
Class and the Fund; 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 Retail Class shares; and such other administrative
services as a Retail Class reasonably may request, to the extent permitted by
applicable statute, rule or regulation.
The Plan is subject to any applicable limitations imposed from time to
time by rules of the National Association of Securities Dealers, Inc.
AIM Distributors does not act as principal, but rather as agent for
the Retail Class, in making dealer incentive and shareholder servicing payments
under the Plan. These payments are an obligation of the Retail Class and not
of AIM Distributors. Similar agreements may be permitted under the Plan for
institutions which provide recordkeeping for and administrative services to
401(k) plans.
THE DISTRIBUTION AGREEMENT
Information concerning AIM Distributors and the continuous offering of
shares of the Retail Class is set forth in the Prospectus under the caption
"How to Purchase Shares" and "Terms and Conditions of Purchase of the AIM
Funds." The Distribution Agreement (the "Distribution Agreement") became
effective on October 18, 1993. The Distribution Agreement provides that AIM
Distributors will bear the expenses of printing from the final proof and
distributing prospectuses and statements of additional information of the
Retail Class relating to public offerings made by AIM Distributors pursuant to
the Distribution Agreement (other than those prospectuses and statements of
additional information distributed to existing shareholders of the Retail
Class), and any promotional or sales literature used by AIM Distributors or
furnished by AIM Distributors to dealers in
16
<PAGE> 53
connection with the public offering of shares of the Retail Class, including
expenses of advertising in connection with such public offerings. AIM
Distributors has not undertaken to sell any specified number of shares of the
Retail Class.
The Distribution Agreement will continue in effect until June 30, 1997
and from year to year thereafter only if such continuation is specifically
approved at least annually by (i) the Board of Trustees or the vote of a
"majority of the outstanding voting securities" of the Fund (as defined in the
1940 Act) and (ii) the affirmative vote of a majority of the Non-Interested
Directors by votes cast in person at a meeting called for such purpose. The
Fund or AIM Distributors may terminate the Distribution Agreement on sixty (60)
days' written notice without penalty. The Distribution Agreement will
terminate automatically in the event of its "assignment," as defined under the
1940 Act.
For the fiscal year ended July 31, 1996, the fiscal year ended July
31, 1995 and the eleven-month period ended July 31, 1994, the total sales
charges paid in connection with the sale of shares of the Retail Class of the
Fund were $540,727, $377,682, and $384,784, respectively, of which AIM
Distributors retained $193,686, $89,885, and $98,879, respectively.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of the Retail
Class may be purchased appears in the Prospectus under the caption "How to
Purchase Shares", "Terms and Conditions of Purchase of the AIM Funds" and
"Special Plans."
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the New York Stock Exchange ("NYSE") is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the NYSE is closed for other than customary weekend and holiday closings, (c)
the SEC has by order permitted such suspension, or (d) an emergency, as
determined by the SEC, exists making disposition of portfolio securities or the
valuation of the net assets of the Fund not reasonably practicable.
The sales charge normally deducted on purchases of shares of the
Retail Class is used to compensate AIM Distributors and participating dealers
for their expenses incurred in connection with the distribution of such shares.
Since there is little expense associated with unsolicited orders placed
directly with AIM Distributors by persons, who, because of their relationship
with the Retail Class or with AIM and its affiliates, are familiar with the
Retail Class (e.g., due to the size of the transaction and shareholder records
required), AIM Distributors believes that it is appropriate and in the Fund's
best interests that such persons, and certain other persons whose purchases
result in relatively low expenses of distribution, be permitted to purchase
shares of the Retail Class through AIM Distributors without payment of a sales
charge. The persons who may purchase shares of the Retail Class without a
sales charge are set forth in the Prospectus under the caption "Terms and
Conditions of Purchase of the AIM Funds".
Complete information concerning the method of exchanging shares of the
Retail Class for shares of the other mutual funds managed or advised by AIM is
set forth in the Prospectus under the caption "Exchange Privilege."
Information concerning redemption of shares of the Retail Class is set
forth in the Prospectus under the caption "How to Redeem Shares." In addition
to the Fund's obligations to redeem shares, AIM Distributors may also
repurchase shares as an accommodation to shareholders. To effect a repurchase,
those dealers who have executed Selected Dealer Agreements with AIM
Distributors must phone orders to the order desk of the Fund at (800) 949-4246
and guarantee delivery of all required documents in good order. A repurchase
is effected at the net asset value per share of the Retail Class next
determined after such order is received. Such arrangement is subject to timely
receipt by AFS, transfer agent for the Retail Class, of all required documents
in good order. If such documents are not received within a reasonable time
after the order is placed, the order is subject to cancellation. While there
is no charge imposed by the Fund or by
17
<PAGE> 54
AIM Distributors when shares are redeemed or repurchased, dealers may charge a
fair service fee for handling the transaction.
The Trust agrees to redeem shares of the Fund, or any other future
portfolios of the Trust, solely in cash up to the lesser of $250,000 or 1% of
the Fund's net assets during any 90-day period for any one shareholder. In
consideration of the best interests of the remaining shareholders, the Trust
reserves the right to pay any redemption price exceeding this amount in whole
or in part by a distribution in kind of securities held by the Fund in lieu of
cash. It is highly unlikely that shares would ever be redeemed in kind. If
shares are redeemed in kind, however, the redeeming shareholder should expect
to incur transaction costs upon the disposition of the securities received in
the distribution.
NET ASSET VALUE DETERMINATION
Shares of the Funds offered by the Prospectus are sold at their net
asset value plus a sales charge of 1.00% of the public offering price per share
(1.01% of the amount invested), scaled down on purchases of $100,000 or more.
Shareholders may at any time redeem all or a portion of their shares at net
asset value without charge. The investor's price for purchase or redemption
will be determined by the net asset value of the relevant Fund's shares next
determined following the receipt of an order to purchase or a request to redeem
shares. The net asset value of the Funds vary depending on the market value of
their respective assets.
In accordance with the current SEC rules and regulations, the net
asset value of a share of the Fund will be determined once daily as of the
close of the NYSE, which is generally 4:00 p.m. Eastern Time on each business
day of the Fund. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of a Fund share is
determined as of the close of the NYSE on such day. The net asset value per
share of the Fund is determined by subtracting the liabilities (e.g., accrued
and dividends payable) of the Fund allocated to the class from the value of
securities, cash and assets (including interest accrued but not collected) of
the Fund allocated to the class; and dividing the result by the total number of
shares outstanding of such class. Determination of the Fund's net asset value
per share is made in accordance with generally accepted accounting principles.
Securities will be valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate, maturity and
seasoning differential. Securities for which prices are not provided by the
pricing service are valued at the mean between the last bid and asked prices or
yield equivalent based upon quotes furnished by market makers for such
securities. 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 Trust's officers in accordance with methods which are
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost, which
approximates fair market value.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gains distributions are automatically
reinvested in additional shares of the same class of the Fund unless the
shareholder has requested in writing to receive such dividends and
distributions in cash or that they be invested in shares of another AIM Fund.
18
<PAGE> 55
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Fund and its shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning. Investors are urged to consult their tax advisors with
specific reference to their own tax situation.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As
a regulated investment company, the Fund is not subject to federal income tax
on the portion of its net investment income (i.e., its taxable interest,
dividends and other taxable ordinary income, net of expenses) and realized
capital gain net income (i.e., the excess of capital gains over capital losses)
that it distributes to shareholders, provided that it distributes at least 90%
of its investment company taxable income (i.e., net investment income and the
excess of net short-term capital gain over net long-term capital loss) for the
taxable year (the "Distribution Requirement"), and satisfies certain other
requirements of the Code that are described below. Distributions by a Fund
made during the taxable year or, under specified circumstances, within 12
months after the close of the taxable year, will be considered distributions of
income and gains of the taxable year and can therefore satisfy the Distribution
Requirement.
In addition to satisfying the Distribution Requirement, the Fund must
(1) derive at least 90% of its gross income from dividends, interest, certain
payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies (to the extent such
currency gains are ancillary to the Fund's principal business of investing in
stock or securities) and other income (including but not limited to gains from
options, futures or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies (the "Income Requirement");
and (2) derive less than 30% of its gross income (exclusive of certain gains on
designated hedging transactions that are offset by realized or unrealized
losses on offsetting positions) from the sale or other disposition of stock,
securities or foreign currencies (or options, futures or forward contracts
thereon) held for less than three months (the "Short-Short Gain Test").
However, foreign currency gains, including those derived from options, futures
and forward contracts, will not be characterized as Short-Short Gain if they
are directly related to the Fund's principal business of investing in stock or
securities (or options or futures thereon). Because of the Short-Short Gain
Test, the Fund may have to limit the sale of appreciated securities that it has
held for less than three months. However, the Short-Short Gain Test will not
prevent the Fund from disposing of investments at a loss, since the recognition
of a loss before the expiration of the three-month holding period is
disregarded. Interest (including original issue discount) received by the Fund
at maturity or upon the disposition of a security held for less than three
months will not be treated as gross income derived from the sale or other
disposition of such security within the meaning of the Short-Short Gain Test.
However, income that is attributable to realized market appreciation will be
treated as gross income from the sale or other disposition of securities for
this purpose.
In general, gain or loss recognized by the Fund on the disposition of
an asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation. In
addition, if the Fund purchases a debt obligation that was originally issued at
a discount, the Fund is generally required to include in gross income each year
the portion of the original issue discount which accrues during such year.
In general, for purposes of determining whether capital gain or loss
recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (i) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, (ii) the asset is otherwise held by the Fund as part of a
19
<PAGE> 56
"straddle" (which term generally excludes a situation where the asset is stock
and the Fund grants a "qualified covered call option" with respect thereto) or
(iii) the asset is stock and the Fund grants an in-the-money qualified covered
call option with respect thereto. However, for purposes of the Short-Short
Gain Test, the holding period of the asset disposed of may be reduced only in
the case of clause (i) above. In addition, the Fund may be required to defer
the recognition of a loss on the disposition of an asset held as part of a
straddle to the extent of any unrecognized gain on the offsetting position.
Any gain recognized by the Fund on the lapse of, or any gain or loss
recognized by the Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by the Fund will commence on the date it is written and end on the date it
lapses or the date a closing transaction is entered into. Accordingly, the
Fund may be limited in its ability to write options which expire within three
months and to enter into closing transactions at a gain within three months of
the writing of options.
Transactions that may be engaged in by the Fund (such as regulated
futures contracts and options on stock indexes and futures contracts) will be
subject to special tax treatment as "Section 1256 contracts." Section 1256
contracts are treated as if they are sold for their fair market value on the
last business day of the taxable year, regardless of whether a taxpayer's
obligations (or rights) under such contracts have terminated (by delivery,
exercise, entering into a closing transaction or otherwise) as of such date.
Any gain or loss recognized as a consequence of the year-end deemed
disposition of Section 1256 contracts is taken into account for the taxable
year together with any other gain or loss that was previously recognized upon
the termination of Section 1256 contracts during that taxable year. Any
capital gain or loss for the taxable year (including any capital gain or loss
arising as a consequence of the year-end deemed sale of such contracts) is
treated as 60% long-term capital gain or loss and 40% short-term capital gain
or loss. The Fund may elect not to have this special tax treatment apply to
Section 1256 contracts that are part of a "mixed straddle" with other
investments of the Fund that are not Section 1256 contracts. The Internal
Revenue Service ("IRS") has held in several private rulings that gains arising
from Section 1256 contracts will be treated for purposes of the Short-Short
Gain Test as being derived from securities held not less than three months if
the gains arise as a result of a constructive sale under Code Section 1256.
The Fund may enter into notional principal contracts, including
interest rate swaps, caps, floors and collars. Under Treasury regulations, in
general, the net income or deduction from a notional principal contract for a
taxable year is included in or deducted from gross income for that taxable
year. The net income or deduction from a notional principal contract for a
taxable year equals the total of all of the periodic payments (generally,
payments that are payable or receivable at fixed periodic intervals of one year
or less during the entire term of the contract) that are recognized from that
contract for the taxable year and all of the non-periodic payments (including
premiums for caps, floors and collars), even if paid in periodic installments,
that are recognized from that contract for the taxable year. A periodic
payment is recognized ratably over the period to which it relates. In general,
a non-periodic payment must be recognized over the term of the notional
principal contract in a manner that reflects the economic substance of the
contract. A non-periodic payment that relates to an interest rate swap, cap,
floor or collar shall be recognized over the term of the contract by allocating
it in accordance with the values of a series of cash-settled forward or option
contracts that reflect the specified index and notional principal amount upon
which the notional principal contract is based (or, in the case of a swap or of
a cap or floor that hedges a debt instrument, under alternative methods
contained in the regulations and, in the case of other notional principal
contracts, under alternative methods that the IRS may provide in a revenue
procedure).
Treasury regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or part of any net capital
loss, any net long-term capital loss or any net foreign currency loss incurred
after October 31 as if it had been incurred in the succeeding year.
20
<PAGE> 57
In addition to satisfying the requirement described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the
Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which
the Fund has not invested more than 5% of the value of the Fund's total assets
in securities of such issuer and as to which the Fund does not hold more than
10% of the outstanding voting securities of such issuer), and no more than 25%
of the value of its total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which the Fund controls and
which are engaged in the same or similar trades or businesses.
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of the Fund's current and accumulated earnings
and profits. Such distributions generally will be eligible for the dividends
received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to distribute in each calendar year an amount equal to 98%
of ordinary taxable income for the calendar year and 98% of capital gain net
income for the one year period ended on October 31 of such calendar year (or,
at the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election")).
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable
year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year and (2) exclude
Section 988 foreign currency gains and losses incurred after October 31 of any
year (or after the end of its taxable year if it has made a taxable year
election) in determining the amount of ordinary taxable income for the current
calendar year (and, instead, include such gains and losses in determining
ordinary taxable income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax.
However, investors should note that the Fund may in certain circumstances be
required to liquidate portfolio investments to make sufficient distributions to
avoid excise tax liability.
FUND DISTRIBUTIONS
The Fund anticipates distributing substantially all of its investment
company taxable income and short-term capital gains for each taxable year.
Such distributions will be taxable to shareholders as ordinary income and
treated as dividends for federal income tax purposes, but they will not qualify
for the 70% dividends received deduction for corporations.
The Fund may either retain or distribute to shareholders its net
long-term capital gain for each taxable year. The Fund currently intends to
distribute any such amounts. If net capital gain is distributed and designated
as a capital gain dividend, it will be taxable to shareholders as long-term
capital gain, regardless of the length of time the shareholder has held his
shares or whether such gain was recognized by the Fund prior to the date on
which the shareholder acquired his shares. Conversely, if the Fund elects to
retain its net capital gain, the Fund will be taxed thereon (except to the
extent of any available capital loss carryovers) at the 35% corporate tax rate.
If the Fund elects to retain net capital gain, it is expected that the Fund
also will elect to have shareholders treated as if each received a distribution
of its pro rata share of such gain, with the
21
<PAGE> 58
result that each shareholder will be required to report its pro rata share of
such gain on its tax return as long-term capital gain, will receive a
refundable tax credit for its pro rata share of tax paid by the Fund on the
gain, and will increase the tax basis for its shares by an amount equal to the
deemed distribution less the tax credit.
Distributions by the Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by the Fund will be treated in the manner described
above regardless of whether such distributions are paid in cash or reinvested
in additional shares of the Fund (or any other fund in The AIM Family of
Funds--Registered Trademark--). Shareholders receiving a distribution in the
form of additional shares will be treated as receiving a distribution in an
amount equal to the fair market value of the shares received, determined as of
the reinvestment date. In addition, if the net asset value at the time a
shareholder purchases shares of the Fund reflects undistributed net investment
income or recognized capital gain net income, or unrealized appreciation in the
value of the assets of the Fund, distributions of such amounts will be taxable
to the shareholder in the manner described above, although such distributions
economically constitute a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the
Fund into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made in certain cases)
during the year.
The Fund is required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the Internal Revenue Service for
failure to report the receipt of interest or dividend income properly, or (3)
who has failed to certify to the Fund that it is not subject to backup
withholding or that it is a corporation or other "exempt recipient."
SALE OR REDEMPTION OF FUND SHARES
A shareholder will recognize gain or loss on the sale or redemption of
shares of the Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
In general, any gain or loss arising from (or treated as arising from) the sale
or redemption of shares of the Fund will be considered capital gain or loss and
will be long-term capital gain or loss if the shares were held for longer than
one year. However, any capital loss arising from the sale or redemption of
shares held for six months or less will be treated as a long-term capital loss
to the extent of the amount of capital gain dividends received on such shares.
For this purpose, the special holding period rules of Code Section 246(c)(3)
and (4) generally will apply in determining the holding period of shares.
Long-term capital gains of non-corporate taxpayers are currently taxed at a
maximum rate 11.6% lower than the maximum rate applicable to ordinary income.
Capital losses in any year are deductible only to the extent of capital gains
plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (i) incurs a sales load in acquiring shares of the
Fund, (ii) disposes of such shares less than 91 days after they are acquired
and (iii) subsequently acquires shares of the same or another fund at a reduced
sales load pursuant to a right to reinvest at such reduced sales load acquired
in connection with the acquisition of the shares disposed of, then the sales
load on the shares disposed of (to the extent of the reduction in the sales
load on the shares subsequently acquired) shall not be taken into account in
determining gain or loss on the shares disposed of but shall be treated as
incurred on the acquisition of the shares subsequently acquired.
22
<PAGE> 59
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income
dividends and return of capital distributions (other than capital gains
dividends) will be subject to U.S. withholding tax at the rate of 30% (or lower
treaty rate) upon the gross amount of the distribution. Such a foreign
shareholder would generally be exempt from U.S. federal income tax on gains
realized on the sale or redemption of shares of the Fund, capital gain
dividends and amounts retained by the Fund that are designated as undistributed
net capital gains.
If the income from the Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income
dividends, capital gain dividends and any gains realized upon the sale or
redemption of shares of the Fund will be subject to U.S. federal income tax at
the rates applicable to U.S. citizens or domestic corporations.
In the case of foreign non-corporate shareholders, the Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the Fund with proper notification of
their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisors with
respect to the particular tax consequences to them of an investment in the
Fund, including the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and regulations issued thereunder as in
effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from
the rules for U.S. federal income taxation described above. The tax treatment
of foreign investors may also differ from the treatment for U.S. investors
described above. Shareholders are urged to consult their tax advisors as to
the consequences of these and other state and local tax rules affecting
investments in the Fund.
DESCRIPTION OF FUND SHARES
Each share of the Fund is entitled to one vote, to participate equally
in dividends and distributions declared with respect to shares of the Fund and,
upon liquidation of the Fund, to participate in its proportionate share of the
net assets remaining after satisfaction of outstanding liabilities. Shares of
the Fund are fully paid, non-assessable and fully transferable when issued and
have no preemptive, conversion or exchange rights. Fractional shares have
proportionately the same rights, including voting rights, as are provided for a
full share.
23
<PAGE> 60
MISCELLANEOUS INFORMATION
AUDIT REPORTS
The Board of Trustees will issue to the shareholders at least
semi-annually the Fund's financial statement. Financial statements, audited by
independent auditors, will be issued annually. The firm of KPMG Peat Marwick
LLP, 700 Louisiana, NationsBank Building, Houston, Texas 77002, currently
serves as the auditors of the Fund.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered
hereby is being passed upon by Ballard Spahr Andrews & Ingersoll, 1735 Market
Street, Philadelphia, Pennsylvania.
CUSTODIAN AND TRANSFER AGENT
The Bank of New York (the "Custodian"), 90 Washington Street, 11th
Floor, New York, New York 10286, is custodian of all securities and cash of the
Fund. The custodian attends to the collection of principal and income, pays
and collects all monies for securities bought and sold by the Fund, and
performs certain other ministerial duties. A I M Fund Services, Inc. (the
"Transfer Agent"), P.O. Box 4739, Houston, Texas 77210-4739, is transfer and
dividend disbursing agent for the Retail Class. The Fund pays the Custodian
and the Transfer Agent such compensation as may be agreed upon from time to
time.
Texas Commerce Bank National Association, 712 Main, Houston, Texas
77002, serves as Sub-Custodian for retail purchases of the AIM Funds.
PRINCIPAL HOLDERS OF SECURITIES
As of November 1, 1996, the trustees and officers of the Trust as a
group owned less than 1% of the outstanding shares of any class of the Trust.
RETAIL CLASS:
To the best of the Trust's knowledge, the names and addresses of the
holders of 5% or more of the outstanding shares of the Retail Class, as of
November 1, 1996 and the percent of outstanding shares owned by such
shareholders are as follows:
24
<PAGE> 61
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address Owned of and
of Record Owner Record Only* Beneficially
--------------- ----------- ------------
<S> <C> <C>
Merrill Lynch Pierce Fenner & Smith -0- 16.55%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Bob & Co 9.32% -0-
c/o Bank of Boston
Attn: Mutual Funds
P. O. Box 1809
Boston, MA 02105
BHC Securities Inc. -0- 5.12%
FBO CB Clients
Trade House Account
2005 Market Street
Philadelphia, PA 19103
</TABLE>
INSTITUTIONAL CLASS:
To the best of the Trust's knowledge, the names and addresses of the
holders of 5% or more of the outstanding shares of the Institutional Class, as
of November 1, 1996 and the percent of outstanding shares owned by such
shareholders are as follows:
<TABLE>
<CAPTION>
Percent
Name and Address Owned of
of Record Owner Record Only*
--------------- ------------
<S> <C>
Frost National Bank 73.04%**
P. O. Box 1600
San Antonio, TX 78296
Mississippi Treasury Dept. 7.84%
P. O. Box 138
Jackson, MS 39205
</TABLE>
- --------------------------
* The Trust has no knowledge as to whether all or any portion of the
shares owned of record are also owned beneficially.
** A shareholder who holds more than 25% of the outstanding shares of a
class may be presumed to be in "control" of such class of shares, as
defined in the 1940 Act.
25
<PAGE> 62
FINANCIAL STATEMENTS
FS
<PAGE> 63
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Investment Securities Funds
We have audited the accompanying statement of assets and liabilities of the
Limited Maturity Treasury Portfolio (a series of AIM Investment Securities
Funds), including the schedule of investments, as of July 31, 1996, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the years in the two-year period then
ended, the eleven months ended July 31, 1994, each of the years in the five-year
period ended August 31, 1993 and the period December 15, 1987 (date operations
commenced) through August 31, 1988. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Limited Maturity Treasury Portfolio as of July 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the two-year period then ended, the eleven months ended
July 31, 1994, each of the years in the five-year period ended August 31, 1993
and the period December 15, 1987 (date operations commenced) through August 31,
1988, in conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
August 23, 1996
Houston, Texas
FS-1
<PAGE> 64
Financials
SCHEDULE OF INVESTMENTS
July 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
MATURITY (000s) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. TREASURY NOTES-98.82%
6.00% 08/31/97 $ 41,475 $ 41,494,908
- ------------------------------------------------------------------------------------------------
5.75% 09/30/97 41,360 41,262,804
- ------------------------------------------------------------------------------------------------
5.625% 10/31/97 42,175 41,988,165
- ------------------------------------------------------------------------------------------------
5.375% 11/30/97 41,585 41,230,280
- ------------------------------------------------------------------------------------------------
5.25% 12/31/97 41,850 41,405,553
- ------------------------------------------------------------------------------------------------
5.00% 01/31/98 41,610 40,966,293
- ------------------------------------------------------------------------------------------------
5.125% 02/28/98 41,525 40,905,032
- ------------------------------------------------------------------------------------------------
6.125% 03/31/98 41,825 41,822,909
- ------------------------------------------------------------------------------------------------
5.875% 04/30/98 41,400 41,211,216
- ------------------------------------------------------------------------------------------------
6.00% 05/31/98 41,500 41,370,935
- ------------------------------------------------------------------------------------------------
6.25% 06/30/98 41,330 41,381,249
- ------------------------------------------------------------------------------------------------
6.25% 07/31/98 41,500 41,539,010
- ------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 496,578,354
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.82% 496,578,354
- ------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.18% 5,937,451
- ------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $502,515,805
================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-2
<PAGE> 65
Financials
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $498,859,636) $ 496,578,354
- -----------------------------------------------------------------------------------------
Cash 287
- -----------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 2,978,883
- -----------------------------------------------------------------------------------------
Interest 5,958,137
- -----------------------------------------------------------------------------------------
Investment in deferred compensation plan 14,009
- -----------------------------------------------------------------------------------------
Other assets 135,367
- -----------------------------------------------------------------------------------------
Total assets 505,665,037
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 1,889,916
- -----------------------------------------------------------------------------------------
Dividends 1,015,880
- -----------------------------------------------------------------------------------------
Deferred compensation 14,009
- -----------------------------------------------------------------------------------------
Accrued advisory fees 83,900
- -----------------------------------------------------------------------------------------
Accrued distribution fees 45,194
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 33,086
- -----------------------------------------------------------------------------------------
Accrued operating expenses 67,247
- -----------------------------------------------------------------------------------------
Total liabilities 3,149,232
- -----------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 502,515,805
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
NET ASSETS: $143,467,539 $359,048,266 $502,515,805
=========================================================================================
Shares outstanding, $0.01 par value
per share 14,388,919 36,010,350 50,399,269
=========================================================================================
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE $ 9.97
=========================================================================================
OFFERING PRICE PER SHARE:
(Net asset value of $9.97
divided by 99.00%) $ 10.07
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-3
<PAGE> 66
Financials
STATEMENT OF OPERATIONS
For the year ended July 31, 1996
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 8,467,903 $ 19,481,627 $ 27,949,530
- ---------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 283,049 650,158 933,207
- ---------------------------------------------------------------------------------------------------
Administrative service fees 18,681 42,176 60,857
- ---------------------------------------------------------------------------------------------------
Custodian fees 6,923 29,591 36,514
- ---------------------------------------------------------------------------------------------------
Transfer agent fees 10,350 255,502 265,852
- ---------------------------------------------------------------------------------------------------
Trustees' fees and expenses 2,802 6,544 9,346
- ---------------------------------------------------------------------------------------------------
Distribution fees -- 488,557 488,557
- ---------------------------------------------------------------------------------------------------
Other 61,928 275,898 337,826
- ---------------------------------------------------------------------------------------------------
Total expenses 383,733 1,748,426 2,132,159
- ---------------------------------------------------------------------------------------------------
Net investment income $ 8,084,170 $ 17,733,201 25,817,371
- ---------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on sales of investment securities 3,022,827
- ---------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (6,292,910)
- ---------------------------------------------------------------------------------------------------
Net gain (loss) on investment securities (3,270,083)
- ---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 22,547,288
===================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE> 67
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended July 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 25,817,371 $ 22,353,697
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities 3,022,827 (7,239,070)
- --------------------------------------------------------------------------------------------
Net unrealized (depreciation) appreciation of investment
securities (6,292,910) 9,384,912
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 22,547,288 24,499,539
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Institutional Shares (8,084,170) (7,065,914)
- --------------------------------------------------------------------------------------------
AIM Shares (17,733,201) (15,287,783)
- --------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Institutional Shares 14,818,211 (6,229,532)
- --------------------------------------------------------------------------------------------
AIM Shares 86,957,303 (56,819,839)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 98,505,431 (60,903,529)
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 404,010,374 464,913,903
- --------------------------------------------------------------------------------------------
End of period $502,515,805 $404,010,374
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $511,800,420 $410,024,906
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (7,003,333) (10,026,160)
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (2,281,282) 4,011,628
- --------------------------------------------------------------------------------------------
$502,515,805 $404,010,374
============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 68
Financials
NOTES TO FINANCIAL STATEMENTS
July 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Investment Securities Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust is organized as a Delaware business
trust consisting of one portfolio, the Limited Maturity Treasury Portfolio (the
"Fund"). The investment objective of the Fund is to seek liquidity with minimum
fluctuation in principal value and, consistent with this investment objective,
the highest total return achievable. The Fund currently offers two different
classes of shares: the AIM Limited Maturity Treasury Shares (the "AIM Shares")
and the Institutional Shares. Matters affecting each class are voted on
exclusively by such shareholders.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of these financial statements and
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
A. Security Valuations--Debt obligations that are issued or guaranteed by the
U.S. Treasury are valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as yield, type of issue, coupon rate and maturity date.
Securities for which market prices are not provided by the pricing service
are valued at the mean between last bid and asked prices based upon quotes
furnished by independent sources. 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. Securities with
a remaining maturity of 60 days or less are valued at amortized cost which
approximates market value.
B. Securities Transactions and Investment Income--Securities transactions are
accounted for on a trade date basis. Interest income, adjusted for
amortization of discounts on investments, is earned from settlement date and
is recorded on the accrual basis. It is the policy of the Fund not to
amortize bond premiums for financial reporting purposes. Interest income is
allocated to each class daily, based upon each class' pro-rata share of the
total shares of the Fund outstanding. Realized gains and losses from
securities transactions are recorded on the identified cost basis.
C. Dividends and Distributions to Shareholders--It is the policy of the Fund to
declare daily dividends from net investment income. Such dividends are paid
monthly. Distributions from net realized capital gains, if any, are recorded
on ex-dividend date and are paid annually.
D. Federal Income Taxes--The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements. The Fund has a capital loss carryforward (which may
be carried forward to offset future taxable capital gains, if any) of
$6,725,562, which expires, if not previously utilized, through the year 2004.
E. Expenses--Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to more than
one class, e.g., advisory fees, are allocated between them.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM") with respect to the Fund. Under the terms of the master
investment advisory agreement, the Fund pays AIM an advisory fee at the annual
rate of 0.20% of the first $500 million of the Fund's average daily net assets
plus 0.175% of the Fund's average daily net assets in excess of $500 million.
This agreement requires AIM to reduce its fee or, if necessary, make payments to
the extent required to satisfy any expense limitations imposed by the securities
laws or regulations thereunder of any state in which the Fund shares are
qualified for sale.
FS-6
<PAGE> 69
Financials
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES-(continued)
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended July 31, 1996, the Fund
reimbursed AIM $60,857 for such services.
The Fund, pursuant to a transfer agent and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the AIM Shares. During the year ended July 31, 1996, AFS
was paid $160,400 for such services. During the year ended July 31, 1996, the
Fund paid A I M Institutional Fund Services, Inc. ("AIFS") $10,350 pursuant to a
transfer agency and shareholder services agreement with respect to the
Institutional Shares.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the AIM
Shares and a master distribution agreement with Fund Management Company ("FMC")
to serve as the distributor for the Institutional Shares. The Trust has adopted
a Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan") with respect to
the AIM Shares. The Fund pays AIM Distributors compensation at an annual rate of
0.15% of the average net assets attributable to the AIM Shares. The Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs and provides periodic payments to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own AIM Shares of the Fund. Any amounts not paid as a
service fee under such Plan would constitute an asset-based sales charge. The
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Fund. During the year ended
July 31, 1996, the AIM Shares paid AIM Distributors $488,557 as compensation
under the Plan.
AIM Distributors received commissions of $193,686 during the year ended July
31, 1996 from sales of AIM Shares. Such commissions are not an expense of the
Fund. They are deducted from, and are not included in, proceeds from sales of
AIM shares. Certain officers and trustees of the Trust are officers and
directors of AIM, AIM Distributors, FMC, AFS and AIFS.
During the year ended July 31, 1996, the Fund paid legal fees of $4,141 for
services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Board
of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank d/b/a Chemical Bank. The Fund
may borrow up to the lesser of (i) $325,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which are
parties to the line of credit may borrow on a first come, first served basis.
Interest on borrowings under the line of credit is payable on maturity or
prepayment date. During the year ended July 31, 1996, the Fund did not borrow
under the line of credit agreement. The funds which are party to the line of
credit are charged a commitment fee of 0.08% on the unused balance of the
committed line. The commitment fee is allocated among the funds based on their
respective average net assets for the period. Prior to an amendment of the line
of credit on July 19, 1996, the Fund was limited to borrowing $6,700,000.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended July 31, 1996 was
$648,234,412 and $546,804,207, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis as, of July 31, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ --
- ----------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,558,630)
- ----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $ (2,558,630)
============================================================================
</TABLE>
Cost of investments for tax purposes is $499,136,984.
FS-7
<PAGE> 70
Financials
NOTE 5-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 6-SHARE INFORMATION
Changes in the AIM Shares outstanding during the years ended July 31, 1996 and
1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C> <C> <C>
---------------------------- ----------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
Sold 25,131,827 $ 252,267,687 15,641,151 $ 155,346,148
- -------------------------------------------------------------------------------- ----------------------------
Issued as reinvestment of dividends 1,451,553 14,553,507 1,083,758 10,758,338
- -------------------------------------------------------------------------------- ----------------------------
Reacquired (17,942,356) (179,863,891) (22,488,544) (222,924,325)
- -------------------------------------------------------------------------------- ----------------------------
8,641,024 $ 86,957,303 (5,763,635) $ (56,819,839)
================================================================================ ============================
</TABLE>
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of AIM Shares
outstanding during each of the years in the two-year period ended July 31, 1996,
the eleven months ended July 31, 1994, each of the years in the five-year period
ended August 31, 1993 and the period December 15, 1987 (date operations
commenced) through August 31, 1988.
<TABLE>
<CAPTION>
JULY 31, AUGUST 31,
------------------------------- ----------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78 $ 9.80 $ 9.92
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Income from investment
operations:
Net investment income 0.55 0.54 0.35 0.42 0.58 0.72 0.77 0.84 0.52
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Net gains (losses) on
securities (both
realized
and unrealized) (0.06) 0.07 (0.20) 0.05 0.29 0.22 0.01 (0.02) (0.12)
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Total from investment
operations 0.49 0.61 0.15 0.47 0.87 0.94 0.78 0.82 0.40
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.55) (0.54) (0.35) (0.42) (0.58) (0.72) (0.77) (0.84) (0.52)
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Distributions from net
realized capital
gains -- -- (0.08) (0.02) (0.09) -- -- -- --
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Total distributions (0.55) (0.54) (0.43) (0.44) (0.67) (0.72) (0.77) (0.84) (0.52)
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Net asset value, end of
period $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78 $ 9.80
========================= ======== ======== ======== ======== ======== ======== ======= ======= =======
Total return(a) 4.98% 6.36% 1.52% 4.65% 8.93% 9.95% 8.32% 8.71% 4.11%
========================= ======== ======== ======== ======== ======== ======== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $359,048 $274,480 $329,942 $348,937 $260,454 $131,880 $79,871 $70,781 $62,342
========================= ======== ======== ======== ======== ======== ======== ======= ======= =======
Ratio of expenses to
average net assets 0.54%(b) 0.51% 0.47%(c) 0.46% 0.48% 0.54% 0.50%(d) 0.45%(e) 0.35%(c)(e)
========================= ======== ======== ======== ======== ======== ======== ======= ======= =======
Ratio of net investment
income to average net
assets 5.45%(b) 5.44% 3.75%(c) 4.07% 5.60% 7.25% 7.90%(d) 8.59%(e) 7.02%(c)(e)
========================= ======== ======== ======== ======== ======== ======== ======= ======= =======
Portfolio turnover rate 117.09% 120.01% 120.40% 122.99% 119.62% 214.74% 192.46% 219.53% 140.83%
========================= ======== ======== ======== ======== ======== ======== ======= ======= =======
Borrowings for the
period:
Amount of debt
outstanding at end of
period
(000s omitted) -- -- -- -- -- -- -- $ 9,943 $19,232
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Average amount of debt
outstanding during
the period
(000s omitted)(f) -- -- -- -- -- -- $ 5,101 $14,301 $ 4,110
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Average number of
shares outstanding
during the period
(000s omitted)(f) 32,350 28,337 34,101 30,416 18,378 10,559 7,389 7,295 2,429
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Average amount of debt
per share during the
period -- -- -- -- -- -- $ 0.69 $ 1.96 $ 1.69
- ------------------------- -------- -------- -------- -------- -------- -------- ------- ------- -------
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(b) Ratios are based on average net assets of $325,704,724.
(c) Annualized.
(d) After waiver of advisory fees.
(e) After waiver of advisory fees and expense reimbursements.
(f) Averages computed on a daily basis.
FS-8
<PAGE> 71
AIM INVESTMENT
SECURITIES FUNDS
Prospectus
- --------------------------------------------------------------------------------
LIMITED
MATURITY
TREASURY
PORTFOLIO
INSTITUTIONAL
SHARES
NOVEMBER 21, 1996
The Limited Maturity Treasury Portfolio (the
"Fund"), a portfolio of AIM Investment Securities Funds
(the "Trust"), is an open-end, series, management
mutual fund designed for institutions seeking liquidity
with minimum fluctuation in principal value, and,
consistent with this investment objective, the highest
total return achievable. To achieve its objective, the
Fund will invest in an actively managed portfolio of
U.S. Treasury notes and other direct obligations of the
U.S. Treasury.
THERE CAN BE NO ASSURANCE THAT THE FUND WILL
ACHIEVE ITS OBJECTIVE. THE NET ASSET VALUE OF THE FUND
VARIES DEPENDING ON THE MARKET VALUE OF ITS ASSETS. 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.
This Prospectus sets forth basic information that
investors should know about the Fund prior to investing
and should be read and retained for future reference. A
Statement of Additional Information, dated November 21,
1996, has been filed with the United States Securities
and Exchange Commission (the "SEC") and is hereby
incorporated by reference. For a copy of the Statement
of Additional Information, write to the address below
or call (800) 659-1005.
This Prospectus relates solely to the
Institutional Shares of the Fund. Shares of a Retail
Class of the Fund are offered pursuant to a separate
prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
[LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
(800) 659-1005
<PAGE> 72
SUMMARY
THE FUND AND ITS INVESTMENT OBJECTIVE
AIM Investment Securities Funds (the "Trust") is a Delaware business trust
organized as an open-end, series, management investment company and currently
has one portfolio: the Limited Maturity Treasury Portfolio (the "Fund"). The
Fund consists of two classes: AIM Limited Maturity Treasury Shares (the "Retail
Class") and the Institutional Shares (the "Institutional Shares"). This
Prospectus relates solely to the Institutional Shares.
Shares of the Retail Class are offered to investors pursuant to a separate
prospectus. To obtain information about the Retail Class, please call (800)
347-4246.
Because the Trust declares dividends for each class of the Fund on a daily
basis, each class of the Fund is expected to have the same net asset value
(proportionate interest in the net assets of the Fund). Moreover, each class
bears equally those expenses, such as the advisory fee, that are allocated to
the Fund as a whole. Both classes of shares of the Fund share a common
investment objective and portfolio of investments. However, each of the classes
of the Fund have different shareholders and are separately allocated certain
class expenses, such as distribution and/or service fees related to their
respective shares. For example, a shareholder servicing fee of up to 0.15% of
the average daily net assets of the Fund attributable to the Retail Class will
be allocated to such class; such fee, however, will not be allocated to the
Institutional Shares. Therefore, assuming that the allocations of other
class-related expenses to the Institutional Shares and the Retail Class are the
same, the yield of the Institutional Shares will be higher than the yield of the
Retail Class in an amount which reflects such shareholder servicing fee.
The investment objective of the Fund is to seek liquidity with minimum
fluctuation in principal value and, consistent with this investment objective,
the highest total return achievable. To achieve its objective, the Fund will
invest in U.S. Treasury notes and other direct obligations of the U.S. Treasury,
and may (but does not currently intend to) engage in repurchase agreement
transactions with respect to such obligations. The Fund will attempt to enhance
its total return through capital appreciation when market factors, such as
economic and market conditions and the prospects for interest rate changes,
indicate that capital appreciation may be available without significant risk to
principal. The Fund will only purchase securities whose remaining maturities,
measured from the date of settlement, do not exceed three (3) years. Under
normal circumstances, the average portfolio maturity of the U.S. Treasury notes
and other direct obligations of the U.S. Treasury owned by the Fund will range
between one-and-one-half (1 1/2) and two (2) years.
INVESTORS IN INSTITUTIONAL SHARES
The Institutional Shares are designed to be a convenient and economical
vehicle through which institutions ("Institutions"), acting for themselves or on
behalf of clients for whom they exercise investment discretion, can invest in a
portfolio consisting of U.S. Treasury notes and other U.S. Treasury obligations
with remaining maturities of three (3) years or less. Although the Institutional
Shares may not be purchased by individuals directly, Institutions may purchase
such shares for themselves or on a discretionary basis for accounts they
maintain on behalf of their customers. The Institutional Shares may be
particularly appropriate for Institutions investing short-term cash reserves for
the benefit of customer accounts with respect to which Institutions exercise
substantial investment discretion. Institutions may charge their customers a
recordkeeping, account maintenance or other fee in connection with their
accounts, and such customers should consult with their Institutions to obtain a
schedule of applicable fees. See "Suitability For Investors."
PURCHASE OF SHARES
Institutional Shares are sold at net asset value. No purchase or redemption
charges are imposed by the Fund. Institutions may charge fees to their customers
for services provided in connection with the maintenance of customer accounts
with the Institutions, and customers should consult with their Institutions to
obtain a schedule of any applicable fees. The minimum initial investment in the
Institutional Shares is $1,000,000. There is no minimum amount for subsequent
investments. Payment for shares purchased must be in federal funds or other
funds immediately available to the Fund. See "Purchase of Shares."
REDEMPTION OF SHARES
Redemptions of the Institutional Shares may be made without charge at net
asset value. Payment for redeemed shares for which redemption orders are
received prior to 4:00 p.m. Eastern Time will normally be made in federal funds
on the next business day. See "Redemption of Shares."
DIVIDENDS AND DISTRIBUTIONS
The net investment income of the Fund is declared as a dividend daily to
shareholders of record immediately prior to 4:00 p.m. Eastern Time. Dividends
are paid monthly by check or wire transfer unless the shareholder has previously
elected to
2
<PAGE> 73
have such dividends automatically reinvested in additional shares of the
Institutional Shares. Distributions of short-term capital gains and long-term
capital gains, if any, are made annually. See "Dividends and Distributions."
INVESTMENT ADVISOR
A I M Advisors, Inc. ("AIM") serves as the Fund's investment advisor pursuant
to a Master Investment Advisory Agreement with the Trust (the "Advisory
Agreement"). AIM, together with its affiliates, manages or advises 43 investment
company portfolios. As of November 1, 1996, the total assets advised or managed
by AIM or its affiliates were approximately $58 billion. Under the Advisory
Agreement, AIM receives a fee for its services based on the Fund's average daily
net assets. Under a separate administrative services agreement, AIM is permitted
to receive reimbursement of its costs in performing certain accounting and other
administrative services for the Fund. Under a Transfer Agency and Service
Agreement, A I M Institutional Fund Services, Inc. ("Transfer Agent" or "AIFS"),
AIM's wholly-owned subsidiary and a registered transfer agent, receives a fee
for its provision of transfer agency, dividend distribution and disbursement,
and shareholder services to the Fund. See "Management of the Trust."
On November 4, 1996, A I M Management Group Inc. ("AIM Management") announced
that it has entered into an Agreement and Plan of Merger among INVESCO plc
("INVESCO"), INVESCO Group Services Inc. and AIM Management, pursuant to which
AIM Management will be merged with INVESCO Group Services Inc. Subject to a
number of conditions being met, it is currently anticipated that the transaction
will occur in the early part of 1997. The Trust's investment advisor, AIM, is a
wholly owned subsidiary of AIM Management.
The proposed transaction may be deemed to cause an "assignment" (as that term
is defined under the Investment Company Act of 1940 (the "1940 Act")) of the
investment advisory agreement between the Trust and AIM. Under the 1940 Act and
the investment advisory agreement, an assignment results in the automatic
termination of the investment advisory agreement. The completion of the
transaction is contingent upon, among other things, the approval of both the
Board of Directors of the Trust and the shareholders of the Trust of a new
investment advisory agreement between the Trust and AIM. Management of the Trust
anticipates that the essential terms of the new investment advisory agreement,
including the investment advisory fees, would be the same as those under the
current investment advisory agreement between the Trust and AIM. It is also
anticipated that the investment advisory personnel responsible for the Trust
will remain unchanged. Upon consummation of the proposed transaction, employees
of INVESCO Group Services, Inc. and affiliated companies will be able to
purchase shares of The AIM Family of Funds at net asset value.
DISTRIBUTOR
Fund Management Company ("FMC") acts as the exclusive distributor of the
Institutional Shares. FMC does not receive any fee from the Fund. See "Purchase
of Shares" and "Management of the Trust -- Distribution of Shares."
SPECIAL CONSIDERATIONS
The Fund's price per share will fluctuate inversely with changes in interest
rates. However, the price changes in the Fund's shares due to changes in
interest rates should be more moderate than the per share fluctuations of a fund
which invests in longer-term bonds. This is because debt securities with longer
maturities generally tend to produce higher yields but are subject to greater
market fluctuation as a result of changes in interest rates than debt securities
with shorter maturities. The Fund is designed for the investor who seeks a
higher yield and greater stability of income than a money market fund offers,
and less capital fluctuation than a long-term bond fund might provide.
AIM, AIM Institutional Funds, AIM LINK, The AIM Family of Funds, The AIM
Family of Funds and Design (i.e., the AIM logo), and AIM and Design are
registered service marks and La Familia AIM de Fondos and La Familia AIM de
Fondos and Design are service marks of A I M Management Group Inc.
3
<PAGE> 74
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor understand the various
costs and expenses that an investor in the Institutional Shares will bear
directly or indirectly. The fees and expenses set forth in this table are based
on the average net assets of the Institutional Shares of the Fund for the fiscal
year ended July 31, 1996.
<TABLE>
<S> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as a % of
offering price)................................................ None
Maximum sales load on reinvested dividends (as a % of offering
price)......................................................... None
Deferred sales load (as a % of original purchase price or
redemption proceeds, as applicable)............................ None
Redemption fees (as a % of amount redeemed, if applicable)........ None
Exchange fee...................................................... None
Annual Fund Operating Expenses
(as a % of average net assets)
Management fees................................................... .20%
12b-1 fees........................................................ None
Other expenses.................................................... .07%
-----
Total fund operating expenses..................................... .27%
=====
</TABLE>
EXAMPLE
An investor would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
INSTITUTIONAL
SHARES
-------
<S> <C>
1 year....................................................... $ 3
3 years...................................................... $ 9
5 years...................................................... $15
10 years...................................................... $34
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED TO BE REPRESENTATIVE OF THE SHARES
OF THE INSTITUTIONAL SHARES OF THE FUND'S ACTUAL OR FUTURE EXPENSES, WHICH MAY
BE GREATER OR LESS THAN THOSE SHOWN. IN ADDITION, WHILE THE EXAMPLES ASSUME A 5%
ANNUAL RETURN, THE ACTUAL PERFORMANCE OF THE INSTITUTIONAL SHARES WILL VARY AND
MAY RESULT IN AN ACTUAL RETURN THAT IS GREATER OR LESS THAN 5%. THE EXAMPLES
ASSUME REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND THAT THE PERCENTAGE
AMOUNT FOR TOTAL FUND OPERATING EXPENSES REMAINS THE SAME FOR EACH YEAR.
4
<PAGE> 75
FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights during each of the fiscal
years ended July 31, 1996 and 1995, the eleven months ended July 31, 1994, each
of the years in the six-year period ended August 31, 1993 and the period July
13, 1987 (date operations commenced) through August 31, 1987. All data have been
audited by KPMG Peat Marwick LLP, independent auditors, whose reports on the
financial statements and the related notes appear in the Statement of Additional
Information.
<TABLE>
<CAPTION>
JULY 31, AUGUST 31,
----------------------------- ----------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
-------- -------- -------- -------- -------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period........... $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78 $ 9.80 $ 9.92 $10.00
Income from
investment
operations:
Net investment
income........... 0.58 0.57 0.37 0.44 0.60 0.73 0.79 0.85 0.73 0.09
Net gains (losses)
on securities
(both realized
and unrealized).. (0.06) 0.07 (0.20) 0.05 0.29 0.22 0.01 (0.02) (0.12) (0.08)
-------- -------- -------- -------- -------- ------- ------- ------- ------- ------
Total from
investment
operations..... 0.52 0.64 0.17 0.49 0.89 0.95 0.80 0.83 0.61 0.01
-------- -------- -------- -------- -------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net
investment income (0.58) (0.57) (0.37) (0.44) (0.60) (0.73) (0.79) (0.85) (0.73) (0.09)
Distributions from
net realized
capital gains.... -- -- (0.08) (0.02) (0.09) -- -- -- -- --
-------- -------- -------- -------- -------- ------- ------- ------- ------- ------
Total
distributions.. (0.58) (0.57) (0.45) (0.46) (0.69) (0.73) (0.79) (0.85) (0.73) (0.09)
-------- -------- -------- -------- -------- ------- ------- ------- ------- ------
Net asset value,
end of period.... $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78 $ 9.80 $ 9.92
======== ======== ======== ======== ======== ======= ======= ======= ======= ======
Total return(a)... 5.27% 6.61% 1.72% 4.88% 9.14% 10.08% 8.52% 8.87% 6.34% 0.14%
======== ======== ======== ======== ======== ======= ======= ======= ======= ======
Ratios/supplemental
data:
Net assets, end
of period (000s
omitted)........ $143,468 $129,530 $134,971 $130,690 $ 89,352 $25,528 $10,378 $16,065 $35,310 $4,202
======== ======== ======== ======== ======== ======= ======= ======= ======= ======
Ratio of expenses
to average net
assets........... 0.27%(b) 0.28% 0.25%(c) 0.24% 0.28% 0.41%(d) 0.31%(e) 0.31%(f) 0.31%(f) 0.25%(c)(f)
======== ======== ======== ======== ======== ======= ======= ======= ======= ======
Ratio of net
investment
income to
average net
assets........... 5.72%(b) 5.70% 3.98%(c) 4.30% 5.76% 7.36%(d) 8.12%(e) 8.69%(f) 7.46%(f) 6.98%(c)(f)
======== ======== ======== ======== ======== ======= ======= ======= ======= ======
Portfolio
turnover rate.... 117.09% 120.01% 120.40% 122.99% 119.62% 214.74% 192.46% 219.53% 140.83% 28.29%
======== ======== ======== ======== ======== ======= ======= ======= ======= ======
Borrowings for the
period:
Amount of debt
outstanding
at end of
period (000s
omitted)........ -- -- -- -- -- -- -- $ 2,257 $10,892 --
Average amount of
debt outstanding
during the period
(000s omitted)(g) -- -- -- -- -- -- $ 834 $ 3,562 $ 3,754 --
Average number of
shares outstanding
during the period
(000s omitted)(g) 13,982 12,540 16,864 9,785 6,097 1,477 1,208 1,817 2,118 390
Average amount of
debt per share
during the period -- -- -- -- -- -- $ 0.69 $ 1.96 $ 1.69 --
</TABLE>
- ---------------
(a) For periods less than one year, total returns is not annualized.
(b) Ratios are based on average net assets of $140,898,895.
(c) Annualized.
(d) After expense reimbursements.
(e) After waiver of advisory fees and expense reimbursements.
(f) After waiver of advisory fees.
(g) Averages computed on a daily basis.
5
<PAGE> 76
SUITABILITY FOR INVESTORS
The Institutional Shares are designed to be a convenient and economical
vehicle through which Institutions can invest in a portfolio consisting of U.S.
Treasury notes and other direct obligations of the U.S. Treasury with remaining
maturities of three (3) years or less. Although shares of Institutional Shares
may not be purchased directly by individuals, Institutions may purchase such
shares for themselves or for accounts they maintain on behalf of their
customers. The Institutional Shares may be particularly appropriate for
Institutions investing short-term cash reserves for the benefit of customer
accounts with respect to which Institutions exercise substantial investment
discretion. It is the responsibility of a prospective institutional investor to
determine if an investment in the Institutional Shares is consistent with the
objectives of an account and with applicable state and federal laws and
regulations.
Each share of beneficial interest of the Fund, regardless of class, has the
same net asset value (proportionate interest in the net assets of the Fund) and
bears equally those expenses, such as the advisory fee, that are allocated to
the Fund as a whole. All classes of the Fund share a common investment objective
and portfolio of investments. However, each class of the Fund has different
shareholders and is separately allocated certain class expenses.
An investment in the Fund may relieve the Institution of many of the
investment and administrative burdens encountered when investing in a portfolio
of debt instruments directly. These functions include: selection of portfolio
investments; surveying the market for the best price at which to buy and sell;
valuation of portfolio securities; selection and scheduling of maturities;
receipt and delivery and safekeeping of securities; and portfolio recordkeeping.
It is anticipated that most Institutions will perform their own sub-accounting.
The price per share of the Fund's shares will fluctuate inversely with changes
in interest rates. However, the price changes in the Fund's shares due to
changes in interest rates should be more moderate than the per share
fluctuations of a fund which invests in longer-term obligations. The Fund is
designed for the investor who seeks a higher yield and greater stability of
income than a money market fund offers, and less capital fluctuation than a
long-term bond fund might provide.
INVESTMENT PROGRAM
INVESTMENT POLICIES
The investment objective of the Fund is to seek liquidity with minimum
fluctuation in principal value, and, consistent with this investment objective,
the highest total return achievable. There can be no assurance, however, that
the Fund will achieve its objective.
To achieve its objective, the Fund will invest in an actively managed
portfolio of U.S. Treasury notes and other direct obligations of the U.S.
Treasury. The Fund may invest in U.S. Treasury obligations, which are direct
obligations of the U.S. Treasury and which differ only in their interest rates,
maturities, and times of issuance, including U.S. Treasury bills, U.S. Treasury
notes and U.S. Treasury bonds. The Fund will attempt to enhance its total return
through capital appreciation when market factors, such as economic and market
conditions and the prospects for interest rate changes, indicate that capital
appreciation may be available without significant risk to principal. The Fund
will only purchase securities whose maturities do not exceed three (3) years.
Under normal circumstances, the average portfolio maturity of the Fund will
range between one-and-one-half (1 1/2) and two (2) years. Since brokerage
commissions are not normally paid on investments of the type made by the Fund,
the high turnover rate should not adversely affect the net income of the Fund.
Loans of Portfolio Securities. Subject to its investment restrictions (see
"Investment Restrictions") the Fund may from time to time loan securities from
its portfolio to brokers, dealers and financial institutions and receive
collateral in cash or U.S. Treasury obligations which will be maintained at all
times in an amount equal to at least 100% of the current market value of the
loaned securities; provided, however, that such loans are made according to the
guidelines of the SEC and the Trust's Board of Trustees. The Fund will be
entitled to the interest paid upon investment of the cash collateral in its
permitted investments, or to the payment of a premium or fee for the loan. The
Fund may at any time call such loans and obtain the securities loaned. However,
if the borrower of the securities should default on its obligation to return the
securities borrowed, the value of the collateral may be insufficient to permit
the Fund to reestablish its position by making a comparable investment due to
changes in market conditions. The Fund may pay reasonable fees to persons
unaffiliated with the Fund in connection with the arranging of such loans. The
Fund will only engage in securities lending transactions with broker-dealers
registered with the SEC, or with federally supervised banks or savings and loan
associations.
When-Issued or Delayed Delivery Trading. The Fund may purchase U.S. Treasury
obligations on a when-issued basis, and it may purchase or sell such securities
for delayed delivery. These transactions occur when securities are purchased or
sold by the Fund with payment and delivery to take place in the future in order
to secure what is considered an advantageous yield and price to the Fund at the
time of entering into the transaction. The value of the security on the delivery
date may be more or less than its purchase price. The Fund's custodian bank will
segregate cash or short-term U.S. Treasury obligations in an aggregate
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amount equal to the amount of its commitments in connection with such delayed
delivery and when-issued purchase transactions. No delayed delivery or
when-issued commitments will be made if, as a result, more than 25% of the
Fund's net assets would be so committed.
Borrowing. Subject to its investment restrictions (see "Investment
Restrictions"), the Fund may borrow money from banks for temporary or emergency
purposes such as to meet redemption requests which might otherwise require the
untimely disposition of securities. The Fund may not borrow for the purpose of
increasing income. If there are unusually heavy redemptions because of changes
in interest rates or for any other reason, the Fund may have to sell a portion
of its investment portfolio at a time when it may be disadvantageous to do so.
Selling Fund securities under these circumstances may result in a lower net
asset value per share or decreased dividend income, or both. The Fund believes
that, in the event of abnormally heavy redemption requests, its borrowing
provisions would help to mitigate any such effects and could make the forced
sale of its portfolio securities less likely.
Reverse Repurchase Agreements. A reverse repurchase agreement involves the
sale of securities held by the Fund, with an agreement that the Fund will
repurchase such securities at an agreed-upon price, date and interest payment.
It is the current operating policy of the Fund to enter into reverse repurchase
agreements (which are considered to be borrowings under the 1940 Act) only for
temporary or emergency purposes and not as a means to increase income, even
though the Fund's investment restrictions permit the Fund to engage in reverse
repurchase agreements for income enhancement. The Fund will enter into a reverse
repurchase agreement only when the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction. During the time a reverse repurchase agreement is
outstanding, the Fund will maintain a segregated custodial account containing
U.S. Treasury obligations having a value equal to the repurchase price under
such reverse repurchase agreement. Any investment gains made by the Fund with
monies borrowed through reverse repurchase agreements will cause the net asset
value of the Fund's shares to rise faster than would be the case if the Fund had
no such borrowings. On the other hand, if the investment performance resulting
from the investment of borrowings obtained through reverse repurchase agreements
fails to cover the cost of such borrowings to the Fund, the net asset value of
the Fund will decrease faster than would otherwise be the case.
Illiquid Securities. The Fund will limit its investment in illiquid securities
to no more than 15% of its net assets, including repurchase agreements with
remaining maturities in excess of seven days.
The investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Fund.
INVESTMENT RESTRICTIONS
The Fund's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. These restrictions are designed to minimize certain
risks associated with investing in certain types of securities or engaging in
certain transactions. The most significant of these restrictions provide that
the Fund will not:
(1) purchase any security unless the security is a direct obligation
of the U.S. Treasury or is a repurchase agreement with respect to a direct
obligation of the U.S. Treasury;
(2) issue senior securities in the form of indebtedness, borrow money,
except from banks for temporary or emergency purposes, such as to meet
redemption requests (not for the purpose of increasing income), or borrow
through reverse repurchase agreements (which may be entered into for the
purpose of increasing income) if, as a result of any such borrowings, the
amount borrowed would exceed 33 1/3% of the value of the Fund's assets
(including the proceeds of such senior securities issued or money borrowed)
less its liabilities (not including the liabilities incurred in connection
with such issuance or borrowing);
(3) make loans of money other than (a) through the purchase of debt
securities in accordance with the Fund's investment program, and (b) by
entering into repurchase agreements; or
(4) lend any portfolio securities if the value of the securities
loaned by it would exceed an amount equal to one-third of its total assets;
The foregoing investment restrictions (as well as certain others set forth in
the Statement of Additional Information) are matters of fundamental policy which
may not be changed without the affirmative vote of the holders of a majority of
the outstanding shares of beneficial interest of the Fund.
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PURCHASE OF SHARES
The Institutional Shares are sold to Institutions on a continuing basis at the
net asset value of such shares next determined after an order has been accepted
by the Fund. No purchase or redemption charges are imposed by the Fund; however,
Institutions may charge their customers a recordkeeping, account maintenance or
other fee in connection with their accounts, and such customers should consult
with their Institutions to obtain a schedule of applicable fees. In order to
maximize its income, the Fund attempts to remain as fully invested as
practicable. Accordingly, in order to be accepted for execution, purchase orders
must be received by the Fund prior to the determination of net asset value (4:00
p.m. Eastern Time) on a business day of the Fund, which means any day on which
the New York Stock Exchange (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 observed holidays of New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Banks will be required to certify to the Trust that they comply with
applicable state laws regarding registration as broker-dealers, or that they are
exempt from such registration.
To facilitate the investment of the proceeds of purchase orders, the Fund
urges Institutions to place their orders as early in the day as possible.
Subject to the conditions stated above and the Fund's right to reject any
purchase order, purchase orders received by the Fund prior to 4:00 p.m. Eastern
Time on any business day will be accepted on that day (a) when payment for the
shares of the class of the Fund purchased is received by The Bank of New York,
the Fund's custodian bank, in the form described below and notice of such order
is provided to AIFS or (b) at the time the order is placed, if the Fund is
assured of payment, and will be priced at the net asset value determined as of
4:00 p.m. Eastern Time on such day. Payment for such shares must be received by
The Bank of New York on the next business day of the Fund following the
effective date of purchase. Dividends begin accruing on the first business day
of the Fund following the day on which a purchase order for the Fund is
effective. Purchase orders received by the Fund after 4:00 p.m. Eastern Time on
any business day will be effective on the next business day of the Fund and will
be priced at the net asset value determined at the end of such day.
Payments for shares purchased must be in the form of federal funds or other
funds immediately available to the Fund. Federal Reserve wires should be sent as
early as possible in order to facilitate crediting to the shareholder's account.
Any funds received with respect to an order which is not accepted by the Fund
and any funds received for which an order has not been received will be returned
to the sending Institution. An order to purchase shares must specify which class
of shares of the Fund is being purchased; otherwise any funds received will be
returned to the sending Institution.
The minimum initial investment for the purchase of shares of the Institutional
Shares is $1,000,000. No minimum amount is required for subsequent investments
in the Institutional Shares nor are minimum balances required. Prior to the
initial purchase of shares, an Account Application must be completed and sent to
AIFS, 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Account
Applications may be obtained from AIFS. Any changes made to the information
provided in the Account Application must be made in writing or by completing a
new form and providing it to AIFS.
In the interest of economy and convenience, certificates representing shares
of the Fund will not be issued except upon written request to the Fund.
Certificates (in full shares only) will be issued without charge and may be
redeposited at any time.
The Trust reserves the right in its sole discretion to withdraw all or any
part of the offering made by this Prospectus or to reject any purchase order.
REDEMPTION OF SHARES
A shareholder may redeem any or all of its shares at the net asset value next
determined after receipt of the redemption request in proper form by the Fund.
There is no charge for redemption. Since shares of the Fund are not maintained
at a constant net asset value, but fluctuate in value with changes in the market
value of securities held by the Fund, the value of the shares of the Fund on
redemption may be more or less than the shareholder's initial cost, depending
upon the value of the Fund's investments at the time of redemption. Redemption
requests with respect to the Institutional Shares may also be made via AIM
LINK(R), a personal computer application software product. See "Net Asset
Value." Redemption requests with respect to shares for which certificates have
not been issued are normally made by calling AIFS at (800) 659-1005.
Payment for redeemed shares is normally made by Federal Reserve wire to the
commercial bank account designated in the shareholder's Account Application. If
a redemption request is received by AIFS prior to 4:00 p.m. Eastern Time on a
business day of the Fund, the redemption will be effected at the net asset value
determined as of 4:00 p.m. Eastern Time on such day and the shares to be
redeemed will receive the dividend declared on the day the request is received.
The proceeds of a redemption request effected prior to 4:00 p.m. Eastern Time
will not be wired to the redeeming shareholder until the next business day of
the Fund. A redemption request received by AIFS after 4:00 p.m. Eastern Time or
on other than a business day of the Fund will be effected at the net asset value
of the Fund determined as of 4:00 p.m. Eastern Time on the next business day of
the Fund, and
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the proceeds of such redemption will normally be wired on the business day next
following such determination, or two (2) business days after the receipt of the
redemption request.
A shareholder may change the bank account designated to receive redemption
proceeds by written notice to the Fund. The authorized signature on such notice
must be signature guaranteed by a commercial bank or a trust company. Additional
documentation may be required when deemed appropriate by the Fund or AIFS.
Payment for shares redeemed by mail and payment for telephone redemptions in
amounts of under $1,000 will be made by check mailed within seven (7) days after
receipt of the redemption request in proper form. The Fund may make payment for
telephone redemptions in excess of $1,000 by check when it is considered to be
in the Fund's best interest to do so.
The Fund's shares are not redeemable at the option of the Trust unless the
Board of Trustees determines in its sole discretion that failure to so redeem
may have materially adverse consequences to the shareholders of the Fund.
Notwithstanding the foregoing, the Fund is permitted to redeem shares in any
account with a net asset value less than $500.
DIVIDENDS AND DISTRIBUTIONS
Dividends from the net investment income (not including any net short-term
capital gains) earned by the Fund are declared daily and paid monthly.
Distributions from net realized short-term capital gains and long-term capital
gains, if any, are paid annually.
The dividends accrued and paid for each class of the Fund's shares will
consist of: (a) interest accrued and discounts earned (including both original
issue and market discount) for the Fund, allocated based upon each class's pro
rata share of the net assets of the Fund, less (b) Trust expenses accrued for
the applicable dividend period attributable to the Fund, such as custodian fees,
trustee's fees, and accounting and legal expenses, allocated based upon each
class' pro rata share of the net assets of the Fund, less (c) expenses directly
attributable to each class which accrued for the applicable dividend period,
such as shareholder servicing plan expenses, if any, or transfer agent fees
unique to each class.
Dividends are declared to shareholders of record immediately prior to the
determination of the net asset value of the Fund. Accordingly, dividends begin
accruing on the first business day of the Fund following the day on which a
purchase order for shares of the Fund is effective, and accrue through the day
on which a redemption order is effective. Thus, if a purchase order is effective
on a Friday, dividends will begin accruing on the following Monday (unless such
day is not a business day of the Fund).
All dividends declared during a month will be paid by check or wire transfer.
(Wire transfers may only be made in amounts of $1,000 or more.) In such case,
payment will normally be made on the first business day of the following month.
A shareholder may elect to have all dividends and distributions automatically
reinvested in additional full and fractional shares of the Fund at the net asset
value of such shares. Such election, or any revocation thereof, must be made in
writing by the institution to AIFS at 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046-1173 and will become effective with dividends paid after its receipt
by AIFS. If a shareholder redeems all the shares in its account at any time
during the month, all dividends declared through the date of redemption are paid
to the shareholder along with the proceeds of the redemption.
TAXES
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
imposes certain requirements that must be met each year for the Fund to qualify
as a regulated investment company. As long as the Fund qualifies for tax
treatment as a regulated investment company, the Fund (but not its shareholders)
will not be subject to income tax on income and capital gains distributed to
shareholders. Consistent with the distribution requirements of the Code, the
Fund's policy is to distribute to its shareholders at least 90% of its
investment company taxable income for each year. The Fund intends to meet the
distribution requirements imposed by the Code in order to avoid the imposition
of a 4% excise tax; to distribute at least 98% of its net investment income for
the calendar year and at least 98% of its net realized capital gains, if any,
for the 12-month period ending on October 31 prior to the end of each calendar
year; and to meet the other requirements of Subchapter M of the Code, including
the requirements with respect to diversification of assets and sources of
income.
Under the Code, dividends paid by the Fund are generally subject to taxation
as of the date of payment, whether received by shareholders in cash or in shares
of the Fund. The Code provides an exception to this general rule; if the Fund
declares a dividend in October, November or December to shareholders of record
and pays the dividend before February 1 of the next year, a shareholder will be
treated for tax purposes as having received the dividend on December 31 of the
year in which it is declared rather than in January of the following year when
it is paid. Dividends paid by the Fund from its net investment income and
realized short term capital gains are taxable to shareholders at ordinary income
tax rates. It is anticipated that no portion of dividends paid by the Fund will
be eligible for the dividends received deduction for corporations. Distributions
of the Fund's
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long term capital gains (capital gains dividends) will be taxable to the
shareholder as long-term capital gains regardless of the length of time the
shareholder held his shares.
A portfolio of the Trust (a "Portfolio") will be treated as a separate
corporation for purposes of determining taxable income, distribution
requirements and other requirements of Subchapter M. Therefore one Portfolio may
not offset its gains against the other Portfolio's losses and each Portfolio
must specifically comply with all the provisions of the Code.
Distributions and transactions referred to above may be subject to state,
local or foreign taxes, and the treatment thereof may differ from the federal
income tax consequences discussed herein. Shareholders are advised to consult
with their tax advisors concerning the application of state, local or foreign
taxes. Certain states exempt payments of interest by mutual funds with respect
to U.S. Treasury obligations from state income taxes, and investors should
consult with their own tax advisors concerning the availability of such
exemption in their state.
Foreign persons who file a United States tax return after December 31, 1996
for a U.S. tax refund and who are not eligible to obtain a social security
number must apply to the Internal Revenue Service ("IRS") for an individual
taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form
W-7 and accompanying instructions, please contact your tax advisor or AIFS.
The foregoing discussion of federal income tax consequences is only a summary
based on tax laws and regulations in effect on the date of this Prospectus,
which laws and regulations are subject to change by legislative or
administrative action. For additional information regarding certain tax
consequences of an investment in the Institutional Shares, see the Statement of
Additional Information.
NET ASSET VALUE
The net asset value per share of the Fund is determined once daily as of 4:00
p.m. Eastern Time on each business day of the Fund. Net asset value per share of
the Fund is determined by subtracting the liabilities (e.g., accrued expenses
and dividends payable) of the Fund allocated to the class from the value of
securities, cash and other assets (including interest accrued but not collected)
of the Fund allocated to the class and dividing the result by the total number
of shares outstanding of such class of the Fund. Portfolio securities are valued
using current market values, if available. 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 Trust's officers in accordance
with methods which are specially authorized by the Board of Trustees of the
Trust. Short-term obligations with maturities of sixty (60) days or less are
valued at amortized cost as reflecting fair value.
PERFORMANCE INFORMATION
Performance information for the Institutional Shares of the Fund can be
obtained by calling the Fund at (800) 659-1005.
The performance of the Institutional Shares may be quoted in advertising in
terms of yield or total return. Both types of performance are based on
historical results and are not intended to indicate future performance. See the
Statement of Additional Information for further details concerning performance
comparisons used in advertisements by the Fund.
The yield of the Institutional Shares is a way of showing the rate of income
the Institutional Shares class earns on its investments as a percentage of the
Institutional Shares' price. In order to calculate yield, the Fund takes the
interest income earned from its portfolio of investments attributable to the
Institutional Shares for a 30-day period (net of expenses), divides such
interest by the number of shares of the Institutional Shares class and expresses
the result as an annualized percentage rate based on the net asset value per
share of the Institutional Shares at the end of the 30-day period. Yields are
calculated according to accounting methods that are standardized for all stock
and bond funds. Because yield accounting methods differ from the methods used
for other accounting purposes, the yield of the Institutional Shares may not
equal the income paid to an investor's account or the income reported in the
financial statements for the Institutional Shares.
The Fund may also quote the distribution rate for the Institutional Shares,
which is calculated by dividing dividends declared during a specified period by
the net asset value per share of the Institutional Shares at the end of the
period and annualizing the results.
The total return of the Institutional Shares shows the overall change in value
of the Institutional Shares, including changes in share price assuming all of
the Institutional Shares' dividends and capital gain distributions are
reinvested. A cumulative total return reflects the performance of the
Institutional Shares over a stated period of time. An average annual total
return reflects the hypothetical annually compounded return that would have
produced the same cumulative total return if the performance of the
Institutional Shares had been constant over the entire period. Because average
annual returns tend to smooth out variations in the return of the Institutional
Shares, investors should recognize that such returns are not the same as actual
year-by-year
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results. To illustrate the components of overall performance, the Institutional
Shares may separate its cumulative and average annual returns into income
results and capital gain or loss.
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 a practice will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
indicative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund and market conditions. Further
information about the performance of the Fund is contained in the Fund's annual
report to shareholders, a copy of which may be obtained without charge upon
written request to the Trust.
REPORTS TO SHAREHOLDERS
The Fund furnishes shareholders with annual and semi-annual reports containing
information about the Fund and its operations, including a list of the
investments held by the Fund and financial statements. The annual financial
statements are audited by the Fund's independent auditors. A copy of the current
list of the investments of the Fund will be sent to shareholders upon request.
Unless otherwise requested by the shareholder, each shareholder will be
provided with a written confirmation for each transaction. Institutions
establishing sub-accounts will receive a written confirmation for each
transaction in a sub-account. Duplicate confirmations may be transmitted to the
beneficial owner of the sub-account if requested by the Institution. The
Institution will receive a periodic statement setting forth, for each
sub-account, the share balance, income earned for the month, income earned for
the year to date and the total current value of the account.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Fund is vested in
the Trust's Board of Trustees. The Board of Trustees approves all significant
agreements between the Trust and persons or companies furnishing services to the
Fund, including agreements with the Fund's investment advisor, distributor,
custodian and transfer agent. The day-to-day operations of the Fund are
delegated to the Trust's officers and to AIM, subject always to the objectives
and policies of the Fund and to the general supervision of the Trust's Board of
Trustees.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, acts as the Fund's investment advisor pursuant to a Master
Investment Advisory Agreement, dated October 18, 1993 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its affiliates,
manages or advises 43 investment company portfolios (including the Fund). As of
November 1, 1996, the total assets of the investment company portfolios were
approximately $58 billion.
AIM is a wholly-owned subsidiary of A I M Management Group Inc. ("AIM
Management"). Certain trustees and officers of the Trust are affiliated with AIM
and AIM Management.
Under the terms of the Advisory Agreement, AIM supervises all aspects of the
Fund's operations and provides investment advisory services to the Fund. AIM
obtains and evaluates economic, statistical and financial information to
formulate and implement investment policies for the Fund. The Advisory Agreement
provides that, upon the request of the Trust's Board of Trustees, AIM may
perform or arrange for the performance of certain accounting, shareholder
servicing and other administrative services for the Fund which are not required
to be performed by AIM under the Advisory Agreement. The Board of Trustees has
made such a request. As a result, AIM and the Fund have entered into a Master
Administrative Services Agreement (the "Administrative Services Agreement"),
dated as of October 18, 1993, pursuant to which AIM is entitled to receive from
the Fund reimbursement of its costs or such reasonable compensation as may be
approved by the Board of Trustees. Currently, AIM is reimbursed for the services
of the Fund's principal financial officer and his staff, and any expenses
related to such services, as well as the services of staff responding to various
shareholder inquiries. In addition, the Fund and A I M Institutional Fund
Services, Inc., a wholly-owned subsidiary of AIM and registered transfer agent,
have entered into the Transfer Agency and Service Agreement, pursuant to which
AIFS provides transfer agency, dividend distribution and disbursement, and
shareholder services to the Fund.
For the fiscal year ended July 31, 1996, the Fund paid 0.20% of its average
daily net assets to AIM for its advisory services, and the Institutional Shares'
total expenses for the same period, stated as a percentage of average daily net
assets of the Institutional Shares was 0.27%.
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For the fiscal year ended July 31, 1996 the Fund paid 0.01% of its average
daily net assets to AIM for reimbursement for administrative services.
FEE WAIVERS
In order to increase the yield to investors, AIM may from time to time
voluntarily waive or reduce its fee, while retaining its ability to be
reimbursed for such fee prior to the end of such fiscal year. Fee waivers or
reductions and waivers of expense reimbursements, other than those set forth in
the Advisory Agreement, may be rescinded, at any time, without notice to
investors.
PORTFOLIO MANAGEMENT
AIM uses a team approach and disciplined investment strategy in providing
investment advisory services to all its accounts, including the Fund. AIM's
investment staff consists of 118 individuals. While individual members of AIM's
investment staff are assigned primary responsibility for the day-to-day
management of each of AIM's accounts, all accounts are reviewed on a regular
basis by AIM's Investment Policy Committee to ensure that they are being
invested in accordance with the accounts' and AIM's investment policies. The
individuals on the investment team who are primarily responsible for the
day-to-day management of the Fund are Karen Dunn Kelley, Meggan M. Walsh and
Paula A. Permenter. Ms. Kelley is Senior Vice President of A I M Capital
Management, Inc. ("AIM Capital"), a wholly-owned subsidiary of AIM; Vice
President of AIM and of the Trust; and has been responsible for the Fund since
1992. Ms. Kelly has been associated with AIM since 1989 and has a total of 14
years of experience as an investment professional. Ms. Walsh is Vice President
of AIM Capital and has been responsible for the Fund since 1992. Ms. Walsh has
been associated with AIM since 1991 and has a total of nine years of experience
as an investment professional. Prior to 1991, Ms. Walsh was Manager of
Short-Term U.S. Commercial Paper and Euro-Commercial Paper Programs at
Nationale-Nederlanden North America Corporation. Paula A. Permenter has been
responsible for the Fund since 1996. Ms. Permenter has been associated with AIM
since 1996 and has eight years of experience as an investment professional.
Prior to joining AIM, she was an Associate Trader and Investment Assistant with
Van Kampen American Capital Asset Management, Inc.
DISTRIBUTION OF SHARES
The Trust has entered into a Distribution Agreement, dated October 18, 1993,
relating to the shares of the Institutional Shares (the "Distribution
Agreement") with Fund Management Company, a registered broker-dealer and a
wholly-owned subsidiary of AIM, to act as the distributor of shares of the
Institutional Shares. The address of FMC is 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173. Certain trustees and officers of the Trust are
affiliated with FMC. The Distribution Agreement provides FMC with the exclusive
right to distribute shares of the Institutional Shares either directly or
through other broker-dealers.
FMC may, from time to time, at its expense, pay a bonus or other consideration
or incentive to dealers or banks who sell a minimum dollar amount of shares of
the Institutional Shares during a specific period of time. In some instances,
these incentives may be offered only to certain dealers or institutions who have
sold or may sell significant amounts of shares. The total amount of such
additional bonus payments or other consideration shall not exceed 0.05% of the
net asset value of the shares of the Institutional Shares sold. Any such bonus
or incentive programs will not change the price paid by investors for the
purchase of shares of the Institutional Shares or the amount received as
proceeds from such sales. Sales of the Institutional Shares may not be used to
qualify for any incentives to the extent that such incentives may be prohibited
by the laws of any jurisdiction.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
AIM is responsible for decisions to buy and sell securities for the Fund,
broker-dealer selection and negotiation of commission rates. Since purchases and
sales of portfolio securities by the Fund are usually principal transactions,
the Fund incurs little or no brokerage commissions. Portfolio securities are
normally purchased directly from the issuer or from a market maker for the
securities. The purchase price paid to dealers serving as market makers may
include a spread between the bid and asked prices. The Fund may also purchase
securities from underwriters at prices which include a concession paid by the
issuer to the underwriter.
AIM's primary consideration in effecting a security transaction is to obtain
the best net price and the most favorable execution of the order. To the extent
that the executions and prices offered by more than one dealer are comparable,
AIM may, in its discretion, effect transactions with dealers that furnish
statistical, research or other information or services which are deemed by AIM
to be beneficial to the Fund's investment program. Certain research services
furnished by dealers may be useful to AIM with clients other than the Fund.
Similarly, any research services received by AIM through placement of portfolio
transactions of other clients may be of value to AIM in fulfilling its
obligations to the Fund. In accordance with policies established by the
12
<PAGE> 83
trustees, AIM may take into account sales of shares of the Fund and other funds
advised by AIM in selecting broker-dealers to effect portfolio transactions on
behalf of the Fund.
GENERAL INFORMATION
ORGANIZATION OF THE TRUST
The Trust is organized as a Delaware business trust pursuant to an Agreement
and Declaration of Trust, dated May 5, 1993, as amended (the "Trust Agreement").
The Trust is an open-end series, management investment company, and may consist
of one or more series portfolios as authorized from time to time by the Board of
Trustees. The Trust was originally organized as a Maryland corporation on
November 4, 1988 and on October 15, 1993 was reorganized as a Delaware business
trust and the Fund.
DESCRIPTION OF SHARES
All shares of the Trust have equal rights with respect to voting, except that
(i) the holders of shares of all classes of a particular Portfolio, voting
together, will have the exclusive right to vote on matters (such as advisory
fees) pertaining solely to that portfolio, and (ii) the holders of shares of a
particular class will have the exclusive right to vote on matters pertaining to
distribution plans or shareholder service plans, if any such plans are adopted,
relating solely to such class. The holders of each class have distinctive rights
with respect to dividends which are more fully described in the Statement of
Additional Information. In the event of dissolution or liquidation, holders of
each portfolio's shares will receive pro rata, subject to the rights of
creditors, (a) the proceeds of the sale of the assets held in the respective
portfolio to which such shares relate, less (b) the liabilities of the Trust
attributable to the respective portfolio or allocated between the portfolios
based on the respective liquidation values of each such portfolio. The Trust
will not normally hold annual shareholders' meetings. Shareholders may remove
trustees from office by votes cast at a meeting of shareholders called for that
purpose or by written consent, and a meeting of shareholders may be called at
the request of the holders of 10% or more of the Trust's outstanding voting
securities.
The Institutional Class and Retail Class have different shareholders and are
allocated certain differing class expenses, such as distribution and/or service
fees related to their respective shares. To obtain information about the Retail
Class, please call A I M Distributors, Inc. ("AIM Distributors"), a registered
broker-dealer and wholly-owned subsidiary of A I M Advisors, Inc., at (800)
347-4246. AIM Distributors is the exclusive distributor of the Retail Class.
There are no preemptive or conversion rights applicable to any of the Trust's
shares. The Trust's shares, when issued, will be fully paid and non-assessable.
The Board of Trustees may create additional classes or series of the Trust's
shares without shareholder approval.
TRANSFER AGENT AND CUSTODIAN
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173, acts as transfer agent and dividend disbursing agent
for the Institutional Shares. The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian for the Fund's portfolio
securities and cash.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania
serves as counsel to the Trust and has passed upon the legality of the Shares.
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be directed
to the Fund at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may
be made by calling (800) 659-1005.
OTHER INFORMATION
This Prospectus sets forth basic information that investors should know about
the Fund prior to investing. A Statement of Additional Information has been
filed with the SEC. Copies of the Statement of Additional Information are
available upon request and without charge by writing or calling the Trust or
FMC. This Prospectus omits certain information contained in the registration
statement filed with the SEC. Copies of the registration statement, including
items omitted herein, may be obtained from the SEC by paying the charges
prescribed under its rules and regulations.
13
<PAGE> 84
===============================================================================
AIM INVESTMENT SECURITIES FUNDS
LIMITED MATURITY TREASURY PORTFOLIO
INSTITUTIONAL SHARES
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
(800) 659-1005
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
(800) 659-1005
AUDITORS
KPMG PEAT MARWICK LLP
NationsBank Building
700 Louisiana
Houston, Texas 77002
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street, 11th Floor
New York, New York 10286
TRANSFER AGENT
A I M INSTITUTIONAL FUND SERVICES, INC.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
===============================================================================
===============================================================================
PROSPECTUS
November 21, 1996
AIM
INVESTMENT
SECURITIES FUNDS
---------------------
LIMITED MATURITY
TREASURY PORTFOLIO
---------------------
INSTITUTIONAL SHARES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary.......................................... 2
Table of Fees and Expenses....................... 4
Financial Highlights............................. 5
Suitability For Investors........................ 6
Investment Program............................... 6
Purchase of Shares............................... 8
Redemption of Shares............................. 8
Dividends and Distributions...................... 9
Taxes............................................ 9
Net Asset Value.................................. 10
Performance Information.......................... 10
Reports to Shareholders.......................... 11
Management of the Trust.......................... 11
Portfolio Transactions and Brokerage
Allocation..................................... 12
General Information.............................. 13
</TABLE>
===============================================================================
<PAGE> 85
STATEMENT OF
ADDITIONAL INFORMATION
AIM INVESTMENT SECURITIES FUNDS
LIMITED MATURITY TREASURY PORTFOLIO
INSTITUTIONAL SHARES
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 659-1005
---------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE
ABOVE-NAMED FUND, A COPY OF WHICH MAY BE OBTAINED FREE
OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 1919, HOUSTON, TEXAS 77046-1173
OR BY CALLING (800) 659-1005
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED NOVEMBER 21, 1996
RELATING TO THE PROSPECTUS DATED NOVEMBER 21, 1996
<PAGE> 86
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction....................................................... 1
General Information About the Fund................................. 1
The Fund and Its Shares....................................... 1
Trustees and Officers......................................... 2
Remuneration of Trustees...................................... 4
AIM Funds Retirement Plan for Eligible Directors/Trustees..... 5
Deferred Compensation Agreements.............................. 6
The Investment Advisor........................................ 6
Transfer Agent and Custodian.................................. 7
Reports....................................................... 8
Principal Holders of Securities............................... 8
Purchases and Redemptions.......................................... 9
Net Asset Value Determination................................. 9
The Distribution Agreement.................................... 9
Suspension of Redemption Rights............................... 9
Investment Program and Restrictions................................ 10
Investment Program............................................ 10
Investment Restrictions....................................... 10
Performance Information............................................ 11
Yield Calculations............................................ 11
Total Return Calculations..................................... 12
Historical Portfolio Results.................................. 12
Portfolio Transactions............................................. 13
Taxes.............................................................. 14
Qualification as a Regulated Investment Company............... 14
Excise Tax on Regulated Investment Companies.................. 15
Fund Distributions............................................ 16
Sale or Redemption of Fund Shares............................. 16
Foreign Shareholders.......................................... 17
Effect of Future Legislation; Local Tax Considerations........ 17
Financial Statements............................................... FS-1
</TABLE>
i
<PAGE> 87
INTRODUCTION
AIM Investment Securities Funds (the "Trust") is a series mutual fund
currently offering one portfolio: the Limited Maturity Treasury Portfolio (the
"Fund"). Currently, the Fund has two classes of shares, consisting of the
Institutional Shares (the "Institutional Shares") and AIM Limited Maturity
Treasury Shares (the "Retail Class"). This Statement of Additional Information
relates solely to the Institutional Shares of the 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 is included in a Prospectus for the Institutional
Shares (the "Prospectus"), dated November 21, 1996. Copies of the Prospectus and
additional copies of this Statement of Additional Information may be obtained
without charge by writing the principal distributor of the Fund's shares, Fund
Management Company ("FMC"), 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173 or by calling (800) 659-1005. Investors must receive a Prospectus
before they invest.
This Statement of Additional Information is intended to furnish prospective
investors with additional information concerning the Institutional Shares. Some
of the information required to be in this Statement of Additional Information is
also included in the current Prospectus; and, in order to avoid repetition,
reference will be made to sections of the Prospectus. Additionally, the
Prospectus and this Statement of Additional Information omit certain information
contained in the registration statement filed with the SEC. Copies of the
registration statement, including items omitted from the Prospectus and this
Statement of Additional Information, may be obtained from the SEC by paying the
charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE FUND
THE FUND AND ITS SHARES
The Fund is an open-end, series portfolio of the Trust. The Trust is an
open-end, series, management investment company which was originally organized
as a Maryland corporation on November 4, 1988. On October 15, 1993, the Trust
was reorganized as a Delaware business trust and the Fund, which previously had
been a portfolio of another open-end investment company, was redomesticated as a
portfolio of the Trust. A copy of the Trust's Agreement and Declaration of Trust
dated May 5, 1993, as amended (the "Declaration of Trust") is on file with the
SEC.
Shares of beneficial interest of the Fund will be redeemable at the net asset
value thereof at the option of the shareholder, or at the option of the Fund in
certain circumstances.
Shareholders of the Trust do not have cumulative voting rights. Therefore, the
holders of more than 50% of the outstanding shares of all series or classes
voting together for election of trustees may elect all of the members of the
Board of Trustees and in such event, the remaining holders cannot elect any
members of the Board of Trustees.
The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust or any portfolio or class thereof, however, may be terminated at any
time, upon the recommendation of the Board of Trustees, by vote of the holders
of a majority of the outstanding shares of the Trust, such portfolio or such
class, respectively; provided, however, that the Board of Trustees may
terminate, without such shareholder approval, the Trust, any portfolio or any
class thereof with respect to which there are fewer than 100 holders of record.
The Declaration of Trust permits the trustees to issue an unlimited number of
full and fractional shares, $0.01 par value, of each class of shares of
beneficial interest of the Trust. The Board of Trustees may establish additional
series or classes of shares from time to time without shareholder approval.
Additional information concerning the rights of share ownership is set forth in
the prospectus applicable to each such class or series of shares of the Trust.
The assets received by the Trust for the issuance or sale of shares of each
class relating to a portfolio and all income, earnings, profits, losses and
proceeds therefrom, subject only to the rights of creditors, will be allocated
to that portfolio, and constitute the underlying assets of that portfolio. The
underlying assets of each portfolio will be segregated and will be charged with
the expenses with respect to that portfolio and with a share of the general
expenses of the Trust. While certain expenses of the Trust will be allocated to
the separate books of account of each portfolio, certain other expenses may be
legally chargeable against the assets of the entire Trust.
Under Delaware law, shareholders of a Delaware business trust shall be
entitled to the same limitations of liability extended to shareholders of
private for-profit corporations. However, there is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the Trust to the extent the courts of another state which does
not recognize such limited liability were to apply the laws of such state to a
controversy involving such obligations. However, the Declaration of Trust
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 the trustees to all
parties, and each party
1
<PAGE> 88
thereto must expressly waive all rights of action directly against shareholders
of the Trust. The Declaration of Trust provides for indemnification out of the
Trust's property for all losses and expenses of any shareholder of the Trust
held liable on account of being or having been a shareholder. Thus, the risk of
a shareholder incurring financial loss due to shareholder liability is limited
to circumstances in which the Trust would be unable to meet its obligations and
wherein the complaining party was held not to be bound by the disclaimer.
The Declaration of Trust further provides that the trustees will not be liable
for errors of judgment or mistakes of fact or law. However, nothing in the
Declaration of Trust protects a trustee against any liability to which a trustee
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office. The Declaration of Trust provides for indemnification by the Trust of
the trustees and the officers of the Trust except with respect to any matter as
to which any such person did not act in good faith in the reasonable belief that
his action was in or not opposed to the best interests of the Trust. Such person
may not be indemnified against any liability to the Trust or to the Trust's
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Declaration of Trust also authorizes
the purchase of liability insurance on behalf of trustees and officers.
As described in the Prospectus, the Trust will not normally hold annual
shareholders' meetings. At such time as less than a majority of the trustees
have been elected by the shareholders, the trustees then in office will call a
shareholders' meeting for the election of trustees. In addition, trustees may be
removed from office by a written instrument signed by at least two-thirds of the
trustees of the Trust or by a vote of the holders of a majority of the shares
present at a meeting of which a quorum is present and which has been duly called
for that purpose, which meeting shall be held upon written request of the
holders of not less than 10% of the outstanding shares of the Trust.
As used herein and in the Prospectus, the term "majority of the outstanding
shares" of beneficial interest of the Trust or a portfolio means, respectively,
the lesser of (i) 67% or more of the shares of beneficial interest of the Trust
or the portfolio present at a meeting, if the holders of more than 50% of the
outstanding shares of beneficial interest of the Trust or the portfolio are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of beneficial interest of the Trust or the portfolio.
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations during
the last five years are set forth below. Unless otherwise indicated, the address
of each trustee and officer is 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173.
*CHARLES T. BAUER, Trustee and Chairman (77)
Director, Chairman and Chief Executive Officer, A I M Management Group
Inc.; and Chairman of the Board of Directors, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services,
Inc., A I M Institutional Fund Services, Inc. and Fund Management Company.
BRUCE L. CROCKETT, Trustee (52)
906 Fromme Lane
McLean, VA 22102
Formerly, Director, President and Chief Executive Officer, COMSAT
Corporation (includes COMSAT World Systems, COMSAT Mobile Communications,
COMSAT Video Enterprises and COMSAT RSI and COMSAT International Ventures),
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT; (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services
company).
OWEN DALY II, Trustee (72)
Six Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly,
Director, CF & I Steel Corp., Monumental Life Insurance Company and
Monumental General Insurance Company; and Chairman of the Board of
Equitable Bancorporation.
- ---------------
* A trustee who is an "interested person" of the Trust and A I M Advisors, Inc.
("AIM"), as defined in the Investment Company Act of 1940 (the "1940 Act").
2
<PAGE> 89
***CARL FRISCHLING, Trustee (59)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis & Frankel (law firm). Formerly,
Partner, Reid & Priest (law firm); and, prior thereto, Partner, Spengler
Carlson Gubar Brodsky & Frischling (law firm).
*ROBERT H. GRAHAM, Trustee and President (49)
Director, President and Chief Operating Officer, A I M Management
Group Inc.; Director and President, A I M Advisors, Inc.; and Director and
Senior Vice President, A I M Capital Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc.
and Fund Management Company.
JOHN F. KROEGER, Trustee (72)
37 Pippins Way
Morristown, NJ 07960
Director, Flag Investors International Fund, Inc., Flag Investors
Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc.,
Flag Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund,
Inc., Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal
Fund, Inc., Flag Investors Value Builder Fund, Inc., Flag Investors
Maryland Intermediate Tax-Free Income Fund, Inc., Flag Investors Real
Estate Securities Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North
American Government Bond Fund, Inc. (investment companies). Formerly,
Consultant, Wendell & Stockel Associates, Inc. (consulting firm).
LEWIS F. PENNOCK, Trustee (54)
6363 Woodway, Suite 825
Houston, TX 77057
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Trustee (73)
183 River Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Services, Inc. (provider of centralized management
services to telephone companies); Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone companies); and Vice President and
Chief Financial Officer, Bell Telephone Company of Pennsylvania and Diamond
State Telephone Company.
LOUIS S. SKLAR, Trustee (57)
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
***JOHN J. ARTHUR, Senior Vice President and Treasurer (52)
Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice
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.,
A I M Institutional Fund Services, Inc. and Fund Management Company.
GARY T. CRUM, Senior Vice President (49)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc.;
and Director, A I M Distributors, Inc.
- ---------------
* A trustee who is an "interested person" of the Trust and AIM as defined in
the 1940 Act.
** A trustee who is an "interested person" of the Trust as defined in the 1940
Act.
*** Mr. Arthur and Ms. Relihan are married to each other.
3
<PAGE> 90
***CAROL F. RELIHAN, Senior Vice President and Secretary (42)
Senior Vice President, Secretary and General Counsel, A I M Advisors,
Inc.; Vice President, General Counsel and Secretary, A I M Management Group
Inc.; Vice President and General Counsel Fund Management Company; and Vice
President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc., and A I M Institutional Fund Services, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (37)
Vice President and Fund Controller, A I M Advisors, Inc.; and
Assistant Vice President and Assistant Treasurer, Fund Management Company.
MELVILLE B. COX, Vice President (53)
Vice President and Chief Compliance Officer, A I M Advisors, Inc.,
A I M Capital Management, Inc., A I M Fund Services, Inc., A I M
Institutional Fund Services, Inc., A I M Distributors, Inc. and Fund
Management Company. Formerly, Vice President, Charles Schwab & Co., Inc.;
Assistant Secretary, Charles Schwab Family of Funds and Schwab Investments;
Chief Compliance Officer, Charles Schwab Investment Management, Inc.; and
Vice President, Integrated Resources Life Insurance Co. and Capitol Life
Insurance Co.
KAREN DUNN KELLEY, Vice President (36)
Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc.
The standing committees of the Board of Trustees are the Audit Committee, the
Investments Committee and the Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger (Chairman),
Pennock and Robinson. The Audit Committee is responsible for meeting with the
Trust's auditors to review audit procedures and results and to consider any
matters arising from an audit to be brought to the attention of the trustees as
a whole with respect to the Trust's fund accounting or its internal accounting
controls, or for considering such matters as may from time to time be set forth
in a charter adopted by the Board of Trustees and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett, Daly
(Chairman), Kroeger and Pennock. The Investments Committee is responsible for
reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, or considering such
matters as may from time to time be set forth in a charter adopted by the board
and such committee.
The members of the Nominating and Compensation Committee are Messrs. Crockett,
Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and Compensation
Committee is responsible for considering and nominating individuals to stand for
election as trustees who are not interested persons as long as the Trust
maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act,
reviewing from time to time the compensation payable to the disinterested
trustees, or considering such matters as may from time to time be set forth in a
charter adopted by the board and such committee.
All of the trustees of the Trust also serve as directors or trustees of some
or all of the other investment companies managed or advised by AIM. Certain of
the executive officers of the Trust hold similar offices with some or all of
such investment companies.
REMUNERATION OF TRUSTEES
Each trustee is reimbursed for expenses incurred in connection with each
meeting of the Board of Trustees or any committee thereof. Each trustee who is
not also an officer of the Trust is compensated for his or her services
according to a fee schedule which recognizes the fact that such trustee also
serves as a trustee or director of other funds in The AIM Family of Funds(R),
AIM Institutional Funds and all other investment companies managed or advised by
AIM (the "AIM Funds"). Each such trustee receives a fee, allocated among the AIM
Funds for which he or she serves as a director or trustee, which consists of an
annual retainer component and a meeting fee component.
- ---------------
*** Mr. Arthur and Ms. Relihan are married to each other.
4
<PAGE> 91
Set forth below is information regarding compensation paid or accrued for each
trustee of the Fund:
<TABLE>
<CAPTION>
RETIREMENT TOTAL
AGGREGATE BENEFITS COMPENSATION
COMPENSATION ACCRUED FROM
FROM BY ALL ALL
THE AIM AIM
DIRECTOR FUND(1) FUNDS(2) FUNDS(3)
------------------------------------------------------ ------ ------- -------
<S> <C> <C> <C>
Charles T. Bauer...................................... $ 0 $ 0 $ 0
Bruce L. Crockett..................................... 1,279 3,655 57,750
Owen Daly II.......................................... 1,464 18,662 58,125
Carl Frischling....................................... 1,448 11,323 57,250
Robert H. Graham...................................... 0 0 0
John F. Kroeger....................................... 1,375 22,313 58,125
Lewis F. Pennock...................................... 1,237 5,067 58,125
Ian W. Robinson....................................... 1,283 15,381 56,750
Louis S. Sklar........................................ 1,460 6,632 57,250
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Trustees of the Fund during
the fiscal year ended July 31, 1996, including interest earned thereon, was
$5,261.
(2) During the fiscal year ended July 31, 1996, the total amount of expenses
allocated to the Fund in respect of such retirement benefits was $2,759.
Data reflects compensation estimated for the calendar year ended December
31, 1995.
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as a Director
or Trustee of a total of 11 AIM Funds. Messrs Crockett, Frischling,
Robinson and Sklar each serves as a Director or Trustee of a total of 10
AIM Funds. Data reflects compensation estimated for the calendar year ended
December 31, 1995.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each trustee (who is not an employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Trustees.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible trustee has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "Applicable
AIM Funds"). Each eligible trustee is entitled to receive an annual benefit from
the Applicable AIM Funds commencing on the first day of the calendar quarter
coincident with or following his date of retirement equal to 75% of the retainer
paid or accrued by the Applicable AIM Funds for such trustee during the
twelve-month period immediately preceding the trustee's retirement (including
amounts deferred under a separate agreement between the Applicable AIM Funds and
the trustee) for the number of such Trustee's years of service (not in excess of
10 years of service) completed with respect to any of the AIM Funds. Such
benefit is payable to each eligible trustee in quarterly installments. If an
eligible trustee dies after attaining the normal retirement date but before
receipt of any benefits under the Plan commences, the trustee's surviving spouse
(if any) shall receive a quarterly survivor's benefit equal to 50% of the amount
payable to the deceased trustee, for no more than ten years beginning the first
day of the calendar quarter following the date of the trustee's death. Payments
under the Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits payable to
an eligible trustee upon retirement assuming various compensation and years of
service classifications. The estimated credited years of service for Messrs.
Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar are 9, 9, 19,
18, 14, 9, and 7 years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
NUMBER OF
YEARS OF ANNUAL COMPENSATION PAID BY ALL AIM
SERVICE WITH FUNDS
THE AIM -------------------------------------
FUNDS $55,000 $60,000 $65,000
------------------------- ------- ------- -------
<S> <C> <C> <C>
10....................... $41,250 $45,000 $48,750
9....................... $37,125 $40,500 $43,875
8....................... $33,000 $36,000 $39,000
7....................... $28,875 $31,500 $34,125
6....................... $24,750 $27,000 $29,250
5....................... $20,625 $22,500 $24,375
</TABLE>
5
<PAGE> 92
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "deferring trustees") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring trustees may elect to defer receipt of up to 100% of
their compensation payable by the Fund, and such amounts are placed into a
deferral account. Currently, the deferring trustees may select various AIM Funds
in which all or part of their deferral accounts shall be deemed to be invested.
Distributions from the deferring trustees' deferral accounts will be paid in
cash, in generally equal quarterly installments over a period of ten years
beginning on the date the deferring trustee's retirement benefits commence under
the Plan. The Fund's Board of Trustees, in its sole discretion, may accelerate
or extend the distribution of such deferral accounts after the deferring
director's termination of service as a trustee of the Fund. If a deferring
trustee dies prior to the distribution of amounts in his deferral account, the
balance of the deferral account will be distributed to his designated
beneficiary in a single lump sum payment as soon as practicable after such
deferring trustee's death. The Agreements are not funded and, with respect to
the payments of amounts held in the deferral accounts, the deferring trustees
have the status of unsecured creditors of the Fund and of each other AIM Fund
from which they are deferring compensation.
During the fiscal year ended July 31, 1996 the Fund paid $4,141 to Kramer,
Levin, Naftalis & Frankel, the law firm in which Mr. Frischling, a trustee of
the Trust, is a partner.
THE INVESTMENT ADVISOR
A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, serves as the investment advisor to the Fund pursuant to a Master
Investment Advisory Agreement with the Trust, dated October 18, 1993 (the
"Advisory Agreement"). AIM was organized in 1976, and together with its
affiliates, advises or manages 43 investment company portfolios. As of November
1, 1996, the total assets of the investment company portfolios advised or
managed by AIM and its affiliates were approximately $58 billion.
AIM is a wholly-owned subsidiary of A I M Management Group Inc. ("AIM
Management"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. AIM
Management is a holding company that has been engaged in the financial services
business since 1976. Certain of the directors and officers of AIM are also
executive officers of the Fund and their affiliations are shown under "Trustees
and Officers." A I M Capital Management, Inc. ("AIM Capital"), a wholly-owned
subsidiary of AIM, is engaged in the business of providing investment advisory
services to investment companies, corporations, institutions and other accounts.
AIM and the Fund have adopted a Code of Ethics which requires investment
personnel and certain other employees (a) to pre-clear all personal securities
transactions subject to the Code of Ethics, (b) to file reports or duplicate
confirmations regarding such transactions, (c) to refrain from personally
engaging in (i) short-term trading of a security, (ii) transactions involving a
security within seven days of an AIM Fund transaction involving the same
security, and (iii) transactions involving securities being considered for
investment by an AIM Fund and, (d) to abide by certain other provisions under
the Code of Ethics. The Code of Ethics also prohibits investment personnel and
all other AIM employees from purchasing securities in an initial public
offering. Personal trading reports are reviewed periodically by AIM, and the
Board of Trustees reviews quarterly and annual reports (including information on
any substantial violations of the Code of Ethics). Violations of the Code of
Ethics may include censure, monetary penalties, suspension or termination of
employment.
The Advisory Agreement became effective on October 18, 1993 and will continue
in effect until June 30, 1997, and from year to year thereafter only if such
continuance is specifically approved at least annually by (i) the Trust's Board
of Trustees or the vote of a "majority of the outstanding voting securities" of
the Fund (as defined in the 1940 Act) and (ii) the affirmative vote of a
majority of the trustees who are not parties to the Advisory Agreement or
"interested persons" of any such party (the "Non-Interested Trustees") by votes
cast in person at a meeting called for such purpose. The Trust or AIM may
terminate the Advisory Agreement on sixty (60) days' written notice without
penalty. The Advisory Agreement terminates automatically in the event of its
"assignment," as defined in the 1940 Act.
Pursuant to the terms of the Advisory Agreement, AIM manages the investments
of the Fund and obtains and evaluates economic, statistical and financial
information to formulate and implement investment policies for the Fund. Any
investment program undertaken by AIM will at all times be subject to the
policies and control of the Trust's Board of Trustees. AIM shall not be liable
to the Fund or its shareholders for any act or omission by AIM or for any loss
sustained by the Fund or its shareholders except in the case of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty. Pursuant
to the Advisory Agreement, AIM receives a fee as compensation for its services
with respect to the Fund, calculated daily and paid monthly, at an annual rate
equal to 0.20% of the first $500 million of the Fund's aggregate average daily
net assets, plus 0.175% of the Fund's aggregate average daily net assets in
excess of $500 million.
6
<PAGE> 93
The Advisory Agreement provides that, upon the request of the Trust's Board of
Trustees, AIM may perform or arrange for the performance of certain accounting,
shareholder servicing and other administrative services for the Fund which are
not required to be performed by AIM under the Advisory Agreement. The Board of
Trustees has made such a request. As a result, AIM and the Fund have entered
into a Master Administrative Services Agreement (the "Administrative Services
Agreement"), dated as of October 18, 1993, pursuant to which AIM is entitled to
receive from the Fund reimbursement of its costs or such reasonable compensation
as may be approved by the Board of Trustees. Currently, AIM is reimbursed for
the services of the Fund's principal financial officer and his staff, and any
expenses related to such services, as well as the services of staff responding
to various shareholder inquiries.
In addition to the fees paid to AIM pursuant to the Advisory Agreement and the
Administrative Services Agreement, the Trust, on behalf of the Fund, also pays
or causes to be paid all other expenses attributable to the Fund, including,
without limitation: the charges and expenses of any registrar, any custodian or
depository appointed by the Trust for the safekeeping of cash, portfolio
securities and other property, and any transfer, dividend or accounting agent or
agents; brokers' commissions in connection with portfolio securities
transactions of the Fund; all taxes, including securities issuance and transfer
taxes, and fees payable to federal, state or other governmental agencies; the
cost and expenses of engraving or printing share certificates; all costs and
expenses in connection with registration and maintenance of registration with
the SEC and various states and other jurisdictions (including filing and legal
fees and disbursements of counsel); the costs and expenses of printing,
including typesetting, and distributing proxy statements, reports to
shareholders, prospectuses and statements of additional information of the Fund
and supplements thereto; expenses of shareholders' and trustees' meetings; fees
and travel expenses of trustees and trustee members of any advisory board or
committee; expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and expenses of
any outside pricing service; fees and expenses of legal counsel, including
counsel to the Non-Interested Trustees of the Trust or AIM, and of independent
accountants; membership dues of industry associations; interest payable on
borrowings; postage; insurance premiums on property or personnel (including
officers and trustees) of the Trust; and extraordinary expenses (including but
not limited to, legal claims and liabilities and litigation costs and any
indemnification related thereto). FMC bears the expenses of printing and
distributing reports to shareholders, prospectuses and statements of additional
information (other than those reports to shareholders, prospectuses and
statements of additional information distributed to existing shareholders of the
Institutional Shares) and any other promotional or sales literature used by FMC
or furnished by FMC to purchasers or dealers in connection with the public
offering of shares of the Institutional Shares.
Expenses of the Trust which are not directly attributable to the operations of
any class of shares or Portfolio of the Trust are prorated among all classes of
the Trust based upon the relative net assets of each class or Portfolio.
Expenses of the Trust which are not directly attributable to a specific class of
shares but are directly attributable to a specific Portfolio are prorated among
all classes of such Portfolio based upon the relative net assets of each such
class. Expenses of the Trust which are directly attributable to a specified
class of shares are charged against the income available for distribution as
dividends to such shares.
During the fiscal years ended July 31, 1996, 1995 and the eleven-month period
ended July 31, 1994, AIM received advisory fees of $933,207, $809,449, and
$942,205, respectively, pursuant to the Advisory Agreement. During the fiscal
years ended July 31, 1996, 1995 and the eleven-month period ended July 31, 1994,
AIM was reimbursed $60,857, $82,199, and $91,445, respectively, pursuant to the
Administrative Services Agreement.
The Advisory Agreement requires AIM to reduce its fees to the extent required
to satisfy any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale. As
described in the Prospectus, AIM may voluntarily waive its fees from time to
time, while retaining the ability to be reimbursed by the Fund for such amounts
prior to the end of the fiscal year.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York acts as custodian for the Fund's portfolio securities and
cash. The Bank of New York receives such compensation from the Trust for its
services as is agreed to from time to time by The Bank of New York and the
Trust. The address of The Bank of New York is 90 Washington Street, 11th floor,
New York, New York 10286.
A I M Institutional Fund Services, Inc. ("AIFS"), 11 Greenway Plaza, Suite
1919, Houston, Texas 77046-1173, serves as transfer agent and dividend
disbursing agent for the Institutional Shares. The Fund pays AIFS such
compensation as may be agreed upon from time to time. During the fiscal year
ended July 31, 1996 and 1995, AIFS received from the Fund transfer agency and
shareholder services fees with respect to the Institutional Shares in the amount
of $10,350 and $3,349, respectively.
7
<PAGE> 94
REPORTS
The Trust furnishes holders of the Institutional Shares with semi-annual
reports containing information about the Trust and its operations, including a
schedule of investments held by the Fund and its financial statements. The
annual financial statements are audited by the Fund's independent certified
public accountants. The Board of Trustees has selected KPMG Peat Marwick LLP,
NationsBank Building, 700 Louisiana, Houston, Texas 77002, as the independent
auditors to audit the financial statements and review the tax returns of the
Fund.
PRINCIPAL HOLDERS OF SECURITIES
To the best of the Trust's knowledge, as of November 1, 1996, the trustees and
officers of the Trust owned less than 1% of the outstanding shares of any class
of the Trust.
INSTITUTIONAL SHARES:
To the best of the Trust's knowledge, the names and addresses of the holders
of 5% or more of the outstanding shares of the Institutional Class, as of
November 1, 1996, and the percent of outstanding shares owned by such
shareholders are as follows:
<TABLE>
<CAPTION>
OWNED OF
PERCENT
NAME AND ADDRESS RECORD
OF RECORD OWNER ONLY*
---------------- --------
<S> <C>
Frost National Bank 73.04%**
P.O. Box 1600
San Antonio, TX 78296
Mississippi Treasury Dept. 7.84%
P.O. Box 138
Jackson, MS 39205
</TABLE>
- ---------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
** A shareholder who holds more than 25% of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in the
1940 Act.
AIM LIMITED MATURITY TREASURY SHARES:
To the best of the Trust's knowledge, the names and addresses of the holders
of 5% or more of the outstanding shares of the Retail Class, as of November 1,
1996, and the percent of outstanding shares owned by such shareholders are as
follows:
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED
OWNED OF
OF RECORD
NAME AND ADDRESS RECORD AND
OF RECORD OWNER ONLY* BENEFICIALLY
---------------- ------- ------------
<S> <C> <C>
Merrill Lynch Pierce Fenner & Smith -0- 16.55%
FBO the Sole Benefit of Customers
Mutual Fund Operations
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Bob & Co 9.32% -0-
c/o Bank of Boston
Attn: Mutual Funds
P.O. Box 1809
Boston, MA 02105
BHC Securities Inc. -0-% 5.12%
FBO CB Clients
Trade House Account
2005 Market Street
Philadelphia, PA 19103
</TABLE>
- ---------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
8
<PAGE> 95
PURCHASES AND REDEMPTIONS
NET ASSET VALUE DETERMINATION
A complete description of the manner by which shares of the Institutional
Shares may be purchased appears in the Prospectus under the caption "Purchase of
Shares."
The Institutional Shares are sold at the net asset value of such shares.
Shareholders may at any time redeem all or a portion of their shares at net
asset value. The investor's price for purchases and redemptions will be the net
asset value next determined following the receipt of an order to purchase or a
request to redeem shares. The net asset value of the Fund varies depending on
the market value of its assets.
In accordance with the current rules and regulations of the SEC, the net asset
value per share of the Fund is determined once daily as of the close of trading
of the New York Stock Exchange ("NYSE") which is generally 4:00 p.m. Eastern
Time on each business day of the Fund. In the event the NYSE closes early (i.e.
before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a
Fund share is determined as of the close of the NYSE on such day. Net asset
value per share of the Fund is determined by subtracting the liabilities (e.g.,
accrued expenses and dividends payable) of the Fund allocated to the class from
the value of securities, cash and other assets (including interest accrued but
not collected) of the Fund allocated to the class, and dividing the result by
the total number of shares outstanding of such class of the Fund. Determination
of the Fund's net asset value per share is made in accordance with generally
accepted accounting principles.
Securities will be valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing services may be determined
without exclusive reliance on quoted prices, and may reflect appropriate factors
such as yield, type of issue, coupon rate, maturity and seasoning differential.
Securities for which prices are not provided by the pricing service are valued
at the mean between the last bid and asked prices based upon quotes furnished by
market makers for such securities. 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 Trust's officers in accordance with methods which
are specifically authorized by the Board of Trustees of the Trust. Short-term
obligations having sixty (60) days or less to maturity are valued at amortized
cost, which approximates market value. (See also "Purchase of Shares,"
"Redemption of Shares" and "Net Asset Value" in the Prospectus.)
The Trust agrees to redeem shares of the Fund solely in cash up to the lesser
of $250,000 or 1% of the Fund's net assets during any 90-day period for any one
shareholder. In consideration of the best interests of the remaining
shareholders, the Trust reserves the right to pay any redemption price exceeding
this amount in whole or in part by a distribution in kind of securities held by
the Fund in lieu of cash. It is highly unlikely that shares would ever be
redeemed in kind. If shares are redeemed in kind, however, the redeeming
shareholder should expect to incur transaction costs upon the disposition of the
securities received in the distribution.
THE DISTRIBUTION AGREEMENT
The Trust has entered into a Distribution Agreement with FMC, dated as of
October 18, 1993 (the "Distribution Agreement"), pursuant to which FMC has
agreed to act as the exclusive distributor of shares of the Institutional
Shares. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. The Distribution Agreement provides that FMC has the exclusive right
to distribute the Institutional Shares either directly or through other
broker-dealers. The Distribution Agreement also provides that FMC will pay
promotional expenses, including the incremental costs of printing prospectuses
and statements of additional information, annual reports and other periodic
reports for distribution to persons who are not shareholders of the
Institutional Shares and the costs of preparing and distributing any other
supplemental sales literature. FMC has not undertaken to sell any specified
number of the Institutional Shares. FMC does not receive any fees from the Fund
pursuant to the Distribution Agreement.
FMC is a registered broker-dealer and is also a wholly-owned subsidiary of
AIM.
The Distribution Agreement became effective October 18, 1993 and will continue
in effect until June 30, 1997, and from year to year only if such continuation
is specifically approved at least annually by (i) the Trust's Board of Trustees
or the vote of a "majority of the outstanding securities" of the Fund (as
defined in the 1940 Act) and (ii) the affirmative vote of a majority of the
Non-Interested Directors by votes cast in person at a meeting called for such
purpose. The Fund or FMC may terminate the Distribution Agreement on sixty (60)
days' written notice without penalty. The Distribution Agreement will terminate
in the event of its "assignment," as defined in the 1940 Act.
SUSPENSION OF REDEMPTION RIGHTS
The right of redemption may be suspended or the date of payment upon
redemption may be 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 cus-
9
<PAGE> 96
tomary weekend or 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 the
Fund not reasonably practicable.
INVESTMENT PROGRAM AND RESTRICTIONS
INVESTMENT PROGRAM
Information concerning the Fund's investment objective and fundamental and
operating policies is set forth in the Prospectus. The principal features of the
Fund's investment program and the primary risks associated with that investment
program are also discussed in the Prospectus. There can be no assurance that the
Fund will achieve its objective. The values of the securities in which the Fund
invests fluctuate based upon interest rates and market factors.
Repurchase Agreements. The Fund's investment policies permit the Fund to
invest in repurchase agreements with banks and broker-dealers pertaining to U.S.
Treasury obligations. However, in order to maximize the Fund's dividends which
are exempt from state taxation, as a matter of operating policy, the Fund does
not currently invest in repurchase agreements. A repurchase agreement involves
the purchase by the Fund of an investment contract from a financial institution,
such as a bank or broker-dealer, which contract is secured by U.S. Treasury
obligations of the type described above whose value is equal to or greater than
the value of the repurchase agreement, including the agreed-upon interest. The
agreement provides that the seller will repurchase the underlying securities at
an agreed-upon time and price. The total amount received on repurchase will
exceed the price paid by the Fund, reflecting the agreed-upon rate of interest
for the period from the date of the repurchase agreement to the settlement date.
This rate of return is not related to the interest rate on the underlying
securities. The difference between the total amount received upon the repurchase
of the securities and the price paid by the Fund upon their acquisition is
accrued daily as interest. Investments in repurchase agreements may involve
risks not associated with investments in the underlying securities. If the
seller defaulted on its repurchase obligation, the Fund would incur a loss to
the extent that the proceeds from a sale of the underlying securities were less
than the repurchase price under the agreement. The Fund will limit repurchase
agreements to transactions with sellers believed by AIM to present minimal
credit risk. Securities subject to repurchase agreements will be held by the
Fund's custodian or in the custodian's account with the Federal Reserve Treasury
Book-Entry System. Although the securities subject to repurchase agreements
might bear maturities in excess of one year, the Fund will not enter into a
repurchase agreement with an agreed-upon repurchase date in excess of seven
calendar days from the date of acquisition by the Fund, unless the Fund has the
right to require the selling institution to repurchase the underlying securities
within seven days of the date of acquisition.
INVESTMENT RESTRICTIONS
The most significant investment restrictions applicable to the Fund's
investment program are set forth in the Prospectus under "Investment
Program -- Restrictions." Additionally, as a matter of fundamental policy which
may not be changed without a vote of the holders of a majority of the
outstanding shares of beneficial interest of all classes of the Fund, the Fund
will not:
(1) mortgage, pledge or hypothecate any assets except to secure
permitted borrowings of money from banks for temporary or emergency
purposes and then only in amounts not in excess of 33 1/3% of the value of
its total assets at the time of such borrowing;
(2) underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition of such
securities in accordance with the Fund's investment program may be deemed
an underwriting;
(3) invest in real estate or other interests in real estate;
(4) purchase or sell commodities or commodity futures contracts,
engage in arbitrage transactions, purchase securities on margin, make short
sales or invest in puts or calls;
(5) invest in any obligation not payable as to principal and interest
in United States currency;
(6) invest 25% or more of the value of its total assets in securities
of issuers engaged in any one industry (excluding securities which are a
direct obligation of the U.S. Treasury or are repurchase agreements with
respect to a direct obligation of the U.S. Treasury); or
(7) acquire for value the securities of any other investment company,
except in connection with a merger, consolidation, reorganization or
acquisition of assets.
In addition to those policies discussed in the Prospectus and above, the Fund
generally will not invest in any company for the purpose of exercising control
or management, or purchase securities of an issuer if the officers and trustees
of the Trust and the
10
<PAGE> 97
officers and directors of the Fund's investment advisor collectively own
beneficially over 5% of the outstanding voting securities of such issuer, in
each case excluding holdings of any officer, trustee or director of less than
1/2 of 1% of the outstanding voting securities of such issuer. These
restrictions are not matters of fundamental policy and may be changed at any
time by the trustees without the approval of shareholders.
The percentage limitations set forth in the restrictions noted above are
calculated by giving effect to the purchase in question and are based upon
values at the time of purchase. The Fund may, however, retain any security
purchased in accordance with such restrictions irrespective of changes in the
values of the Fund's assets occurring subsequent to the time of purchase.
The Trust has obtained an opinion of Dechert Price & Rhoads, special counsel
to the Trust, that shares of the Fund are eligible for investment by a federal
credit union. In order to ensure that shares of the Fund meet the requirements
for eligibility for investment by federal credit unions, the Fund has adopted
the following policies:
(1) The Fund will enter into repurchase agreements only with: (a)
banks insured by the Federal Deposit Insurance Corporation (FDIC); (b)
savings and loan associations insured by the FDIC; or (c) registered
broker-dealers. The Fund will only enter into repurchase transactions
pursuant to a master repurchase agreement in writing with the Fund's
counterparty. Under the terms of a written agreement with its custodian,
the Fund receives on a daily basis written confirmation of each purchase of
a security subject to a repurchase agreement and a receipt from the Fund's
custodian evidencing each transaction. In addition, securities subject to a
repurchase agreement may be recorded in the Federal Reserve Book-Entry
System on behalf of the Fund by its custodian. The Fund purchases
securities subject to a repurchase agreement only when the purchase price
of the security acquired is equal to or less than its market price at the
time of the purchase.
(2) The Fund will only enter into reverse repurchase agreements and
purchase additional securities with the proceeds when such proceeds are
used to purchase other securities that either mature on a date simultaneous
with or prior to the expiration date of the reverse repurchase agreement,
or are subject to an agreement to resell such securities within that same
time period.
(3) The Fund will only enter into securities lending transactions that
comply with the same counterparty, safekeeping, maturity and borrowing
restrictions that the Fund observes when participating in repurchase and
reverse repurchase transactions.
(4) The Fund will enter into when-issued and delayed delivery
transactions only when the time period between trade date and settlement
date does not exceed 120 days, and only when settlement is on a cash basis.
When the delivery of securities purchased in such manner is to occur within
30 days of the trade date, the Fund will purchase the securities only at
their market price as of the trade date.
In addition, in order to comply with regulations governing the liquidity
requirements applicable to federal savings and loan associations, as a matter of
fundamental policy, the Fund will only invest in eligible securities having a
remaining term to maturity of three years or less.
In order to permit the sale of the Fund's shares in certain states, the Fund
may from time to time make commitments more restrictive than the restrictions
described herein. These restrictions are not matters of fundamental policy, and
should the Fund determine that any such commitment is no longer in the best
interests of the Fund and its shareholders, it will revoke the commitment by
terminating sales of its shares in the states involved.
To permit the sale of shares of the Fund in Texas, the Fund will limit its
investment in securities which are not readily marketable to 15% of its net
assets.
PERFORMANCE INFORMATION
YIELD CALCULATIONS
Yields for the Institutional Shares used in advertising are computed as
follows: (a) divide the interest and dividend income of the Institutional Shares
for a given 30-day or one-month period, net of expenses, by the average number
of shares entitled to receive dividends during the period; (b) divide the figure
arrived at in step (a) by the net asset value of the Institutional Shares at the
end of the period; and (c) annualize the result (assuming compounding of income)
in order to arrive at an annual percentage rate. For purposes of yield
quotation, income is calculated in accordance with standardized methods
applicable to all stock and bond mutual funds. In general, interest income is
reduced with respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and is
increased with respect to bonds trading at a discount by adding a portion of the
discount to daily income. Capital gains and losses are excluded from the
calculation.
Income calculated for the purposes of calculating the yield of the
Institutional Shares differs from income as determined for other accounting
purposes. Because of the different accounting methods used, and because of the
compounding assumed in
11
<PAGE> 98
yield calculations, the yield quoted for the Institutional Shares may differ
from the rate of distributions the Institutional Shares paid over the same
period or the rate of income reported in the financial statements of the
Institutional Shares.
The Fund may also quote the distribution rate for the Institutional Shares,
which expresses the historical amount of income dividends of the Institutional
Shares to its shareholders as a percentage of the net asset value per share of
the Institutional Shares. The distribution rate for the Institutional Shares for
the thirty day period ended July 31, 1996 was 5.45%. This distribution rate was
calculated by dividing dividends declared over the thirty days ended July 31,
1996 by the net asset value per share of the Institutional Shares at the end of
that period and annualizing the result.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the Institutional
Shares' return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the net asset value per share of the
Institutional Shares over the period. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical investment in the
Institutional Shares over a stated period, and then calculating the annually
compounded percentage rate that would have produced the same result if the rate
of growth or decline in value had been constant over the period. While average
annual returns are a convenient means of comparing investment alternatives,
investors should realize that the performance of the Institutional Shares is not
constant over time, but changes from year to year, and that average annual
returns do not represent the actual year-to-year performance of the
Institutional Shares.
In addition to average annual returns, the Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as a percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments, and/or a series of redemptions, over any
time period. Total returns may be broken down into their components of income
and capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return. Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
HISTORICAL PORTFOLIO RESULTS
The following chart shows the total returns for the Institutional Shares for
the twelve months and five year periods ended July 31, 1996, and the period
beginning July 13, 1987 (the date operations commenced) through July 31, 1996.
<TABLE>
<CAPTION>
AVERAGE
ANNUAL CUMULATIVE
RETURN RETURN
------ ---------
<S> <C> <C>
Twelve months ended 7/31/96.................................. 5.27% 5.27%
Five years ended 7/31/96..................................... 5.75% 32.25%
7/13/87 - 7/31/96............................................ 6.79% 81.17%
</TABLE>
The 30 day yield of the Institutional Shares as of July 31, 1996 was 5.83%.
A hypothetical investment of $1,000 in the Institutional Shares made during
the twelve months ended July 31, 1996 would have been worth $1,059.34. During
the five-year period ended July 31, 1996, a hypothetical $1,000 investment in
the Institutional Shares at the beginning of such period would have been worth
$1,330.38. A hypothetical investment of $1,000 made on July 13, 1987 (the date
operations commenced) through July 31, 1996, would have been worth $1,809.90,
assuming in each case that all distributions were reinvested.
The performance of the Institutional Shares may be compared in advertising to
the performance of other mutual funds in general or of particular types of
mutual funds, especially those with similar objectives. Such performance data
may be prepared by Lipper Analytical Services, Inc. and other independent
services which monitor the performance of mutual funds. The Institutional Shares
may also advertise mutual fund performance rankings which have been assigned to
the Institutional Shares by such monitoring services.
12
<PAGE> 99
PORTFOLIO TRANSACTIONS
AIM is responsible for decisions to buy and sell securities for the Fund,
broker-dealer selection and negotiation of commission rates. Since purchases and
sales of portfolio securities by the Fund are usually principal transactions,
the Fund incurs little or no brokerage commissions. Portfolio securities are
normally purchased directly from the issuer or from a market maker for the
securities. The purchase price paid to dealers serving as market makers may
include a spread between the bid and asked prices. The Fund may also purchase
securities from underwriters at prices which include a commission paid by the
issuer to the underwriter.
AIM's primary consideration in effecting a security transaction is to obtain
the best net price and the most favorable execution of the order. To the extent
that the execution and prices offered by more than one dealer are comparable,
AIM may, in its discretion, effect transactions with dealers that furnish
statistical, research or other information or services which are deemed by AIM
to be beneficial to the Fund's investment program. Certain research services
furnished by dealers may be useful to AIM with clients other than the Fund.
Similarly, any research services received by AIM through placement of portfolio
transactions of other clients may be of value to AIM in fulfilling its
obligations to the Fund. AIM is of the opinion that the material received is
beneficial in supplementing AIM's research and analysis; and therefore, it may
benefit the Fund by improving the quality of AIM's investment advice. The
advisory fees paid by the Fund are not reduced because AIM receives such
services.
AIM and its affiliates manage several other investment companies (the "AIM
Funds"), some of which may have objectives similar to those of the Fund. It is
possible that, at times, identical securities will be appropriate for investment
by the Fund and by one or more of the AIM Funds. The position of each account,
however, in the securities of the same issue, may vary and the length of time
that each account may choose to hold its investment in the securities of the
same issue may likewise vary. The timing and amount of purchase by each account
will also be determined by its cash position. If the purchase or sale of
securities consistent with the investment policies of the Fund and one or more
of the AIM Funds is considered at or about the same time, transactions in such
securities will be allocated among the Fund and the AIM Funds in a manner deemed
equitable by AIM. AIM may combine such transactions, in accordance with
applicable laws and regulations, in order to obtain the best net price and most
favorable execution. Simultaneous transactions could, however, adversely affect
the ability of the Fund to obtain or dispose of the full amount of a security
which it seeks to purchase or sell.
Under the 1940 Act, persons affiliated with the Fund are prohibited from
dealing with the Fund as principal in any purchase or sale of securities unless
an exemptive order allowing such transactions is obtained from the SEC. The
Board of Trustees has adopted procedures pursuant to Rule 17a-7 under the 1940
Act relating to portfolio transactions between the Fund and the AIM Funds and
the Fund may from time to time enter into transactions in accordance with such
Rule and procedures.
From time to time, an identical security may be sold by an AIM Fund or another
investment account advised by AIM or AIM Capital and simultaneously purchased by
another investment account advised by AIM or AIM Capital, when such transactions
comply with applicable rules and regulations and are deemed consistent with the
investment objective(s) and policies of the investment accounts advised by AIM
or AIM Capital. Procedures pursuant to Rule 17a-7 under the 1940 Act regarding
transactions between investment accounts advised by AIM or AIM Capital have been
adopted by the Boards of Directors/Trustees of the various AIM Funds, including
the Fund. Although such transactions may result in custodian, tax or other
related expenses, no brokerage commissions or other direct transaction costs are
generated by transactions among the investment accounts advised by AIM or AIM
Capital.
Changes in the portfolio holdings of the Fund are made without regard to
whether a sale would result in a profit or loss. The portfolio turnover rate of
the Fund for the years ended July 31, 1996, 1995 and the eleven month period
ended July 31, 1994, were 117.09%, 120.01%, and 120.40%, respectively. High
portfolio turnover involves correspondingly greater transaction costs which are
borne directly by the Fund, and may increase capital gains which are taxable as
ordinary income when distributed to shareholders.
Provisions of the 1940 Act and the rules and regulations thereunder have been
construed to prohibit the Fund from purchasing securities or instruments from,
or selling securities or instruments to, any holder of 5% or more of the voting
securities of any investment company managed or advised by AIM. The Fund has
obtained an order of exemption from the SEC which permits the Fund to engage in
certain transactions with such 5% holder if the Fund complies with conditions
and procedures designed to ensure that such transactions are executed at fair
market value and present no conflicts of interest.
At the present time, the Fund does not intend to engage in any transactions
with such 5% holders other than repurchase agreement transactions.
13
<PAGE> 100
TAXES
The following is only a summary of certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Fund intends to qualify as a regulated investment company under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"). As a regulated
investment company, the Fund is not subject to federal income tax on the portion
of its net investment income (i.e., its taxable interest, dividends and other
taxable ordinary income, net of expenses) and realized capital gain net income
(i.e., the excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) for the taxable year
(the "Distribution Requirement"), and satisfies certain other requirements of
the Code that are described below. Distributions by the Fund made during the
taxable year or, under specified circumstances, within 12 months after the close
of the taxable year, will be considered distributions of income and gains of the
taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, the Fund must (1)
derive at least 90% of its gross income from dividends, interest, certain
payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies (to the extent such
currency gains are ancillary to the Fund's principal business of investing in
stock or securities) and other income (including but not limited to gains from
options, futures or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies (the "Income Requirement");
and (2) derive less than 30% of its gross income (exclusive of certain gains on
designated hedging transactions that are offset by realized or unrealized losses
on offsetting positions) from the sale or other disposition of stock, securities
or foreign currencies (or options, futures or forward contracts thereon) held
for less than three months (the "Short-Short Gain Test"). However, foreign
currency gains, including those derived from options, futures and forward
contracts, will not be characterized as Short-Short Gain if they are directly
related to the Fund's principal business of investing in stock or securities (or
options or futures thereon). Because of the Short-Short Gain Test, the Fund may
have to limit the sale of appreciated securities that it has held for less than
three months. However, the Short-Short Gain Test will not prevent the Fund from
disposing of investments at a loss, since the recognition of a loss before the
expiration of the three-month holding period is disregarded. Interest (including
original issue discount) received by the Fund at maturity or upon the
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security within
the meaning of the Short-Short Gain Test. However, income that is attributable
to realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.
In general, gain or loss recognized by the Fund on the disposition of an asset
will be a capital gain or loss. However, gain recognized on the disposition of a
debt obligation purchased by the Fund at a market discount (generally, at a
price less than its principal amount) will be treated as ordinary income to the
extent of the portion of the market discount which accrued during the period of
time the Fund held the debt obligation. In addition, if the Fund purchases a
debt obligation that was originally issued at a discount, the Fund is generally
required to include in gross income each year the portion of the original issue
discount which accrues during such year.
In general, for purposes of determining whether capital gain or loss
recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (i) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, (ii) the asset is otherwise held by the Fund as part of a "straddle"
(which term generally excludes a situation where the asset is stock and the Fund
grants a "qualified covered call option" with respect thereto) or (iii) the
asset is stock and the Fund grants an in-the-money qualified covered call option
with respect thereto. However, for purposes of the Short-Short Gain Test, the
holding period of the asset disposed of may be reduced only in the case of
clause (i) above. In addition, the Fund may be required to defer the recognition
of a loss on the disposition of an asset held as part of a straddle to the
extent of any unrecognized gain on the offsetting position.
Any gain recognized by the Fund on the lapse of, or any gain or loss
recognized by the Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by the Fund will commence on the date it is written and end on the date it
lapses or the date a closing transaction is entered into. Accordingly, the Fund
may be limited in its ability to write options which expire within three months
and to enter into closing transactions at a gain within three months of the
writing of options.
Transactions that may be engaged in by the Fund (such as regulated futures
contracts and options on stock indexes and futures contracts) will be subject to
special tax treatment as "Section 1256 contracts." Section 1256 contracts are
treated as if
14
<PAGE> 101
they are sold for their fair market value on the last business day of the
taxable year, regardless of whether a taxpayer's obligations (or rights) under
such contracts have terminated (by delivery, exercise, entering into a closing
transaction or otherwise) as of such date. Any gain or loss is recognized as a
consequence of the year-end deemed disposition of Section 1256 contracts is
taken into account for the taxable year together with any other gain or loss
that was previously recognized upon the termination of Section 1256 contracts
during that taxable year. Any capital gain or loss for the taxable year
(including any capital gain or loss arising as a consequence of the year-end
deemed sale of such contracts) is treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss. The Fund may elect not to have this
special tax treatment apply to Section 1256 contracts that are part of a "mixed
straddle" with other investments of the Fund that are not Section 1256
contracts. The Internal Revenue Service ("IRS") has held in several private
rulings that gains arising from Section 1256 contracts will be treated for
purposes of the Short-Short Gain Test as being derived from securities held not
less than three months if the gains arise as a result of a constructive sale
under Code Section 1256.
The Fund may enter into notional principal contracts, including interest rate
swaps, caps, floors and collars. Under Treasury regulations, in general, the net
income or deduction from a notional principal contract for a taxable year is
included in or deducted from gross income for that taxable year. The net income
or deduction from a notional principal contract for a taxable year equals the
total of all of the periodic payments (generally, payments that are payable or
receivable at fixed periodic intervals of one year or less during the entire
term of the contract) that are recognized from that contract for the taxable
year and all of the non-periodic payments (including premiums for caps, floors
and collars), even if paid in periodic installments, that are recognized from
that contract for the taxable year. A periodic payment is recognized ratably
over the period to which it relates. In general, a non-periodic payment must be
recognized over the term of the notional principal contract in a manner that
reflects the economic substance of the contract. A non-periodic payment that
relates to an interest rate swap, cap, floor or collar shall be recognized over
the term of the contract by allocating it in accordance with the values of a
series of cash-settled forward or option contracts that reflect the specified
index and notional principal amount upon which the notional principal contract
is based (or, in the case of a swap or of a cap or floor that hedges a debt
instrument, under alternative methods contained in the regulations and, in the
case of other notional principal contracts, under alternative methods that the
IRS may provide in a revenue procedure).
Treasury regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) for any taxable year,
to elect (unless it has made a taxable year election for excise tax purposes as
discussed below) to treat all or part of any net capital loss, any net long-term
capital loss or any net foreign currency loss incurred after October 31 as if it
had been incurred in the succeeding year.
In addition to satisfying the requirement described above, the Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), an no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses.
If for any taxable year the Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of the Fund's current and accumulated earnings
and profits. Such distributions generally will be eligible for the dividends
received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on regulated investment companies
that fail to distribute in each calendar year an amount equal to 98% of ordinary
taxable income for the calendar year and 98% of capital gain net income and
foreign currency gain or loss for the one-year period ended on October 31 of
such calendar year (or, at the election of a regulated investment company having
a taxable year ending November 30 or December 31, for its taxable year (a
"taxable year election")). The balance of such income must be distributed during
the next calendar year. For the foregoing purposes, a regulated investment
company is treated as having distributed any amount on which it is subject to
income tax for any taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall (1)
reduce its capital gain net income (but not below its net capital gain) by the
amount of any net ordinary loss for the calendar year and (2) exclude Section
988 foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election)
15
<PAGE> 102
in determining the amount of ordinary taxable income for the current calendar
year (and, instead, include such gains and losses in determining ordinary
taxable income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed distributions of
its ordinary taxable income and capital gain net income prior to the end of each
calendar year to avoid liability for the excise tax. However, investors should
note that the Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
FUND DISTRIBUTIONS
The Fund anticipates distributing substantially all of its investment company
taxable income and short-term capital gains for each taxable year. Such
distributions will be taxable to shareholders as ordinary income and treated as
dividends for federal income tax purposes, but they will not qualify for the 70%
dividends received deduction for corporations.
The Fund may either retain or distribute to shareholders its net long-term
capital gain for each taxable year. The Fund currently intends to distribute any
such amounts. If net capital gain is distributed and designated as a capital
gain dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares. Conversely, if the Fund elects to retain its net capital
gain, the Fund will be taxed thereon (except to the extent of any available
capital loss carryovers) at the 35% corporate tax rate. If the Fund elects to
retain net capital gain, it is expected that the Fund also will elect to have
shareholders treated as if each received a distribution of its pro rata share of
such gain, with the result that each shareholder will be required to report its
pro rata share of such gain on its tax return as long-term capital gain, will
receive a refundable tax credit for its pro rata share of tax paid by the Fund
on the gain, and will increase the tax basis for its shares by an amount equal
to the deemed distribution less the tax credit.
Distributions by the Fund that do not constitute ordinary income dividends or
capital gain dividends will be treated as a return of capital to the extent of
(and in reduction of) the shareholder's tax basis in his shares; any excess will
be treated as gain from the sale of his shares, as discussed below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or any other fund in the AIM Funds). Shareholders
receiving a distribution in the form of additional shares will be treated as
receiving a distribution in an amount equal to the fair market value of the
shares received, determined as of the reinvestment date. In addition, if the net
asset value at the time a shareholder purchases shares of the Fund reflects
undistributed net investment income or recognized capital gain net income, or
unrealized appreciation in the value of the assets of the Fund, distributions of
such amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by the Fund into
account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made in certain cases)
during the year.
The Fund is required in certain cases to withhold and remit to the U.S.
Treasury 31% of ordinary income dividends and capital gain dividends, and the
proceeds of redemption of shares, paid to any shareholder (1) who has provided
either an incorrect tax identification number or no number at all, (2) who is
subject to backup withholding by the Internal Revenue Service for failure to
report the receipt of interest or dividend income properly, or (3) who has
failed to certify to the Fund that it is not subject to backup withholding or
that it is a corporation or other "exempt recipient."
SALE OR REDEMPTION OF FUND SHARES
A shareholder will recognize gain or loss on the sale or redemption of shares
of the Fund in an amount equal to the difference between the proceeds of the
sale or redemption and the shareholder's adjusted tax basis in the shares. In
general, any gain or loss arising from (or treated as arising from) the sale or
redemption of shares of the Fund will be considered capital gain or loss and
will be long-term capital gain or loss if the shares were held for longer than
one year. However, any capital loss arising from the sale or redemption of
shares held for six months or less will be treated as a long-term capital loss
to the extent of the amount of capital gain dividends received on such shares.
For this purpose, the special holding period rules of Code Section 246(c)(3) and
(4) generally will apply in determining the holding period of shares. Long-term
capital gains of non-corporate taxpayers are currently taxed at a maximum rate
11.6% lower than the maximum rate applicable to ordinary income. Capital losses
in any year are deductible only to the extent of capital gains plus, in the case
of a noncorporate taxpayer, $3,000 of ordinary income.
16
<PAGE> 103
If a shareholder (i) incurs a sales load in acquiring shares of the Fund, (ii)
disposes of such shares less than 91 days after they are acquired and (iii)
subsequently acquires shares of the same or another fund at a reduced sales load
pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign shareholder"), depends on whether the income from the Fund is
"effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from the Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income dividends and
return of capital distributions (other than capital gains dividends) will be
subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon
the gross amount of the distribution. Such a foreign shareholder would generally
be exempt from U.S. federal income tax on gains realized on the sale or
redemption of shares of the Fund, capital gain dividends and amounts retained by
the Fund that are designated as undistributed net capital gains.
If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends and any gains realized upon the sale or redemption of
shares of the Fund will be subject to U.S. federal income tax at the rates
applicable to U.S. citizens or domestic corporations.
In the case of foreign non-corporate shareholders, the Fund may be required to
withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of their
foreign status.
The tax consequences to a foreign shareholder entitled to claim the benefits
of an applicable tax treaty may be different from those described herein.
Foreign shareholders are urged to consult their own tax advisors with respect to
the particular tax consequences to them of an investment in the Fund, including
the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and regulations issued thereunder as in effect on the date of
this Statement of Additional Information. Future legislative or administrative
changes or court decisions may significantly change the conclusions expressed
herein, and any such changes or decisions may have a retroactive effect with
respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. The tax treatment of foreign
investors may also differ from the treatment for U.S. investors described above.
Shareholders are urged to consult their tax advisors as to the consequences of
these and other state and local tax rules affecting investments in the Fund.
17
<PAGE> 104
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Investment Securities Funds
We have audited the accompanying statement of assets and liabilities of the
Limited Maturity Treasury Portfolio (a series of AIM Investment Securities
Funds), including the schedule of investments, as of July 31, 1996, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the years in the two-year period then
ended, the eleven months ended July 31, 1994, each of the years in the six-year
period ended August 31, 1993 and the period July 13, 1987 (date operations
commenced) through August 31, 1987. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Limited Maturity Treasury Portfolio as of July 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the two-year period then ended, the eleven months ended
July 31, 1994, each of the years in the six-year period ended August 31, 1993
and the period July 13, 1987 (date operations commenced) through August 31,
1987, in conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
August 23, 1996
Houston, Texas
FS-1
<PAGE> 105
SCHEDULE OF INVESTMENTS
July 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
MATURITY (000s) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. TREASURY NOTES-98.82%
6.00% 08/31/97 $ 41,475 $ 41,494,908
- ------------------------------------------------------------------------------------------------
5.75% 09/30/97 41,360 41,262,804
- ------------------------------------------------------------------------------------------------
5.625% 10/31/97 42,175 41,988,165
- ------------------------------------------------------------------------------------------------
5.375% 11/30/97 41,585 41,230,280
- ------------------------------------------------------------------------------------------------
5.25% 12/31/97 41,850 41,405,553
- ------------------------------------------------------------------------------------------------
5.00% 01/31/98 41,610 40,966,293
- ------------------------------------------------------------------------------------------------
5.125% 02/28/98 41,525 40,905,032
- ------------------------------------------------------------------------------------------------
6.125% 03/31/98 41,825 41,822,909
- ------------------------------------------------------------------------------------------------
5.875% 04/30/98 41,400 41,211,216
- ------------------------------------------------------------------------------------------------
6.00% 05/31/98 41,500 41,370,935
- ------------------------------------------------------------------------------------------------
6.25% 06/30/98 41,330 41,381,249
- ------------------------------------------------------------------------------------------------
6.25% 07/31/98 41,500 41,539,010
- ------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 496,578,354
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.82% 496,578,354
- ------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.18% 5,937,451
- ------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $502,515,805
================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-2
<PAGE> 106
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $498,859,636) $496,578,354
- ----------------------------------------------------------------------------------
Cash 287
- ----------------------------------------------------------------------------------
Receivables for:
Fund shares sold 2,978,883
- ----------------------------------------------------------------------------------
Interest 5,958,137
- ----------------------------------------------------------------------------------
Investment in deferred compensation plan 14,009
- ----------------------------------------------------------------------------------
Other assets 135,367
- ----------------------------------------------------------------------------------
Total assets 505,665,037
- ----------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 1,889,916
- ----------------------------------------------------------------------------------
Dividends 1,015,880
- ----------------------------------------------------------------------------------
Deferred compensation 14,009
- ----------------------------------------------------------------------------------
Accrued advisory fees 83,900
- ----------------------------------------------------------------------------------
Accrued distribution fees 45,194
- ----------------------------------------------------------------------------------
Accrued transfer agent fees 33,086
- ----------------------------------------------------------------------------------
Accrued operating expenses 67,247
- ----------------------------------------------------------------------------------
Total liabilities 3,149,232
- ----------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $502,515,805
==================================================================================
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
NET ASSETS: $143,467,539 $359,048,266 $502,515,805
=========================================================================================
Shares outstanding, $0.01 par value per
share 14,388,919 36,010,350 50,399,269
=========================================================================================
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 9.97
=========================================================================================
OFFERING PRICE PER SHARE:
(Net asset value of $9.97 divided by 99.00%)* $ 10.07
=========================================================================================
* There is no sales charge or 12b-1 fee on sales of Institutional
Shares.
</TABLE>
See Notes to Financial Statements.
FS-3
<PAGE> 107
STATEMENT OF OPERATIONS
For the year ended July 31, 1996
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 8,467,903 $ 19,481,627 $ 27,949,530
- ---------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 283,049 650,158 933,207
- ---------------------------------------------------------------------------------------------
Administrative service fees 18,681 42,176 60,857
- ---------------------------------------------------------------------------------------------
Custodian fees 6,923 29,591 36,514
- ---------------------------------------------------------------------------------------------
Transfer agent fees 10,350 255,502 265,852
- ---------------------------------------------------------------------------------------------
Trustees' fees and expenses 2,802 6,544 9,346
- ---------------------------------------------------------------------------------------------
Distribution fees -- 488,557 488,557
- ---------------------------------------------------------------------------------------------
Other 61,928 275,898 337,826
- ---------------------------------------------------------------------------------------------
Total expenses 383,733 1,748,426 2,132,159
- ---------------------------------------------------------------------------------------------
Net investment income $ 8,084,170 $ 17,733,201 25,817,371
- ---------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on sales of investment securities 3,022,827
- ---------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (6,292,910)
- ---------------------------------------------------------------------------------------------
Net gain (loss) on investment securities (3,270,083)
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 22,547,288
=============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE> 108
STATEMENT OF CHANGES IN NET ASSETS
For the years ended July 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 25,817,371 $ 22,353,697
- -------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities 3,022,827 (7,239,070)
- -------------------------------------------------------------------------------------
Net unrealized (depreciation) appreciation of
investment securities (6,292,910) 9,384,912
- -------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 22,547,288 24,499,539
- -------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME:
Institutional Shares (8,084,170) (7,065,914)
- -------------------------------------------------------------------------------------
AIM Shares (17,733,201) (15,287,783)
- -------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Institutional Shares 14,818,211 (6,229,532)
- -------------------------------------------------------------------------------------
AIM Shares 86,957,303 (56,819,839)
- -------------------------------------------------------------------------------------
Net increase (decrease) in net assets 98,505,431 (60,903,529)
- -------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 404,010,374 464,913,903
- -------------------------------------------------------------------------------------
End of period $502,515,805 $404,010,374
=====================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $511,800,420 $410,024,906
- -------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of
investment securities (7,003,333) (10,026,160)
- -------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (2,281,282) 4,011,628
- -------------------------------------------------------------------------------------
$502,515,805 $404,010,374
=====================================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 109
NOTES TO FINANCIAL STATEMENTS
July 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Investment Securities Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust is organized as a Delaware business
trust consisting of one portfolio, the Limited Maturity Treasury Portfolio (the
"Fund"). The investment objective of the Fund is to seek liquidity with minimum
fluctuation in principal value and, consistent with this investment objective,
the highest total return achievable. The Fund currently offers two different
classes of shares: the AIM Limited Maturity Treasury Shares (the "AIM Shares")
and the Institutional Shares. Matters affecting each class are voted on
exclusively by such shareholders.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of these financial statements and
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
A. Security Valuations--Debt obligations that are issued or guaranteed by the
U.S. Treasury are valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as yield, type of issue, coupon rate and maturity date.
Securities for which market prices are not provided by the pricing service
are valued at the mean between last bid and asked prices based upon quotes
furnished by independent sources. 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. Securities with
a remaining maturity of 60 days or less are valued at amortized cost which
approximates market value.
B. Securities Transactions and Investment Income--Securities transactions are
accounted for on a trade date basis. Interest income, adjusted for
amortization of discounts on investments, is earned from settlement date and
is recorded on the accrual basis. It is the policy of the Fund not to
amortize bond premiums for financial reporting purposes. Interest income is
allocated to each class daily, based upon each class' pro-rata share of the
total shares of the Fund outstanding. Realized gains and losses from
securities transactions are recorded on the identified cost basis.
C. Dividends and Distributions to Shareholders--It is the policy of the Fund to
declare daily dividends from net investment income. Such dividends are paid
monthly. Distributions from net realized capital gains, if any, are recorded
on ex-dividend date and are paid annually.
D. Federal Income Taxes--The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements. The Fund has a capital loss carryforward (which may
be carried forward to offset
FS-6
<PAGE> 110
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES-(continued)
future taxable capital gains, if any) of $6,725,562, which expires, if not
previously utilized, through the year 2004.
E. Expenses--Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to more than
one class, e.g., advisory fees, are allocated between them.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM") with respect to the Fund. Under the terms of the master
investment advisory agreement, the Fund pays AIM an advisory fee at the annual
rate of 0.20% of the first $500 million of the Fund's average daily net assets
plus 0.175% of the Fund's average daily net assets in excess of $500 million.
This agreement requires AIM to reduce its fee or, if necessary, make payments to
the extent required to satisfy any expense limitations imposed by the securities
laws or regulations thereunder of any state in which the Fund shares are
qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended July 31, 1996, the Fund
reimbursed AIM $60,857 for such services.
The Fund, pursuant to a transfer agent and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the AIM Shares. During the year ended July 31, 1996, AFS
was paid $160,400 for such services. During the year ended July 31, 1996, the
Fund paid A I M Institutional Fund Services, Inc. ("AIFS") $10,350 pursuant to a
transfer agency and shareholder services agreement with respect to the
Institutional Shares.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the AIM
Shares and a master distribution agreement with Fund Management Company ("FMC")
to serve as the distributor for the Institutional Shares. The Trust has adopted
a Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan") with respect to
the AIM Shares. The Fund pays AIM Distributors compensation at an annual rate of
0.15% of the average net assets attributable to the AIM Shares. The Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs and provides periodic payments to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own AIM Shares of the Fund. Any amounts not paid as a
service fee under such Plan would constitute an asset-based sales charge. The
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Fund. During the year ended
July 31, 1996, the AIM Shares paid AIM Distributors $488,557 as compensation
under the Plan.
AIM Distributors received commissions of $193,686 during the year ended July
31, 1996 from sales of AIM Shares. Such commissions are not an expense of the
Fund. They are deducted from, and are not included in, proceeds from sales of
AIM shares. Certain officers and trustees of the Trust are officers and
directors of AIM, AIM Distributors, FMC, AFS and AIFS.
During the year ended July 31, 1996, the Fund paid legal fees of $4,141 for
services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Board
of Trustees. A member of that firm is a trustee of the Trust.
FS-7
<PAGE> 111
NOTE 3-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank d/b/a Chemical Bank. The Fund
may borrow up to the lesser of (i) $325,000,000 or (ii) the limits set by its
prospectus for borrowings. The Fund and other funds advised by AIM which are
parties to the line of credit may borrow on a first come, first served basis.
Interest on borrowings under the line of credit is payable on maturity or
prepayment date. During the year ended July 31, 1996, the Fund did not borrow
under the line of credit agreement. The funds which are party to the line of
credit are charged a commitment fee of 0.08% on the unused balance of the
committed line. The commitment fee is allocated among the funds based on their
respective average net assets for the period. Prior to an amendment of the line
of credit on July 19, 1996, the Fund was limited to borrowing $6,700,000.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended July 31, 1996 was
$648,234,412 and $546,804,207, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of July 31, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ --
- -----------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,558,630)
- -----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(2,558,630)
=============================================================================
</TABLE>
Cost of investments for tax purposes is $499,136,984.
NOTE 5-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 6-SHARE INFORMATION
Changes in the Institutional Shares outstanding during the years ended July 31,
1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C> <C> <C>
---------------------------- ----------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
Sold 5,925,940 $ 59,531,203 1,443,720 $ 14,412,733
- -------------------------------------------------------- ----------------------------
Issued as reinvestment of
dividends 113,885 1,142,722 113,174 1,124,015
- -------------------------------------------------------- ----------------------------
Reacquired (4,566,815) (45,855,714) (2,194,873) (21,766,280)
- -------------------------------------------------------- ----------------------------
1,473,010 $ 14,818,211 (637,979) $ (6,229,532)
======================================================== ============================
</TABLE>
FS-8
<PAGE> 112
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of Institutional
Shares outstanding during each of the years in the two year period ended July
31, 1996, the eleven months ended July 31, 1994, each of the years in the
six-year period ended August 31, 1993 and the period July 13, 1987 (date
operations commenced) through August 31, 1987.
<TABLE>
<CAPTION>
JULY 31, AUGUST 31,
---------------------------------- -----------------------------------------------
1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.58 0.57 0.37 0.44 0.60 0.73 0.79
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) (0.06) 0.07 (0.20) 0.05 0.29 0.22 0.01
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations 0.52 0.64 0.17 0.49 0.89 0.95 0.80
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.58) (0.57) (0.37) (0.44) (0.60) (0.73) (0.79)
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Distributions from net realized
capital gains -- -- (0.08) (0.02) (0.09) -- --
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.58) (0.57) (0.45) (0.46) (0.69) (0.73) (0.79)
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79
=================================== ======== ======== ======== ======== ======== ======== ========
Total return(a) 5.27% 6.61% 1.72% 4.88% 9.14% 10.08% 8.52%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $143,468 $129,530 $134,971 $130,690 $ 89,352 $ 25,528 $ 10,378
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets 0.27%(b) 0.28% 0.25%(c) 0.24% 0.28% 0.41%(d) 0.31%(e)
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 5.72%(b) 5.70% 3.98%(c) 4.30% 5.76% 7.36%(d) 8.12%(e)
=================================== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 117.09% 120.01% 120.40% 122.99% 119.62% 214.74% 192.46%
=================================== ======== ======== ======== ======== ======== ======== ========
Borrowings for the period:
Amount of debt outstanding at
end of period (000s omitted) -- -- -- -- -- -- --
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Average amount of debt outstanding
during the period (000s
omitted)(g) -- -- -- -- -- -- $ 834
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Average number of shares
outstanding during the period
(000s omitted)(g) 13,982 12,540 16,864 9,785 6,097 1,477 1,208
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Average amount of debt per share
during the period -- -- -- -- -- -- $ 0.69
=================================== ======== ======== ======== ======== ======== ======== ========
<CAPTION>
AUGUST 31,
-------------------------------
1989 1988 1987
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 9.80 $ 9.92 $ 10.00
- ----------------------------------- ------- ------- -------
Income from investment operations:
Net investment income 0.85 0.73 0.09
- ----------------------------------- ------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) (0.02) (0.12) (0.08)
- ----------------------------------- ------- ------- -------
Total from investment operations 0.83 0.61 0.01
- ----------------------------------- ------- ------- -------
Less distributions:
Dividends from net investment
income (0.85) (0.83) (0.09)
- ----------------------------------- ------- ------- -------
Distributions from net realized
capital gains -- -- --
- ----------------------------------- ------- ------- -------
Total distributions (0.73) (0.73) (0.09)
- ----------------------------------- ------- ------- -------
Net asset value, end of period $ 9.78 $ 9.80 $ 9.92
=================================== ======= ======= =======
Total return(a) 8.87% 6.34% 0.14%
=================================== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $16,065 $35,310 $ 4,202
=================================== ======= ======= =======
Ratio of expenses to average net
assets 0.31%(f) 0.31%(f) 0.25%(c)(f)
=================================== ======= ======= =======
Ratio of net investment income to
average net assets 8.69%(f) 7.46%(f) 6.98%(c)(f)
=================================== ======= ======= =======
Portfolio turnover rate 219.53% 140.83% 28.29%
=================================== ======= ======= =======
Borrowings for the period:
Amount of debt outstanding at
end of period (000s omitted) $ 2,257 $10,892 --
- ----------------------------------- ------- ------- -------
Average amount of debt outstanding
during the period (000s
omitted)(g) 3,562 3,754
- ----------------------------------- ------- ------- -------
Average number of shares
outstanding during the period
(000s omitted)(g) 1,817 2,118 390
- ----------------------------------- ------- ------- -------
Average amount of debt per share
during the period $ 1.96 $ 1.69 --
=================================== ======= ======= =======
</TABLE>
(a) For periods less than one year, the total return is not annualized.
(b) Ratios are based on average net assets of $140,898,895.
(c) Annualized.
(d) After expense reimbursements.
(e) After waiver of advisory fees and expense reimbursements.
(f) After waiver of advisory fees.
(g) Averages computed on a daily basis.
FS-9
<PAGE> 113
PART C
OTHER INFORMATION
<TABLE>
<S> <C> <C>
Item 24. (a) Financial Statements:
(1) AIM Limited Maturity Treasury Shares of the Limited Maturity Treasury Portfolio
In Part A: Financial Highlights
In Part B: (1) Independent Auditors' Report
(2) Schedule of Investments as of July 31, 1996
(3) Statement of Assets and Liabilities as of July 31, 1996
(4) Statement of Operations for the year ended July 31, 1996
(5) Statements of Changes in Net Assets for the years ended July 31, 1996
and 1995
(2) Institutional Shares of the Limited Maturity Treasury Portfolio
In Part A: Financial Highlights
In Part B: (1) Independent Auditors' Report
(2) Schedule of Investments as of July 31, 1996
(3) Statement of Assets and Liabilities as of July 31, 1996
(4) Statement of Operations for the year ended July 31, 1996
(5) Statements of Changes in Net Assets for the years ended July 31, 1996
and 1995
(b) Exhibits:
</TABLE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ ---------------------------------------------
<S> <C> <C>
(1) (a) - Agreement and Declaration of Trust of the Registrant was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on August 16, 1993, and was filed
electronically as an Exhibit to Post-Effective Amendment No. 6 on November 17, 1995, and
is hereby incorporated by reference.
(b) - First Amendment to Agreement and Declaration of Trust of Registrant was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 4 on October 15, 1993, and was filed
electronically as an Exhibit to Post-Effective Amendment No. 6 on November 17, 1995, and is
hereby incorporated by reference.
(c) - Second Amendment to Agreement and Declaration of Trust of Registrant is filed herewith
electronically.
(2) (a) - By-Laws of the Registrant were filed as an Exhibit to Registrant's Post-Effective Amendment
No. 3 on August 16, 1993, and are filed herewith electronically.
(b) - Amendment to By-Laws of Registrant was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 5 on November 30, 1994, and is filed herewith electronically.
</TABLE>
C-1
<PAGE> 114
<TABLE>
<S> <C> <C>
(c) - Second Amendment to By-Laws of Registrant was filed as an Exhibit to Registrant's Post-
Effective Amendment No. 5 on November 30, 1994, and is filed herewith electronically.
(3) - Voting Trust Agreement - None.
(4) (a) - Specimen share certificate for Registrant's Limited Maturity Treasury Portfolio -AIM
Limited Maturity Treasury Shares was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 5 on November 30, 1994.
(b) - Specimen share certificate for Institutional Shares was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 3 on August 16, 1993.
(5) (a) - Investment Advisory Agreement between Registrant (on behalf of its AIM Adjustable Rate
Government Fund) and A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post-
Effective Amendment No. 1 on June 15, 1992.
(b) - Master Investment Advisory Agreement, dated as of August 6, 1993, between Registrant and
A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 4
on October 15, 1993.
(c) - Master Investment Advisory Agreement, dated October 18, 1993, between Registrant and
A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 5
on November 30, 1994, and was filed electronically as an Exhibit to Post-Effective
Amendment No. 6 on November 17, 1995 and is hereby incorporated by reference.
(c)(i) - Notice of Termination dated November 18, 1994 to Master Investment Advisory Agreement,
dated October 18, 1993, between Registrant, with respect to the AIM Adjustable Rate
Government Fund, and A I M Advisors, Inc. was filed electronically as an Exhibit to Post-
Effective Amendment No. 6 on November 17, 1995, and is hereby incorporated by reference.
(6) (a) - (1) Distribution Agreement between Registrant (on behalf of its AIM Adjustable Rate
Government Fund) and A I M Distributors, Inc. was filed as an Exhibit to Registrant's Post-
Effective Amendment No. 1 on June 15, 1992.
(2) Master Distribution Agreement, dated August 6, 1993, between Registrant (on behalf of
its AIM Adjustable Rate Government Fund and Limited Maturity Treasury Portfolio - AIM
Limited Maturity Treasury Shares) and A I M Distributors, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 4 on October 15, 1993.
(3) Distribution Agreement, dated August 6, 1993, between Registrant (on behalf of its
Limited Maturity Treasury Portfolio - Institutional Shares) and Fund Management Company was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 4 on October 15, 1993.
(4)(i) Master Distribution Agreement, dated October 18, 1993, between Registrant (on behalf
of its Limited Maturity Treasury Portfolio - AIM Limited Maturity Treasury Shares) and
A I M Distributors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment
No. 5 on November 30, 1994, and was filed electronically as an Exhibit to Post-Effective
Amendment No. 6 on November 17, 1995, and is hereby incorporated by reference.
</TABLE>
C-2
<PAGE> 115
<TABLE>
<S> <C> <C>
(4)(ii) Amendment No. 1 dated November 18, 1994, to Master Distribution Agreement, dated
October 18, 1993, between Registrant (on behalf of its Limited Maturity Treasury Portfolio
- AIM Limited Maturity Treasury Shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No. 6 on November 17, 1995 and is
hereby incorporated by reference.
(5) Distribution Agreement, dated October 18, 1993, between Registrant (on behalf of its
Limited Maturity Treasury Portfolio - Institutional Shares) and Fund Management Company was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on November 30, 1994,
and is filed herewith electronically.
(b) - Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers is
filed herewith electronically.
(c) - Form of Bank Selling Group Agreement between A I M Distributors, Inc. and banks is filed
herewith electronically.
(d) - Form of Service Agreement for Certain Retirement Plans between Fund Management Company and Plan
Providers was filed electronically as an Exhibit to Post-Effective Amendment No. 6 on
November 17, 1995, and is hereby incorporated by reference.
(7) (a) - Retirement Plan for Registrant's Non-Affiliated Trustees was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on November 30, 1994.
(b) - Retirement Plan for Registrant's Non-Affiliated Trustees effective as of March 8, 1994, as
restated September 18, 1995, is filed herewith electronically.
(c) - Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Trustees was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 5 on November 30, 1994.
(d) - Form of Deferred Compensation Agreements for Registrant's Non-Affiliated Trustees as
approved December 5, 1995, is filed herewith electronically.
(8) (a)(i) - Custody Agreement between Registrant and State Street Bank and Trust Company was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 1 on June 15, 1992.
(a)(ii) - Second Amended and Restated Custody Agreement between Short-Term Investments Co. (on behalf
of its Limited Maturity Treasury Portfolio) and The Bank of New York was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 5 on November 30, 1994, and is filed
herewith electronically.
(a)(iii) - Amendment to Second Amended and Restated Custody Agreement between Short-Term Investments
Co. (on behalf of its Limited Maturity Treasury Portfolio) and The Bank of New York was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on November 30, 1994,
and is filed herewith electronically.
(a)(iv) - Assignment and Acceptance of Assignment of Custody Agreement between Registrant (on behalf
of its Limited Maturity Treasury Portfolio) and Short-Term Investments Co. (on behalf of
its Limited Maturity Treasury Portfolio) was filed as
</TABLE>
C-3
<PAGE> 116
<TABLE>
<S> <C> <C>
an Exhibit to Registrant's Post-Effective Amendment No. 5 on November 30, 1994, and is
filed herewith electronically.
(b) - Subcustodian Agreement with Texas Commerce Bank, dated September 9, 1994, among Texas
Commerce Bank National Association, State Street Bank and Trust Company, A I M Fund
Services, Inc. and Registrant is filed herewith electronically.
(9) (a) - (1) Administrative Services Agreement between Registrant and A I M Advisors, Inc. was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 1 on June 15, 1992.
(2) Master Administrative Services Agreement, dated as of August 6, 1993, between
Registrant and A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 4 on October 15, 1993.
(3)(i) Master Administrative Services Agreement, dated October 18, 1993, between Registrant
and A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment
No. 5 on November 30, 1994, and was filed electronically as an Exhibit to Post-Effective
Amendment No. 6 on November 17, 1995 and is hereby incorporated by reference.
(3)(ii) Amendment No. 1 dated November 18, 1994 to Master Administrative Services
Agreement, dated October 18, 1993, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No. 6 on November 17, 1995 and is
hereby incorporated by reference.
(4)(i) Administrative Services Agreement, dated as of October 18, 1993, between
A I M Advisors, Inc., on behalf of Registrant's portfolios and classes, and A I M Fund
Services, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on
November 30,1994.
(4)(ii) Amendment No. 1 dated May 11, 1994, to Administrative Services Agreement, dated
October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's portfolios and
classes, and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-
Effective Amendment No. 5 on November 30, 1994.
(4)(iii) Amendment No. 2 dated July 1, 1994, to Administrative Services Agreement, dated
October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's portfolios and
classes, and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-
Effective Amendment No. 5 on November 30, 1994.
(4)(iv) Amendment No. 3 dated September 16, 1994, to Administrative Services Agreement,
dated October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's portfolios
and classes, and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-
Effective Amendment No. 5 on November 30, 1994.
(4)(v) Amendment No. 4 dated November 1, 1994, to Administrative Services Agreement, dated
October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's portfolios and
classes, and A I M Fund Services, Inc. was filed electronically as an Exhibit to Post-
Effective Amendment No. 6 on November 17, 1995.
</TABLE>
C-4
<PAGE> 117
<TABLE>
<S> <C> <C>
(b) - (1)(i) Transfer Agency Agreement between Registrant and The Shareholder Services Group,
Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2 on November 27,
1992.
(1)(ii) Amendment to Transfer Agency Agreement between Registrant and The Shareholder
Services Group, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2
on November 27, 1992.
(1)(iii) Remote Access and Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group (formerly The Shareholder Services Group,
Inc.) was filed electronically as an Exhibit to Post-Effective Amendment No. 6 on November
17, 1995 and is hereby incorporated by reference.
(1)(iv) Amendment No. 1 Remote Access and Related Services Agreement, dated October 4,
1995, between Registrant and First Data Investor Services Group (formerly The Shareholder
Services Group, Inc). was filed electronically as an Exhibit to Post-Effective Amendment
No. 6 on November 17, 1995 and is hereby incorporated by reference.
(1)(v) Addendum No. 2 to Remote Access and Related Services Agreement, dated October 12,
1995, between Registrant and First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.) was filed electronically as an Exhibit to Post-Effective Amendment
No. 6 on November 17, 1995 and is hereby incorporated by reference.
(1)(vi) Assignment and Acceptance of Assignment of Transfer Agency Agreement among
Registrant (on behalf of its Limited Maturity Treasury Portfolio - Institutional Shares),
Short-Term Investments Co. and State Street Bank and Trust Company was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 5 on November 30, 1994.
(2) Transfer Agency and Service Agreement between Registrant (on behalf of its Limited
Maturity Treasury Portfolio - AIM Limited Maturity Treasury Shares) and A I M Fund
Services, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 6 on
November 17, 1995 and is hereby incorporated by reference.
(3) Transfer Agency and Service Agreement between Registrant (on behalf of its Limited
Maturity Treasury Portfolio - Institutional Shares) and A I M Institutional Fund Services,
Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 6 on November
17, 1995 and is hereby incorporated by reference.
(10) (a) - Opinion of Ballard Spahr Andrews & Ingersoll was filed as an Exhibit to the Registrant's
24f-2 Notice for the fiscal year July 31, 1996 on September 26, 1996.
(11) (a) - Consent of Ballard Spahr Andrews & Ingersoll is filed electronically herewith.
(b) - Consent of Dechert Price & Rhoads is filed electronically herewith.
(c) - Consent of KPMG Peat Marwick LLP is filed herewith electronically.
</TABLE>
C-5
<PAGE> 118
<TABLE>
<S> <C> <C>
(d) - Opinion of Dechert Price & Rhoads was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on November 30,
1994 and is filed herewith electronicaly.
(12) - Financial Statements - None.
(13) - Agreements concerning Initial Capitalization - None.
(14) (a) - Form of the Registrant's IRA documents was filed as an Exhibit to the Registrant's Post-
Effective Amendment No. 3 on August 16, 1993, and is hereby incorporated by reference.
(b) - Form of the Registrant's Simplified Employee Pension - Individual Retirement Accounts
Contribution Agreement was filed as an Exhibit to the Registrant's Post-Effective Amendment
No. 3 on August 16, 1993, and is hereby incorporated by reference.
(c) - Form of the Registrant's Combination Profit Sharing-Money Purchase Plan and Trust was filed
as an Exhibit to the Registrant's Post-Effective Amendment No. 3 on August 16, 1993, and is
hereby incorporated by reference.
(d) - Form of the Registrant's 403(b) Plan was filed as an Exhibit to the Registrant's Post-
Effective Amendment No. 3 on August 16, 1993, and is hereby incorporated by reference.
(15) (a) - Distribution Plan for Registrant (on behalf of its Limited Maturity Treasury Portfolio -
AIM Limited Maturity Treasury Shares), was filed electronically as an Exhibit to Post-
Effective Amendment No. 6 on November 17, 1995, and is hereby incorporated by reference.
(b) - (1) Form of Shareholder Service Agreement to be used in connection with Registrant's Master
12b-1 Plan was filed electronically as an Exhibit to Post-Effective Amendment No. 6 on
November 17, 1995.
(2) Form of Shareholder Service Agreement to be used in connection with Registrant's Master
12b-1 Plan is filed herewith electronically.
(c) - (1) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's
Master 12b-1 Plan was filed electronically as an Exhibit to Post-Effective Amendment No. 6
on November 17, 1995.
(2) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's
Master 12b-1 Plan is filed herewith electronically.
(d) - (1) Form of Service Agreement to Certain Retirement Plans (for the Retail Classes) to be
used in connection with Registrant's Master 12b-1 Plan was filed electronically as an
Exhibit to Post-Effective Amendment No. 6 on November 17, 1995.
(2) Form of Service Agreement for Certain Retirement Plans (for the Retail Classes) to be
used in connection with Registrant's Master 12b-1 Plan is filed herewith electronically.
</TABLE>
C-6
<PAGE> 119
<TABLE>
<S> <C> <C>
(e) - (1) Forms of Bank Trust Department Agreements to be used in connection with Registrant's
Master 12b-1 Plan were filed electronically as an Exhibit to Post-Effective Amendment No. 6
on November 17, 1995.
(2) Forms of Bank Trust Departments Agreements to be used in connection with Registrant's
Master 12b-1 Plan are filed herewith electronically.
(16) - Schedule of Performance Quotations was filed as an Exhibit to the Registrant's Registration
Statements on August 16, 1993 and on October 15, 1993, and is filed herewith electronically.
(18) - Multiple Class (Rule 18f-3) Plan is filed herewith electronically.
(27) - Financial Data Schedule is filed herewith electronically.
</TABLE>
Item 25. Persons Controlled by or Under Common Control With Registrant
Furnish a list or diagram of all persons directly or indirectly controlled
by or under common control with the Registrant and as to each such person
indicate (1) if a company, the state or other sovereign power under the laws of
which it is organized, and (2) the percentage of voting securities owned or
other basis of control by the person, if any, immediately controlling it.
None.
Item 26. Number of Holders of Securities
State in substantially the tabular form indicated, as of a specified date
within 90 days prior to the date of filing, the number of record holders of
each class of securities of the Registrant.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of November 1, 1996
-------------- ----------------------
<S> <C>
Limited Maturity Treasury Portfolio
AIM Limited Maturity Treasury Shares 8,636
Institutional Shares 13
</TABLE>
Item 27. Indemnification
State the general effect of any contract, arrangement or statute under
which any director, officer, underwriter or affiliated person of the Registrant
is insured or indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any director,
officer, affiliated person or underwriter for their own protection.
Delaware law provides that subject to such standards or restrictions, if
any, as are set forth in the governing instrument of a business trust, a
business trust shall have the power to indemnify and hold harmless any
trustee or beneficial owner or other person from and against any and all
claims and demands whatsoever. The Registrant's Agreement and Declaration
of Trust provides that every person who is or has been a trustee or
officer of the Registrant shall be indemnified by the Registrant to the
fullest extent permitted by Delaware law, the Registrant's bylaws and
other applicable law. The Registrant's bylaws provide that a trustee,
when acting in such capacity, shall not be liable for any act or omission
or any conduct whatsoever in his capacity as trustee, provided that
nothing
C-7
<PAGE> 120
contained in the bylaws or the Delaware Business Trust Act shall protect
any trustee against any liability to the Trust or its shareholders to
which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard involved in the conduct of
his office.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the United States
Securities and Exchange Commission such indemnification is against public
policy and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being registered
hereby, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy and will be governed by the final adjudication of
such issue.
The Registrant has obtained insurance coverage for its officers and
trustees under a joint Mutual Fund and Investment Advisory Professional
Directors and Officers Liability Policy, issued by ICI Mutual Insurance
Company, with a $15,000,000 limit of liability.
Item 28. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment advisor of the Registrant, and each
director, officer or partner of any such investment advisor, is or has been, at
and time during the past two fiscal years, engaged for his own account or in
the capacity of director, officer, employee, partner or trustee.
The only employment of a substantial nature of the officers and directors
of A I M Advisors, Inc. (the "Advisor"), the Registrant's investment
advisor, is with the Advisor and its affiliated companies. For additional
information regarding the Advisor and its officers and directors, see
"Management" in the Prospectus and the Statement of Additional Information
for the Retail Class and "Management of the Trust" and "General
Information About the Fund" in the Prospectus and the Statement of
Additional Information, respectively, for the Institutional Class.
Item 29. Principal Underwriters
(a)(1) A I M Distributors, Inc., the Registrant's principal underwriter
for AIM Limited Maturity Treasury Shares, also acts as a principal
underwriter to the following investment companies:
AIM Equity Funds, Inc. (Retail Classes)
AIM Funds Group
AIM International Funds, Inc.
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
(a)(2) Fund Management Company, the Registrant's principal underwriter
for Institutional Shares, also acts as a principal underwriter to
the following investment companies:
AIM Equity Funds, Inc. (Institutional Classes)
Short-Term Investments Co.
Short-Term Investments Trust
Tax-Free Investments Co.
C-8
<PAGE> 121
(b) The following table sets forth information with respect to each
director and officer of: (1) A I M Distributors, Inc.
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- --------------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Directors Chairman and Trustee
Michael J. Cemo Director and President None
Gary T. Crum Director Senior Vice President
Robert H. Graham Director and Senior Vice President Trustee and President
W. Gary Littlepage Director and Senior Vice President None
James L. Salners Director and Senior Vice President None
John Caldwell Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
Marilyn M. Miller First Vice President None
Carol F. Relihan Vice President Senior Vice President
and Secretary
John J. Arthur Vice President and Treasurer Senior Vice President
and Treasurer
Ofelia M. Mayo General Counsel, Vice President Assistant Secretary
and Assistant Secretary
Melville B. Cox Vice President and Vice President
Chief Compliance Officer
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
William H. Kleh Vice President None
Frank V. Serebrin Vice President None
B. J. Thompson Vice President None
</TABLE>
__________________________________
11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-9
<PAGE> 122
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- --------------------
<S> <C> <C>
Robert D. Van Sant Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
Mary E. Gentempo Assistant Vice President None
David E. Hessel Assistant Vice President, Assistant None
Treasurer and Controller
Jeffrey L. Horne Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Nicholas D. White Assistant Vice President None
David L. Kite Assistant General Counsel and Assistant Secretary
Assistant Secretary
Nancy L. Martin Assistant General Counsel Assistant Secretary
and Assistant Secretary
Samuel D. Sirko Assistant General Counsel Assistant Secretary
and Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
</TABLE>
(2) Fund Management Company
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- --------------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Directors Chairman and Trustee
J. Abbott Sprague Director and President None
Robert H. Graham Director and Senior Vice President President and Trustee
William H. Kleh Director None
John J. Arthur Vice President and Treasurer Senior Vice President and
Treasurer
Carol F. Relihan Vice President and Senior Vice President
General Counsel and Secretary
</TABLE>
__________________________________
* 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-10
<PAGE> 123
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- --------------------
<S> <C> <C>
Mark E. McMeans Senior Vice President None
Mark D. Santero Senior Vice President None
Melville B. Cox Vice President and Vice President
Chief Compliance Officer
Jesse H. Cole Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
David E. Hessel Assistant Vice President, None
Assistant Treasurer and
Controller
Dana R. Sutton Assistant Vice President Vice President
and Assistant Treasurer and Assistant Treasurer
Stephen I. Winer Assistant Vice President, Assistant Assistant Secretary
General Counsel and Assistant Secretary
Nancy A. Beck Assistant Vice President None
Jeffrey L. Horne Assistant Vice President None
Margaret A. Reilly Assistant Vice President None
Nicholas D. White Assistant Vice President None
David L. Kite Assistant General Counsel and Assistant Secretary
Assistant Secretary
Nancy L. Martin Assistant General Counsel and Assistant Secretary
Assistant Secretary
Ofelia M. Mayo Assistant General Counsel Assistant Secretary
and Assistant Secretary
Samuel D. Sirko Assistant General Counsel and Assistant Secretary
Assistant Secretary
</TABLE>
(c) Not Applicable
__________________________________
* 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
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<PAGE> 124
Item 30. Location of Accounts and Records
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, will maintain physical possession of each such account, book
or other document of the Registrant at its principal executive offices,
except for those relating to certain transactions in portfolio securities
that are maintained by the Registrant's Custodian, The Bank of New York,
90 Washington Street, 11th Floor, New York, New York 10286, and
Registrant's Transfer Agents and Dividend Paying Agents, A I M Fund
Services, Inc. (on behalf of Registrant's Limited Maturity Treasury
Portfolio - AIM Limited Maturity Treasury Shares), P.O. Box 4739, Houston,
Texas 77210-4739; and A I M Institutional Fund Services, Inc., (on behalf
of its Limited Maturity Treasury Portfolio - Institutional Shares) 11
Greenway Plaza, Suite 1919, Houston, Texas 77046-1173.
Item 31. Management Services
Furnish a summary of the substantive provisions of any management-related
service contract not discussed in Part A and Part B of this Form (because the
contract was not believed to be of interest to a purchaser of securities of the
Registrant) under which services are provided to the Registrant, indicating the
parties to the contract, the total dollars paid and by whom, for the last three
fiscal years.
None.
Item 32. Undertakings
The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the applicable Fund's latest annual report to
shareholders, upon request and without charge.
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<PAGE> 125
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Houston, Texas on the 21st day of
November, 1996.
REGISTRANT: AIM INVESTMENT SECURITIES FUNDS
By: /s/Robert H. Graham
---------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/Charles T. Bauer Chairman & Trustee 11/21/96
-------------------------
(Charles T. Bauer)
/s/Robert H. Graham Trustee & President 11/21/96
------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/Bruce L. Crockett Trustee 11/21/96
--------------------------
(Bruce L. Crockett)
/s/Owen Daly II Trustee 11/21/96
-------------------------
(Owen Daly II)
/s/Carl Frischling Trustee 11/21/96
-------------------------
(Carl Frischling)
/s/John F. Kroeger Trustee 11/21/96
-------------------------
(John F. Kroeger)
/s/Lewis F. Pennock Trustee 11/21/96
-------------------------
(Lewis F. Pennock)
/s/Ian W. Robinson Trustee 11/21/96
-------------------------
(Ian W. Robinson)
/s/Louis S. Sklar Trustee 11/21/96
-------------------------
(Louis S. Sklar)
/s/John J. Arthur Senior Vice President & 11/21/96
------------------------- Treasurer (Principal Financial
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE> 126
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No.
- -------
<S> <C>
1(c) Second Amendment to Agreement and Declaration of Trust of Registrant.
(2)(a) By-Laws of the Registrant
(2)(b) Amendment to By-Laws of Registrant
(2)(c) Second Amendment to By-Laws of Registrant
6(a)(5) Distribution Agreement, dated October 18, 1993, between Registrant (on behalf of its Limited Maturity
Treasury Portfolio - Institutional Shares) and Fund Management Company
6(b) Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers
6(c) Form of Bank Selling Group Agreement between A I M Distributors, Inc. and banks
7(b) Retirement Plan for Registrant's Non-Affiliated Trustees effective as of March 8, 1994, as
restated September 18, 1995
7(d) Form of Deferred Compensation Agreements for Registrant's Non-Affiliated Trustees as approved
December 5, 1995
8(a)(ii) Second Amended and Restated Custody Agreement between Short-Term Investments Co. (on behalf of
its Limited Maturity Treasury Portfolio) and The Bank of New York
8(a)(iii) Amendment to Second Amended and Restated Custody Agreement between Short-Term Investments Co.
(on behalf of its Limited Maturity Treasury Portfolio) and The Bank of New York
8(a)(iv) Assignment and Acceptance of Assignment of Custody Agreement between Registrant (on behalf of
its Limited Maturity Treasury Portfolio) and Short-Term Investments Co. (on behalf of its
Limited Maturity Treasury Portfolio)
8(b) Subcustodian Agreement with Texas Commerce Bank, dated September 9, 1994, among Texas Commerce
Bank National Association, State Street Bank and Trust Company, A I M Fund Services, Inc. and
Registrant
11(a) Consent of Ballard Spahr Andrews & Ingersoll
11(b) Consent of Dechert Price & Rhoads
11(c) Consent of KPMG Peat Marwick LLP
11(d) Opinion of Dechert Price & Rhoads
15(b)(2) Form of Shareholder Service Agreement to be used in connection with Registrant's Master 12b-1
Plan
</TABLE>
<PAGE> 127
<TABLE>
<S> <C>
15(c)(2) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master
12b-1 Plan
15(d)(2) Form of Service Agreement for Certain Retirement Plans (for the Retail Classes) to be used in
connection with Registrant's Master 12b-1 Plan
15(e)(2) Forms of Bank Trust Departments Agreements to be used in connection with Registrant's Master
12b-1 Plan
16 Schedule of Performance Quotations
18 Multiple Class (Rule 18f-3) Plan
27 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 1(c)
SECOND AMENDMENT
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM INVESTMENT SECURITIES FUNDS
THIS SECOND AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST (the
"Amendment") OF AIM INVESTMENT SECURITIES FUNDS (the "Trust") is entered into
the 18th day of November, 1994, among Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, John F. Kroeger, Lewis F. Pennock, Ian W. Robinson,
Louis S. Sklar, as Trustees, and each person who became or becomes a
shareholder in accordance with the terms set forth in that certain Agreement
and Declaration of Trust of AIM Investment Securities Funds entered into as of
May 5, 1993, as amended (the "Agreement").
WHEREAS, at a meeting held on September 10, 1994, the Board of
Trustees of the Trust approved, subject to shareholder approval, an Agreement
and Plan of Reorganization (the "Plan"), pursuant to which all of the assets
and liabilities of AIM Adjustable Rate Government Fund ("ARM"), a Portfolio of
the Trust, would be transferred to AIM Intermediate Government Fund (formerly
AIM Government Securities Fund), a portfolio of AIM Funds Group, a Delaware
business trust (the "Transaction");
WHEREAS, the shareholders of ARM approved the Plan on November 15,
1994, as required pursuant to Section 6.1 of the Agreement, and the
Transaction was consummated;
WHEREAS, as a result of the consummation of the Transaction, ARM had
no remaining assets or liabilities;
WHEREAS, Section 9.7 of the Agreement authorizes the Trustees without
Shareholder vote to amend or otherwise supplement the Agreement by making an
amendment; and
WHEREAS, the Trustees have resolved to amend the Agreement as
hereinafter set forth with an effective date of November 18, 1994.
NOW THEREFORE, the Trustees hereby amend the Agreement as herein set
forth below:
1. Capitalized terms not specifically defined in this Agreement
shall have the meanings ascribed to them in the Agreement.
2. Section 2.3 of the Agreement shall be deleted in its entirety
and the following new Section 2.3 shall be substituted in lieu thereof:
"Section 2.3 Establishment of Portfolios and Classes. The Trust shall
contain one Portfolio, the Limited Maturity Treasury Portfolio. The Limited
Maturity Treasury Portfolio shall contain two initial Classes, the Institutional
Class and the AIM Limited Maturity Treasury Share Class. The Limited Maturity
Treasury Portfolio and its Classes as set forth in this Section 2.3 are
1
<PAGE> 2
collectively referred to as the "Initial Portfolio." The establishment and
designation of any other Portfolio or Class thereof, or, subject to Section 6.1
hereof, any change to the Initial Portfolio, shall be effective upon the
adoption by a majority of the then Trustees of a resolution which sets forth
such establishment, designation or change."
3. The amendments in the preceding paragraph 2 of this Amendment
shall be effective as of the 18th day of November, 1994.
4. With the exception of the amendment in the preceding
paragraphs 2 and 3 of this Amendment, the Agreement shall in all other respects
remain in full force and effect.
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this Second Amendment to Agreement and Declaration of
Trust of AIM Investment Securities Funds the 5th day of December, 1995.
/s/ CHARLES T. BAUER /s/ BRUCE L. CROCKETT
- ------------------------------------- -------------------------------------
Charles T. Bauer Bruce L. Crockett
Trustee Trustee
/s/ OWEN DALY II /s/ CARL FRISCHLING
- ------------------------------------- -------------------------------------
Owen Daly II Carl Frischling
Trustee Trustee
/s/ JOHN F. KROEGER /s/ LEWIS F. PENNOCK
- ------------------------------------- -------------------------------------
John F. Kroeger Lewis F. Pennock
Trustee Trustee
/s/ IAN W. ROBINSON /s/ LOUIS S. SKLAR
- ------------------------------------- -------------------------------------
Ian W. Robinson Louis S. Sklar
Trustee Trustee
[THIS IS THE SIGNATURE PAGE FOR
THE SECOND AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST
OF AIM INVESTMENT SECURITIES FUNDS]
2
<PAGE> 1
EXHIBIT 2(a)
AIM INVESTMENT SECURITIES FUNDS
-----------------------
BY-LAWS
-----------------------
Capitalized terms not specifically defined
herein shall have the meanings ascribed to
them in the Agreement and Declaration of
Trust.
ARTICLE I
OFFICES
Section 1. The registered office of AIM Investment Securities Funds
(the "Trust") shall be in the County of Newcastle, State of Delaware.
Section 2. The Trust may also have offices at such other places both
within and without the State of Delaware as the Trustees may from time to time
determine or the business of the Trust may require.
ARTICLE II
TRUSTEES
Section 1. The number of Trustees shall initially be three, and
thereafter shall be such number as shall be fixed from time to time by a
majority of the Trustees; provided, however, that the number of Trustees shall
in no event be less than three nor more than twelve.
Section 2. The Trustees shall hold office during the lifetime of the
Trust, and until its termination as provided in the Agreement and Declaration
of Trust; except (a) that any Trustee may resign his trusteeship or may retire
by written instrument signed by him and delivered to the other Trustees, which
shall take effect upon such delivery or upon such later
<PAGE> 2
date as is specified therein; (b) that any Trustee may be removed at any time
by written instrument, signed by at least two-thirds of the number of Trustees
prior to such removal, specifying the date when such removal shall become
effective; (c) that any Trustee who has died, become physically or mentally
incapacitated by reason of disease or otherwise, or is otherwise unable to
serve, may be retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and (d) that a Trustee may be
removed at any meeting of the shareholders of the Trust.
Section 3. In case of the declination to serve, death, resignation,
retirement or removal of a Trustee, or a Trustee is otherwise unable to serve,
or an increase in the number of Trustees, a vacancy shall occur. Whenever a
vacancy in the Trustees shall occur, until such vacancy is filled, the other
Trustees shall have all the powers hereunder and the certification of the other
Trustees of such vacancy shall be conclusive. In the case of an existing
vacancy, the remaining Trustees may fill such vacancy by appointing such other
person as they in their discretion shall see fit, or may leave such vacancy
unfilled or may reduce the number of Trustees to not less than three Trustees.
Such appointment shall be evidenced by a written instrument signed by a
majority of the Trustees in office or by resolution of the Trustees, duly
adopted, which shall be recorded in the minutes of a meeting a the Trustees,
whereupon the appointment shall take effect.
2
<PAGE> 3
An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to Sections 2 and 3 of Article II of these by-laws
and the Agreement and Declaration of Trust shall have accepted this Trust, the
trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder.
Section 4. Any Trustee may, by power of attorney, delegate his power
for a period not exceeding six months at any one time to any other Trustee or
Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
Section 5. The declination to serve, death, resignation, retirement,
removal, incapacity, or inability of the Trustees, or any one of them, shall
not operate to terminate the Trust or to revoke any existing agency created
pursuant to the terms of the Agreement and Declaration of Trust.
Section 6. The Trustees shall have exclusive and absolute control
over the trust property and over the business of the Trust to the same extent
as if the Trustees were the sole owners of the trust property and business in
their own right, but with such powers of delegation as may be permitted by the
3
<PAGE> 4
Agreement and Declaration of Trust. The Trustees shall have power to conduct
the business of the Trust and carry on its operations in any and all of its
branches and maintain offices both within and without the State of Delaware, in
any and all states of the United States of America, in the District of
Columbia, in any and all commonwealths, territories, dependencies, colonies, or
possessions of the United States of America, and in any foreign jurisdiction
and to do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of the Trust
although such things are not herein specifically mentioned. Any determination
as to what is in the interests of the Trust made by the Trustees in good faith
shall be conclusive. In construing the provisions of these by-laws and the
Agreement and Declaration of Trust, the presumption shall be in favor of a
grant of power to the Trustees.
MEETINGS OF THE TRUSTEES
Section 7. The Trustees of the Trust may hold meetings, both regular
and special, either within or without the State of Delaware.
Section 8. The first meeting of each newly elected Board of Trustees
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the meeting causing their election. In the event of the
failure of the shareholders to fix the time or place of such first meeting of
the newly elected Board of Trustees, or in the event such meeting is not held
at the time and place so fixed by the shareholders, the
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meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Trustees, or shall be
specified in a written waiver signed by all of the Trustees.
Section 9. Regular meetings of the Trustees may be held without
notice at such time and at such place as shall from time to time be determined
by the Trustees.
Section 10. Special meetings of the Trustees may be called by any
Trustee on one day's notice to each Trustee, either personally, by telephone,
by mail, by telegram or by telecopier.
Section 11. At all meetings of the Trustees a majority of Trustees
shall constitute a quorum for the transaction of business. In the event the
number of Trustees of the Trust is hereafter increased, a majority of all the
Trustees of the Trust shall constitute a quorum and the act of a majority of
the Trustees present at any meeting at which there is a quorum shall be the act
of the Board of Trustees, except as may be otherwise specifically provided by
applicable law or by the Agreement and Declaration of Trust. If a quorum shall
not be present at any meeting of the Board of Trustees, the Trustees present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 12. Unless otherwise restricted by the Agreement and
Declaration of Trust or these by-laws, any action required or permitted to be
taken at any meeting of the Board of Trustees or of any committee thereof may
be taken without a
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meeting, if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
COMMITTEES OF TRUSTEES
Section 13. In the event the number of Trustees of the Trust is
hereafter increased, the Board of Trustees may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of three or more of the Trustees of the Trust. The Board may
designate one or more Trustees as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of such committee.
Any such committee, to the extent provided in the resolution, shall have and
may exercise the powers of the Board of Trustees in the management of the
business and affairs of the Trust; provided, however, that in the absence or
disqualification of any member of such committee or committees, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not such members constitute a quorum, may unanimously appoint
another member of the Board of Trustees to act at the meeting in the place of
any such absent or disqualified member. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board of Trustees.
Section 14. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Trustees when required.
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COMPENSATION OF TRUSTEES
Section 15. The Trustees as such shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, administrative, legal, accounting, investment banking,
underwriting, brokerage, or investment dealer or other services and the payment
for the same by the Trust.
ARTICLE III
MEETINGS OF SHAREHOLDERS
Section 1. All meetings of the shareholders for the election of
Trustees shall be held at such place as may be fixed from time to time by the
Trustees, or at such other place either within or without the State of Delaware
as shall be designated from time to time by the Trustees and stated in the
notice indicating that a meeting has been called for such purpose. Meetings of
the shareholders may be held for any of the other following purposes and may be
held at such time and place, within or without the State of Delaware as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof: (a) to remove Trustees, (b) to terminate the Trust or any Portfolio or
Class, unless, as of the date on which the Trustees have determined to so
terminate the Trust or such Portfolio or Class, there are fewer than 100
holders of record of the Trust or of such terminating Portfolio or Class; (c)
to approve the sale of all or substantially all the assets of the Trust or of
any
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Portfolio or Class, unless the primary purpose of such sale is to change the
Trust's domicile or form of organization or form of business trust; (d) to
approve the merger or consolidation of the Trust or any Portfolio or Class with
and into another Company, unless (i) the primary purpose of such merger or
consolidation is to change the Trust's domicile or form of organization or form
of business trust, or (ii) after giving effect to such merger or consolidation,
based on the number of shares outstanding as of a date selected by the
Trustees, the shareholders of the Trust or such Portfolio or Class will have a
majority of the outstanding shares of the surviving Company or Portfolio or
Class, as the case may be; (e) to approve any amendment to Section 6.1 of the
Agreement and Declaration of Trust of the Trust; and (f) to approve such
additional matters as may be required by law or as the Trustees, in their sole
discretion, shall determine. Shares may be voted in person or by proxy. A
proxy with respect to shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of the
proxy the Trust received a specific written notice to the contrary from any one
of them. A proxy purporting to be executed by or behalf of a shareholder shall
be deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. No proxy shall be valid after
the expiration of eleven months from the date thereof unless otherwise provided
in the proxy.
Section 2. All meetings of shareholders for the purpose of electing
Trustees shall be held on such date and at such time
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as shall be designated from time to time by the Trustees and stated in the
notice of the meeting, at which the shareholders shall elect by a plurality
vote any number of Trustees as the notice for such meeting shall state are to
be elected, and transact such other business as may properly be brought before
the meeting in accordance with Section 1 of this Article III.
Section 3. Written notice of any meeting stating the place, date, and
hour of the meeting shall be given to each shareholder entitled to vote at such
meeting not less than ten days before the date of the meeting in accordance
with Article XI hereof.
Section 4. The officer who has charge of the share ledger of
beneficial interests of the Trust shall prepare and make, at least ten days
before any meeting of shareholders, a complete list of the shareholders
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each shareholder and the number of shares registered in the name
of each shareholder. Such list shall be open to the examination of any
shareholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder who is present.
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Section 5. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by applicable law or by the Agreement and
Declaration of Trust, may be called by any Trustee; provided, however, that the
Trustees shall promptly call a meeting of the shareholders solely for the
purpose set forth in Article III, Section 1(a) of these by-laws, when
requested in writing so to do by the record holders of not less than ten
percent of the outstanding shares of the Trust.
Section 6. Written notice of a special meeting stating the place,
date, and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten days before the date of the
meeting, to each shareholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of shareholders
shall be limited to the purpose stated in the notice.
Section 8. The holders of one-third of the shares of beneficial
interests that are issued and outstanding and entitled to vote thereat, present
in person or represented by proxy, shall constitute a quorum at all meetings of
the shareholders for the transaction of business except as otherwise provided
by applicable law or by the Agreement and Declaration of Trust. If, however,
such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be
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present or represented. At such adjourned meeting, at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the shares having voting power present in person or
represented by proxy shall decide any question in person or represented by
proxy shall decide any question brought before such meeting, unless the
question is one on which by express provision of applicable law, the Agreement
and Declaration of Trust or these by-laws, a different vote is required in
which case such express provision shall govern and control the decision of such
question.
Section 10. Each whole share shall be entitled to one vote, and each
fractional share shall be entitled to a proportionate fractional vote. On any
matter submitted to a vote of the shareholders, all shares shall be voted
together, except when required by applicable law or when the Trustees have
determined that the matter affects the interests of one or more Portfolios (or
Classes), then only the shareholders of such Portfolios (or Classes) shall be
entitled to vote thereon.
Section 11. Unless otherwise provided in the Agreement and
Declaration of Trust or applicable law, any action required to be taken at any
meeting of shareholders of the Trust, or any action which may be taken at any
meeting of such shareholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding shares
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having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted. Prompt notice of the taking of any such action
without a meeting by less than unanimous written consent shall be given to
those shareholders who have not consented in writing.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of applicable law or of the
Agreement and Declaration of Trust or of these by-laws, notice is required to
be given to any Trustee or shareholder, it shall not, unless otherwise provided
herein, be construed to mean personal notice, but such notice may be given by
telephone (promptly confirmed in writing) or in writing, by mail, addressed to
such Trustee or shareholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to
be given at the time when the same shall be deposited in the United States
mail. Notice to trustees may also be given by telegram or telecopier.
Section 2. Whenever any notice is required to be given under the
provisions of applicable law or of the Agreement and Declaration of Trust or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
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ARTICLE V
CERTIFICATES OF SHARES
Section q. Upon request, every holder of shares in the Trust shall be
entitled to have a certificate, signed by, or in the name of the Trust by, a
Trustee, certifying the number of shares owned by him in the Trust.
Section 2. Where a certificate is countersigned (1) by a transfer
agent other than the Trust or its employee, or, (2) by a registrar other than
the Trust or its employee, the signature of the Trustee may be a facsimile.
LOST CERTIFICATES
Section 3. The Board of Trustees may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Trust alleged to have been lost, stolen or destroyed,
upon the making of an affidavit of the fact by the person claiming the
certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Trustees may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the Trust a bond in such sum as it may direct as indemnity
against any claim that may be made against the Trust with respect to the
certificate alleged to have been lost, stolen or destroyed.
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TRANSFERS OF SHARES
Section 4. The Trustees shall make such rules as they consider
appropriate for the transfer of shares and similar matters. To the extent
certificates are issued in accordance with Section 1 of this Article V, upon
surrender to the Trust or the transfer agent of the Trust of such certificate
for shares duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the Trust to issue
a new certificate to the person entitled thereto, cancel the old certificate
and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the Trustees may determine the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent to action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
of allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of beneficial interests or for the purpose
of any other lawful action, the Board of Trustees may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record is adopted by the Board of Trustees, and which record date shall not be
more than ninety nor less than ten days before the date of such meeting, nor
more than ten days after the date upon which the resolution fixing the record
date is adopted by the Board of Trustees for
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action by shareholder consent in writing without a meeting, nor more than
ninety days prior to any other action. A determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Trustees may fix a new record date for the adjourned meeting.
REGISTERED SHAREHOLDERS
Section 6. The Trust shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice hereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VI
GENERAL PROVISIONS
DISTRIBUTIONS AND REDEMPTIONS
Section 1. The Trustees may from time to time declare and pay
dividends and make other distributions with respect to any Portfolio, or Class
thereof, which may be from income, capital gains or capital. The amount of
such dividends or distributions and the payment of them and whether they are in
cash or any other Trust Property shall be wholly in the discretion of the
Trustees.
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Section 2. Any holder of record of shares of a particular Portfolio,
or Class thereof, shall have the right to require the Trust to redeem his
shares, or any portion thereof, subject to the terms and conditions set forth
in the registration statement in effect from time to time.
The redemption price may in any case or cases be paid wholly or partly
in kind if the Trustees determine that such payment is advisable in the
interest of the remaining shareholders of the Portfolio or Class thereof for
which the share are being redeemed. Subject to the foregoing, the fair value,
selection and quantity of securities or other property so paid or delivered as
all or part of the redemption price may be determined by or under the authority
of the Trustees. In no case shall the Trust be liable for any delay of any
corporation or other Person in transferring securities selected for delivery as
all or part of any payment in kind.
The Trustees may, at their option, and at any time, have the right to
redeem shares of any shareholder of a particular Portfolio or Class thereof in
accordance with Section 2 of this Article VI. The Trustees may refuse to
transfer or issue shares to any person to the extent that the same is necessary
to comply with applicable law or advisable to further the purposes for which
the Trust is formed.
If, at any time when a request for transfer or redemption of shares of
any Portfolio is received by the Trust or its agent, the value of the shares of
such Portfolio in a shareholder's account is less than Five Hundred Dollars
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($500.00), after giving effect to such transfer or redemption, the Trust may
cause the remaining shares of such Portfolio in such shareholder's account to
be redeemed in accordance with such procedures set forth above.
INDEMNIFICATION
Section 3. Every person who is, or has been, a Trustee or officer of
the Trust shall be indemnified by the Trust to the fullest extent permitted by
the Delaware Business Trust Act, these by-laws and other applicable law.
SEAL
Section 4. The business seal shall have inscribed thereon the name of
the business trust, the year of its organization and the words "Business Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VII
AMENDMENTS
Section 1. These by-laws may be altered or repealed at any regular or
special meeting of the Board of Trustees. These by-laws may also be altered or
repealed at any special meeting of the shareholders, but only if the Board of
Trustees resolves to put a proposed alteration or repealer to the vote of the
shareholders and notice of such alteration or repealer is contained in a notice
of the special meeting being held for such purpose.
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EXHIBIT 2(b)
AMENDMENT TO THE BY-LAWS OF
AIM INVESTMENT SECURITIES FUNDS
(A DELAWARE BUSINESS TRUST)
ADOPTED DECEMBER 2, 1993
The By-Laws of AIM Investment Securities Funds are hereby amended by
adding the following new Article III and renumbering each Article thereafter
accordingly:
ARTICLE III
OFFICERS
Section 1. Executive Officers. The initial executive officers of the
Trust shall be elected by the Board of Trustees as soon as practicable after
the organization of the Trust. The executive officers may include a Chairman
of the Board, and shall include a President, one or more Vice Presidents (the
number thereof to be determine by the Board of Trustees), a Secretary and a
Treasurer. The Chairman of the Board, if any, shall be selected from among the
trustees. The Board of Trustees may also in its discretion appoint Assistant
Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other
officers, agents and employees, who shall have such authority and perform such
duties as the Board may determine. The Board of Trustees may fill any vacancy
which may occur in any office. Any two (2) offices, except those of President
and Vice President, may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument on behalf of the Trust in more
than one (1) capacity, if such instrument is required by law or by these
By-Laws to be executed, acknowledged or verified by two (2) or more officers.
Section 2. Term of Office. Unless otherwise specifically determined
by the Board of Trustees, the officers shall serve at the pleasure of the Board
of Trustees. If the Board of Trustees in its judgment finds that the best
interests of the Trust will be served, the Board of Trustees may
remove any officer of the Trust at any time with or without cause.
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Section 3. President. The President shall be the chief executive
officer of the Trust and, subject to the Board of Trustees, shall generally
manage the business and affairs of the Trust. If there is no Chairman of the
Board, or if the Chairman of the Board has been appointed but is absent, the
President shall, if present, preside at all meetings of the shareholders and
the Board of Trustees.
Section 4. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the shareholders and the Board of Trustees, if
the Chairman of the Board is present. The Chairman of the Board shall have
such other powers and duties as shall be determined by the Board of Trustees,
and shall undertake such other assignments as may be requested by the
President.
Section 5. Other Officers. The Chairman of the Board or one or more
Vice Presidents shall have and exercise such powers and duties of the President
in the absence or inability to act of the President, as may be assigned to
them, respectively, by the Board of Trustees or, to the extent not so assigned,
by the President. In the absence or inability to act of the President, the
powers and duties of the President not otherwise assigned by the Board of
Trustees or the President shall devolve upon the Chairman of the Board, or in
the Chairman's absence, the Vice Presidents in the order of their election.
Section 6. Secretary. The Secretary shall have custody of the seal of
the Trust, and shall keep the minutes of the meetings of shareholders, Board of
Trustees and any committees thereof, and shall issue all notices of the Trust.
The Secretary shall have charge of the shareholder records and such other books
and papers as the Board may direct, and shall perform such other duties as may
be incidental to the office or which are assigned by the Board of Trustees.
The Secretary shall also keep or cause to be kept a shareholder book, which may
be maintained by means of computer systems, containing the names,
alphabetically arranged, of all persons who are shareholders of the Trust,
showing their places of residence, the number and class or series of any class
of shares of beneficial interest held by them, respectively, and the dates when
they became the record owners thereof, and such book shall be open for
inspection as prescribed by the laws of the State of Delaware.
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Section 7. Treasurer. The Treasurer shall have the care and custody
of the funds and securities of the Trust and shall deposit the same in the name
of the Trust in such bank or banks or other depositories, subject to withdrawal
in such manner as these By-Laws or the Board of Trustees may determine. The
Treasurer shall, if required by the Board of Trustees, give such bond for the
faithful discharge of duties in such form as the Board of Trustees may require.
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EXHIBIT 2(c)
SECOND AMENDMENT TO THE BY-LAWS OF
AIM INVESTMENT SECURITIES FUNDS
(A DELAWARE BUSINESS TRUST)
ADOPTED OCTOBER 27, 1994
The By-Laws of AIM Investment Securities Funds are hereby amended as follows:
WHEREAS, the Board of Trustees of the Fund desires to establish methods by
which a shareholder can designate a person to act as his, her or its proxy;
NOW THEREFORE, BE IT RESOLVED, that Article IV, Section 1 of the Fund's By-Laws
is hereby amended by redesignating the fifth and sixth sentences of such
Section as the sixth and seventh sentences thereof and by adding thereto a new
sentence as the fifth sentence of such Section, which sentence shall read in
full as follows:
A shareholder may authorize any person or entity to act as his proxy
through written, electronic, telephonic, computerized, facsimile,
telecommunication, telex or oral communication or by any other form of
communication.
<PAGE> 1
EXHIBIT 6(a)(5)
DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT SECURITIES FUNDS
(INSTITUTIONAL SHARES)
AND
FUND MANAGEMENT COMPANY
THIS AGREEMENT is made this 18th day of October, 1993, by and between
AIM INVESTMENT SECURITIES FUNDS, a Delaware business trust (hereinafter
referred to as the "Company"), and FUND MANAGEMENT COMPANY, a Texas
corporation, (hereinafter referred to as the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged,
the parties hereto agree as follows:
FIRST: The Company hereby appoints the Distributor as its exclusive
agent for the sale of the shares of its Limited Maturity Treasury Portfolio -
Institutional Shares (the "Shares") of the Company to the public through
investment dealers in the United States and throughout the world in accordance
with the terms of the Company's current prospectus applicable to the Shares.
SECOND: The Company shall not sell any Shares except through the
Distributor and under the terms and conditions set forth in paragraph FOURTH
below. Notwithstanding the provisions of the foregoing sentence, however,
(A) the Company may issue Shares to any other investment company or
personal holding company, or to the shareholders thereof, in exchange for all
or a majority of the shares or assets of any such company; and
(B) the Company may issue Shares at their net asset value in
connection with certain categories of transactions or to certain categories of
persons, in accordance with Rule 22d-1 under the Investment Company Act of
1940, as amended (the "1940 Act"), provided that any such category is specified
in the then current prospectus of the Company.
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the Shares and agrees that it will use its best efforts to sell
such Shares; provided, however, that:
(A) the Distributor may, and when requested by the Company shall,
suspend its efforts to effectuate such sales at any time when, in the opinion
of the Distributor or of the Company, no sales should be made because of market
or other economic considerations or abnormal circumstance of any kind; and
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(B) the Company may withdraw the offering of the Shares (i) at any
time with the consent of the Distributor, or (ii) without such consent when so
required by the provisions of any statute or of any order, rule or regulation
of any governmental body having jurisdiction. It is mutually understood and
agreed that the Distributor does not undertake to sell any specific amount of
the Shares. The Company shall have the right to specify minimum amounts for
initial and subsequent orders for the purchase of Shares.
FOURTH: The public offering price of Shares of the Company (the
"offering price") shall be the net asset value per share. Net asset value per
share shall be determined in accordance with the provisions of the then current
Shares' prospectus and Statement of Additional Information.
FIFTH: The Distributor shall act as agent of the Company in
connection with the sale and repurchase of Shares of the Company. Except with
respect to such sales and repurchases, the Distributor shall act as principal
in all matters relating to the promotion of the sale of Shares of the Company
and shall enter into all of its own engagements, agreements and contracts as
principal on its own account. The Distributor shall enter into Selling Group
Agreements with investment dealers selected by the Distributor, authorizing
such investment dealers to offer and sell Shares of the Company to the public
upon the terms and conditions set forth therein, which shall not be
inconsistent with the provisions of this Agreement. Each Selling Group
Agreement shall provide that the investment dealer shall act as a principal,
and not as an agent of the Company.
SIXTH: The Company shall bear
(A) the expenses of qualification of the Shares for sale in connection
with such public offerings in such states as shall be selected by the
Distributor and of continuing the qualification therein until the Distributor
notifies the Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH: The Distributor shall bear
(A) the expenses of printing from the final proof and distributing
prospectuses and statements of additional information (including supplements
thereto) of the Company relating to the Shares in connection with public
offerings made by the Distributor pursuant to this Agreement (which shall not
include those prospectuses and statements of additional information, and
supplements thereto, to be distributed to shareholders by the Company), and any
other promotional or sales literature used by the Distributor or furnished by
the Distributor to dealers in connection with such public offerings; and
(B) expenses of advertising in connection with such public offerings.
EIGHTH: The Distributor will accept orders for the purchase of Shares
only to the extent of purchase orders actually received and not in excess of
such orders, and it will not avail itself of any opportunity of making a
profit by expediting or withholding orders. It is
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mutually understood and agreed that the Company may reject purchase orders
where, in the judgment of the Company, such rejection is in the best interest
of the Company.
NINTH: The Company and the Distributor shall each comply with all
applicable provisions of the 1940 Act, the Securities Act of 1933 and of all
other federal and state laws, rules and regulations governing the issuance and
sale of the Shares.
TENTH:
(A) In absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Company agrees to indemnify the Distributor against any and
all claims, demands, liabilities and expenses which the Distributor may incur
under the Securities Act of 1933, or common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in any
registration statement or prospectus of the Company, or any omission to state a
material fact therein, the omission of which makes any statement contained
therein misleading, unless such statement or omission was made in reliance
upon, and in conformity with, information furnished to the Company in
connection therewith by or on behalf of the Distributor. The Distributor
agrees to indemnify the Company against any and all claims, demands,
liabilities and expenses which the Company may incur arising out of or based
upon any act or deed of the Distributor or its sales representatives which has
not been authorized by the Company in its prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Company against any and
all claims, demands, liabilities and expenses which the Company may incur under
the Securities Act of 1933, or common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in any
registration statement or prospectus of the Company, or any omission to state a
material fact therein if such statement or omission was made in reliance upon,
and in conformity with, information furnished to the Company in connection
therewith by or on behalf of the Distributor.
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the Company's transfer agent
or for any failure of such transfer agent to perform its duties.
ELEVENTH: Nothing herein contained shall require the Company to take
any action contrary to any provision of its organizational documents or to any
applicable statute or regulation.
TWELFTH: This Agreement shall become effective at the close of
business on the date hereof, shall continue in force and effect until June 30,
1994, and shall continue in force and effect from year to year thereafter,
provided, that such continuance is specifically approved at least annually
(a)(i) by the Board of Trustees of the Company, or (ii) by the vote of a
majority of the Company's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), and (b) by vote of a majority of the Company's
trustees who are not parties to this Agreement or "interested persons" (as
defined in Section 2(a)(19) of the 1940 Act) of any party to this Agreement
cast in person at a meeting called for such purpose.
-3-
<PAGE> 4
THIRTEENTH:
(A) This Agreement may be terminated at any time, without the payment
of any penalty, by vote of the Board of Trustees of the Company or by vote of a
majority of the outstanding voting securities of the Company, or by the
Distributor, on sixty (60) days' written notice to the other party.
(B) This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" having the meaning as defined in Section
2(a)(4) of the 1940 Act.
FOURTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed, postage paid, to the other party at such
address as such other party may designate for the receipt of such notices.
Until further notice to the other party, it is agreed that the address of both
the Company and the Distributor shall be Eleven Greenway Plaza, Suite 1919,
Houston, Texas 77046.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate as of the day and year first above written.
AIM INVESTMENT SECURITIES FUNDS
(on behalf of its Limited Maturity
Treasury Portfolio - Institutional Shares)
By: /s/ CHARLES T. BAUER
------------------------------------
President
Attest:
/s/ NANCY L. MARTIN
- ---------------------------------
FUND MANAGEMENT COMPANY
By: /s/ CAROL F. RELIHAN
-------------------------------------
Vice President
Attest:
/s/ NANCY L. MARTIN
- ---------------------------------
-5-
<PAGE> 1
[AIM LOGO APPEARS HERE] EXHIBIT 6(b)
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares of
the common stock (the "Shares") of the registered investment companies listed
on Schedule A attached hereto which may be amended from time to time by us (the
"Funds"), understands that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that
you agree to abide by all of the rules and regulations of the NASD for purposes
of this Agreement (which you confirm by your signature below). In consideration
of the mutual covenants stated below, you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares), as determined in accordance with the then effective
prospectus used in connection with the offer and sale of Shares
(the "Prospectus"), which public offering price may reflect scheduled
variations in, or the elimination of, the Sales Charge on sales of the
Funds' Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus. You agree that you will
apply any scheduled variation in, or elimination of, the Sales Charge
uniformly to all offerees in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole descretion to reject any order.
4 With respect to the Funds the Shares of which are indicated on the attached
Schedule as being sold with a Sales Charge (the "Load Funds"), you will be
allowed the concessions from the public offering price provided in the
Load Funds' prospectus. With respect to the Funds, the Shares of which are
indicated on the attached Schedule A as being sold with a contingent
deferred sales charge (the "CDSC Funds"), you will be paid a commission or
consession as disclosed in the CDSC Fund's then current prospectus. Wtih
respect to the Funds whose Shares are indicated on the attached Schedule as
being sold without a Sales Charge or a contingent deferred sales charge
(the "No-Load Funds"), you may charge a reasonable administrative fee. For
the purpose of this Agreement the terms "Sales Charge" and "Dealer
Commission" apply only to the Load Funds and the CDSC Funds. All commissions
and concessions are subject to change without notice by us and will comply
with any changes in regulatory requirements. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders. Redemptions
by a Fund and repurchases by us will be effected in the manner and upon the
terms described in the Prospectus. We will, upon your request, assist you
in processing such orders for redemptions or repurchases. To facilitate
prompt payment following a redemption or repurchase of Shares, the owner's
signature shall appear as registered on the Funds' records and, as
described in the Prospectus, it may be required to be guaranteed by a
commercial bank, trust company or a member of a national securities
exchange.
<PAGE> 2
6 Sales and exchages of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer's Concesssion
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any commissions plus interest thereon.
9 You and we agree to abide by the Rules of Fair Practice of the NASD and all
other federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within
seven (7) business days after the date of our confirmation to you of your
original purchase order therefore, you agree to pay forthwith to us the
full amount of the concession allowed to you on the original sale and we
agree to pay such amount to the Fund when received by us. We also agree to
pay to the Fund the amount of our share of the Sales Charge on the original
sale of such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospecutus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representaion, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
<PAGE> 3
16 We will supply you with copies of the Prospectuses and Statements of
Additional Information of the Funds (including any amendments thereto) in
reasonable quantities upon request. You will provide all customers with a
Prospectus prior to or at the time such customer purchases Shares. You will
provide any customer who so requests a copy of the Statement of Additional
Information on file with the U.S. Securities and Exchange Commission.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ MICHAEL J. CEMO
------------------ ---------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
05/95
<PAGE> 4
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
SELECTED DEALER AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges With CDSC
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund Yes No
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes No
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Government Securities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Class A Yes Yes
AIM Money Market Fund Class C No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Limited Maturity Treasury Shares, AIM Money Market Fund
Class C, AIM Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Shares.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
09/96
<PAGE> 1
[AIM LOGO APPEARS HERE] EXHIBIT 6(c)
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Mutual Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies listed on Schedule A hereto which may be
amended from time to time by us (the "Funds"). As exclusive agent for the
Funds, we are offering to make available shares of common stock or of
beneficial interest, as the case may be, of the Funds (the "Shares") for
purchase by your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated on the attached Schedule A as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus. With respect to the Funds,
the Shares of which are indicated on the attached Schedule A as being sold
with a contingent deferred sales charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
<PAGE> 2
11 If payment is not received within ten (10) business days of our acceptance
of the order, we reserve the right to cancel the sale or, at our option, to
sell Shares to the Fund at the then prevailing net asset value. In this
event you agree to be responsible for any loss resulting to the Fund from
the failure to make payment as aforesaid.
12 Shares sold hereunder shall be available in book-entry form on the books of
the Funds' Transfer Agent unless other instructions have been given.
13 No person is authorized to make any representations concerning Shares of
any Fund except those contained in the applicable current Prospectus and
printed information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
make Shares available to your customers except under circumstances that
will result in compliance with the applicable Federal and State Securities
and Banking Laws and that you will not furnish to any person any
information contained in the then current Prospectus or cause any
advertisement to be published in any newspaper or posted in any public
place without our consent and the consent of the appropriate Fund.
14 Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sales, and you agree to indemnify us and/or the Funds for any claim,
liability, expense or loss in any way arising out of a sale of Shares in
any state or jurisdiction not identified by us as a state or jurisdiction
in which such Shares are so registered or qualified. We agree to indemnify
you for any claim, liability, expense or loss in any way arising out of a
sale of shares in any state or jurisdiction identified by us as a state or
jurisdiction in which shares are so registered or qualified.
15 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
16 All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares and,
upon notice, to change the sales charge or discount or to modify, cancel or
change the terms of this Agreement. You agree that any order to purchase
Shares of the Funds placed by you after any notice of amendment to this
Agreement has been sent to you shall constitute your agreement to any such
agreement.
17 The names of your customers shall remain your sole property and shall not
be used by us for any purpose except for servicing and information mailings
in the normal course of business to Fund Shareholders.
18 Your acceptance of this Agreement constitutes a representation that you are
a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder.
All communications to us should be sent to A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046. Any notice to you shall
be duly given if mailed or telegraphed to you at the address specified by
you below or to such other address as you shall have designated in writing
to us. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ MICHAEL J. CEMO
------------------ ---------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
05/95
<PAGE> 3
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
BANK SELLING GROUP AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges With CDSC
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund Yes No
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes No
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Government Securities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Class A Yes Yes
AIM Money Market Fund Class C No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Limited Maturity Treasury Shares, AIM Money Market Fund
Class C, AIM Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Shares.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
09/96
<PAGE> 1
EXHIBIT 7(b)
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
Effective as of March 8, 1994
As Restated September 18, 1995
<PAGE> 2
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITION OF TERMS AND CONSTRUCTION . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Accrued Benefit . . . . . . . . . . . . . . . . . . . 1
(b) Actuary . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Administrator . . . . . . . . . . . . . . . . . . . . 1
(d) AIM Funds . . . . . . . . . . . . . . . . . . . . . . 1
(e) Board of Directors . . . . . . . . . . . . . . . . . 1
(f) Code . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) Compensation . . . . . . . . . . . . . . . . . . . . 2
(h) Deferred Retirement Date . . . . . . . . . . . . . . 2
(i) Director . . . . . . . . . . . . . . . . . . . . . . 2
(j) Disability . . . . . . . . . . . . . . . . . . . . . 2
(k) Effective Date . . . . . . . . . . . . . . . . . . . 2
(l) Fund . . . . . . . . . . . . . . . . . . . . . . . . 2
(m) Normal Retirement Date . . . . . . . . . . . . . . . 2
(n) Participant . . . . . . . . . . . . . . . . . . . . . 2
(o) Plan . . . . . . . . . . . . . . . . . . . . . . . . 2
(p) Plan Year . . . . . . . . . . . . . . . . . . . . . . 2
(q) Retirement . . . . . . . . . . . . . . . . . . . . . 2
(r) Retirement Benefit . . . . . . . . . . . . . . . . . 3
(s) Service . . . . . . . . . . . . . . . . . . . . . . . 3
(t) Year of Service . . . . . . . . . . . . . . . . . . . 3
1.2 Plurals and Gender . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II PARTICIPATION . . . . . . . . . . . . . . . . . . . . . 4
2.1 Commencement of Participation . . . . . . . . . . . . . . . . 4
2.2 Termination of Participation . . . . . . . . . . . . . . . . . 4
2.3 Resumption of Participation . . . . . . . . . . . . . . . . . 4
2.4 Determination of Eligibility . . . . . . . . . . . . . . . . . 4
-i-
<PAGE> 3
Page
----
ARTICLE III BENEFITS UPON RETIREMENT AND OTHER
TERMINATION OF SERVICE. . . . . . . . . . . . . . . . . 4
3.1 Retirement. . .. . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Termination of Service Before Retirement . . . . . . . . . . . 5
3.3 Termination of Service by Reason of Death. . . . . . . . . . . 5
3.4 Benefits Calculated in the Aggregate for all of the AIM Funds. 5
ARTICLE IV DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . 5
4.1 Death Prior to Commencement of Benefits . . . . . . . . . . . 5
4.2 Death Subsequent to Commencement of Benefits . . . . . . . . 5
4.3 Death of Spouse . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V SUSPENSION OF BENEFITS, ETC. . . . . . . . . . . . . . 6
5.1 Suspension of Benefits Upon Resumption of Service . . . . . . 6
5.2 Payments Due Missing Persons . . . . . . . . . . . . . . . . . 6
ARTICLE VI ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . 7
6.1 Appointment of Administrator . . . . . . . . . . . . . . . . . 7
6.2 Powers and Duties of Administrator . . . . . . . . . . . . . . 7
6.3 Action by Administrator . . . . . . . . . . . . . . . . . . . 8
6.4 Participation by Administrators . . . . . . . . . . . . . . . 8
6.5 Agents and Expenses. . . . . . . . . . . . . . . . . . . . . . 8
6.6 Allocation of Duties . . . . . . . . . . . . . . . . . . . . . 8
6.7 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 9
6.8 Administrator's Action Conclusive . . . . . . . . . . . . . . 9
6.9 Records and Reports . . . . . . . . . . . . . . . . . . . . . 9
6.10 Information from the AIM Funds . . . . . . . . . . . . . . . . 9
6.11 Reservation of Rights by Boards of Directors . . . . . . . . . 9
6.12 Liability and Indemnification. . . . . . . . . . . . . . . . . 9
ARTICLE VII AMENDMENTS AND TERMINATION . . . . . . . . . . . . . . 10
7.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 10
8.1 Rights of Creditors . . . . . . . . . . . . . . . . . . . . . 10
8.2 Liability Limited. . . . . . . . . . . . . . . . . . . . . . . 11
8.3 Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Cooperation of Parties . . . . . . . . . . . . . . . . . . . . 11
8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 11
8.6 Nonguarantee of Directorship . . . . . . . . . . . . . . . . . 12
8.7 Counsel . . . . . . . . . . . . . . . .. . . . . . . . . . . . 12
8.8 Spendthrift Provision . . . . . . . . . . . . . . . . . . . . 12
8.9 Forfeiture for Cause . . . . . . . . . . . . . . . . . . . . . 12
-ii-
<PAGE> 4
Page
----
ARTICLE IX CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . 12
9.1 Notice of Denial . . . . . . . . . . . . . . . . . . . . . . . 12
9.2 Right to Reconsideration . . . . . . . . . . . . . . . . . . . 13
9.3 Review of Documents. . . . . . . . . . . . . . . . . . . . . . 13
9.4 Decision by Administrator. . . . . . . . . . . . . . . . . . . 13
9.5 Notice by Administrator. . . . . . . . . . . . . . . . . . . . 13
-iii-
<PAGE> 5
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
PREAMBLE
Effective as of March 8, 1994, the regulated investment
companies managed, administered and/or distributed by AIM Advisors, Inc. or its
affiliates (the "AIM Funds") have adopted THE AIM FUNDS RETIREMENT PLAN FOR
ELIGIBLE DIRECTORS/TRUSTEES (the "Plan") for the benefit of each of the
directors and trustees of each of the AIM Funds who is not an employee of any
of the AIM Funds, A I M Management Group Inc. or any of their affiliates. As
the Plan does not benefit any employees of the AIM Funds, it is not intended to
be classified as an employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
ARTICLE I
DEFINITION OF TERMS AND CONSTRUCTION
------------------------------------
1.1 Definitions.
------------
Unless a different meaning is plainly implied by the context,
the following terms as used in this Plan shall have the following meanings:
(a) "Accrued Benefit" shall mean, as of any date prior to
a Participant's Normal Retirement Date, his Retirement Benefit commencing on
his Normal Retirement Date, but based upon his Compensation and Years of
Service computed as of such date of determination.
(b) "Actuary" shall mean the independent actuary selected
by the Administrator.
(c) "Administrator" shall mean the administrative
committee provided for in Article VI.
(d) "AIM Funds" shall mean the regulated investment
companies managed, administered or distributed by A I M Advisors, Inc. or its
affiliates.
(e) "Board of Directors" shall mean the Board of
Directors of each of the AIM Funds.
<PAGE> 6
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute.
(g) "Compensation" shall mean, for any Director, the
amount of the retainer paid or accrued by the AIM Funds for such Director
during the twelve month period immediately preceding the Director's Retirement,
including amounts deferred under a separate agreement between the AIM Funds and
the Director. The amount of such retainer Compensation shall be as determined
by the Administrator.
(h) "Deferred Retirement Date" shall mean the first day
of the month coincident with or next following the date on which a Participant
terminated Service after his Normal Retirement Date.
(i) "Director" shall mean an individual who is a director
or trustee of one or more of the AIM Funds which have adopted the Plan but who
is not an employee of any of the AIM Funds, A I M Management Group Inc. or any
of their affiliates.
(j) "Disability" shall mean the inability of the
Participant to participate in meetings of the Board of Directors, either in
person or by telephone, for a period of at least nine (9) months.
(k) "Effective Date" shall mean March 8, 1994.
(l) "Fund" shall mean an AIM Fund which has adopted this
Plan.
(m) "Normal Retirement Date" shall mean, the date on
which a Participant has both attained age 65 (or at least age 55 in the event
of the Director's termination of Service by reason of death or Disability) and
has completed at least five continuous and non-forfeited Years of Service (and
thirty months of Service with one or more of the AIM Funds).
(n) "Participant" shall mean a Director who has met all
of the eligibility requirements of the Plan and who is currently included in
the Plan as provided in Article II hereof.
(o) "Plan" shall mean the "AIM Funds Retirement Plan for
Eligible Directors/Trustees" as described herein or as hereafter amended from
time to time.
(p) "Plan Year" shall mean the calendar year.
(q) "Retirement" shall mean a Director's termination of
his active Service with the AIM Funds on or after his Normal Retirement Date,
due to his death, Disability, or voluntary or involuntary termination of his
Service.
(r) "Retirement Benefit" shall mean the benefit described
under Section 3.1 hereof.
-2-
<PAGE> 7
(s) "Service" shall mean an individual's serving as a
Director of one or more of the AIM Funds. Furthermore, any unbroken service
provided by a Participant (i) to an AIM Fund immediately prior to its being
managed or administered by A I M Advisors, Inc. (or any of its affiliates) or
(ii) to a predecessor of an AIM Fund immediately prior to its being merged into
such AIM Fund, will be taken into account in determining such Participant's
Years of Service, subject to all restrictions and other forfeiture provisions
contained herein.
(t) "Year of Service" shall mean a twelve consecutive
month period of Service. For all purposes in this Plan, if a Participant's
Service terminates prior to his Retirement, he shall forfeit credit for all
Years of Service completed prior to such termination unless (a) he again
becomes a Director and (b) the number of Years of Service he accumulated prior
to such termination exceeded the number of years in which he did not serve as a
Director.
1.2 Plurals and Gender.
Where appearing in the Plan, the masculine gender shall
include the feminine and neuter genders, and the singular shall include the
plural, and vice versa, unless the context clearly indicates a different
meaning.
1.3 Directors/Trustees.
Where appropriate, the term "director" shall refer to
"trustee", "directorship" shall refer to "trusteeship" and "Board of Directors"
shall refer to "Board of Trustees."
1.4 Headings.
The headings and sub-headings in this Plan are inserted for
the convenience of reference only and are to be ignored in any construction of
the provisions hereof.
1.5 Severability.
In case any provision of this Plan shall be held illegal or
void, such illegality or invalidity shall not affect the remaining provisions
of this Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been inserted
herein.
-3-
<PAGE> 8
ARTICLE II
PARTICIPATION
-------------
2.1 Commencement of Participation.
------------------------------
Each Director shall become a Participant hereunder on the date
his directorship of one or more of the AIM Funds commences.
2.2 Termination of Participation.
-----------------------------
After commencement or resumption of his participation, a
Director shall remain a Participant until the earliest of the following dates:
(a) His actual Retirement date;
(b) His date of death;
(c) The date on which he otherwise incurs a termination
of Service; or
(d) The effective date of the termination of the Plan.
2.3 Resumption of Participation.
----------------------------
Any Participant whose Service terminates and who thereafter
again becomes a Director shall resume participation immediately upon again
becoming a Director except that, as provided in Section 1.1(t) hereof, if his
Service is terminated prior to his Normal Retirement Date, for all purposes of
this Plan he shall forfeit credit for all Years of Service completed prior to
such termination of his Service.
2.4 Determination of Eligibility.
-----------------------------
The Administrator shall determine the eligibility of Directors
in accordance with the provisions of this Article.
ARTICLE III
BENEFITS UPON
-------------
RETIREMENT AND OTHER TERMINATION OF SERVICE
-------------------------------------------
3.1 Retirement.
-----------
Upon Retirement a Participant shall be entitled to receive an
annual benefit from the AIM Funds commencing on the first day of the calendar
quarter coincident with or next following his date of Retirement, payable in
quarterly installments for a period of no more than
-4-
<PAGE> 9
ten (10) years (or, if less, the number of his Years of Service) equal
to seventy-five percent (75%) of his Compensation.
3.2 Termination of Service Before Retirement.
-----------------------------------------
In the event that a Participant's Service terminates by reason
of death, Disability or removal by the Board for cause (as defined in Section
8.9) prior to his Normal Retirement Date, he shall not be entitled to receive
any benefits hereunder. If a Participant's Service terminates for any other
reason and he has accumulated at least five (5) continuous and non-forfeited
Years of Service, he shall be entitled to receive his Accrued Benefit
determined as of such date of termination.
3.3 Termination of Service by Reason of Death.
------------------------------------------
No benefits will be paid under this Plan with respect to a
Participant after his death other than as provided in Article IV.
3.4 Benefits Calculated in the Aggregate for all of the AIM Funds.
--------------------------------------------------------------
With respect to each Participant, the benefits payable
hereunder shall be based on the aggregate Compensation paid by the AIM Funds
and on the Participant's non-forfeited Years of Service. Each Fund's share of
the obligation to provide such benefits shall be determined by use of
accounting methods adopted by the Administrator.
ARTICLE IV
DEATH BENEFITS
--------------
4.1 Death Prior to Commencement of Benefits.
----------------------------------------
In the event of a Participant's death subsequent to his Normal
Retirement Date, but prior to the commencement of his Retirement Benefits under
Article III hereof, the surviving spouse (if any) of such Participant shall be
entitled to receive a quarterly survivor's benefit for a period of no more than
ten (10) years (or, if less, the number of the Participant's Years of Service)
beginning on the first day of the calendar quarter next following the date of
the Participant's death equal to fifty percent (50%) of the amount of the
quarterly installments of Retirement Benefits that would have been paid to the
Participant under Sections 3.1 or 3.2 hereof had his Retirement occurred on his
date of death.
4.2 Death Subsequent to Commencement of Benefits.
---------------------------------------------
In the event a Participant dies after the commencement of his
Retirement Benefit under Article III, but prior to the cessation of the payment
of such Retirement Benefits, the surviving spouse (if any) of such Participant
shall be entitled to receive survivor's benefits equal to fifty percent (50%)
of the amount of the annual Retirement Benefit payable to the Participant
-5-
<PAGE> 10
under Article III hereunder, paid at such times, and for such period, as such
Retirement Benefit would have continued to have been paid to the Participant
had he not died.
4.3 Death of Spouse.
----------------
(a) In the event a Participant is not survived by a
spouse, no benefits will be paid hereunder upon the Participant's death.
(b) If a deceased Participant's surviving spouse dies
while receiving survivor's benefits hereunder, any installments not paid at the
time of the surviving spouse's death shall be forfeited.
ARTICLE V
SUSPENSION OF BENEFITS, ETC.
----------------------------
5.1 Suspension of Benefits Upon Resumption of Service.
--------------------------------------------------
In the case of a Participant who, at a time when he is
receiving Retirement Benefits under Article III of this Plan, resumes Service
with any AIM Fund, such Retirement Benefits shall be suspended until his
subsequent Retirement, termination of Service or death. Subject to the Years
of Service limitations of Section 3.1 hereof, in the event of his Retirement
or termination of Service following such a suspension, the quarterly amount of
his remaining Retirement Benefits shall thereafter be adjusted, if
appropriate, to reflect any additional Years of Service completed by, or a
higher rate of Compensation received by, such Participant.
5.2 Payments Due Missing Persons.
-----------------------------
The Administrator shall make a reasonable effort to locate all
persons entitled to benefits (including Retirement Benefits and survivor's
benefits for spouses) under the Plan; however, notwithstanding any provisions
of this Plan to the contrary, if, after a period of 5 years from the date any
of such benefits first become due, any such persons entitled to benefits have
not been located, their rights under the Plan shall stand suspended. Before
this provision becomes operative, the Administrator shall send a certified
letter to all such persons (if any) at their last known address advising them
that their benefits under the Plan shall be suspended. Any such suspended
amounts shall be held by the AIM Funds for a period of 3 additional years (or a
total of 8 years from the time the benefits first became payable) and
thereafter such amounts shall be forfeited.
-6-
<PAGE> 11
ARTICLE VI
ADMINISTRATOR
-------------
6.1 Appointment of Administrator.
-----------------------------
This Plan shall be administered by the Nominating and
Compensation Committees of the Boards of Directors of the AIM Funds. The
members of such committees are not "interested persons" (within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940) of any of the AIM
Funds. The term "Administrator" as used in this Plan shall refer to the
members of such committees, either individually or collectively, as
appropriate.
6.2 Powers and Duties of Administrator.
-----------------------------------
Except as provided below, the Administrator shall have the
following duties and responsibilities in connection with the administration of
this Plan:
(a) To promulgate and enforce such rules, regulations and
procedures as shall be proper for the efficient administration of the Plan;
(b) To determine all questions arising in the
administration, interpretation and application of the Plan, including questions
of eligibility and of the status and rights of Participants and any other
persons hereunder;
(c) To decide any dispute arising hereunder; provided,
however, that no Administrator shall participate in any matter involving any
questions relating solely to his own participation or benefits under this Plan;
(d) To advise the Boards of Directors of the AIM Funds
regarding the known future need for funds to be available for distribution;
(e) To correct defects, supply omissions and reconcile
inconsistencies to the extent necessary to effectuate the Plan;
(f) To compute the amount of benefits and other payments
which shall be payable to any Participant or surviving spouse in accordance
with the provisions of the Plan and to determine the person or persons to whom
such benefits shall be paid;
(g) To make recommendations to the Boards of Directors of
the AIM Funds with respect to proposed amendments to the Plan;
(h) To file all reports with government agencies,
Participants and other parties as may be required by law, whether such reports
are initially the obligation of the AIM Funds, or the Plan;
-7-
<PAGE> 12
(i) To engage the Actuary of the Plan and to cause the
liabilities of the Plan to be evaluated by the Actuary; and
(j) To have all such other powers as may be necessary to
discharge its duties hereunder.
6.3 Action by Administrator.
------------------------
The Administrator may elect a Chairman and Secretary from
among its members and may adopt rules for the conduct of its business. A
majority of the members then serving shall constitute a quorum for the
transacting of business. All resolutions or other action taken by the
Administrator shall be by vote of a majority of those present at such meeting
and entitled to vote. Resolutions may be adopted or other action taken without
a meeting upon written consent signed by at least a majority of the members.
All documents, instruments, orders, requests, directions, instructions and
other papers shall be executed on behalf of the Administrator by either the
Chairman or the Secretary of the Administrator, if any, or by any member or
agent of the Administrator duly authorized to act on the Administrator's
behalf.
6.4 Participation by Administrators.
--------------------------------
No Administrator shall be precluded from becoming a
Participant in the Plan if he would be otherwise eligible, but he shall not be
entitled to vote or act upon matters or to sign any documents relating
specifically to his own participation under the Plan, except when such matters
or documents relate to benefits generally. If this disqualification results in
the lack of a quorum, then the Boards of Directors, by majority vote of the
members of a majority of such Boards of Directors (a "Majority Vote"), shall
appoint a sufficient number of temporary Administrators, who shall serve for
the sole purpose of determining such a question.
6.5 Agents and Expenses.
--------------------
The Administrator may employ agents and provide for such
clerical, legal, actuarial, accounting, medical, advisory or other services as
it deems necessary to perform its duties under this Plan. The cost of such
services and all other expenses incurred by the Administrator in connection
with the administration of the Plan shall be allocated to each Fund pursuant to
the method utilized under Section 3.4 hereof with respect to costs related to
benefit accruals. For purposes of the preceding sentence, if an individual
serves as a Director for more than one Fund, he shall be deemed to be a
separate Director for each such Fund in determining the aggregate number of
Directors of the AIM Funds.
6.6 Allocation of Duties.
---------------------
The duties, powers and responsibilities reserved to the
Administrator may be allocated among its members so long as such allocation is
pursuant to written procedures adopted by the Administrator, in which case no
Administrator shall have any liability, with respect to any duties, powers or
responsibilities not allocated to him, for the acts or omissions of any other
Administrator.
-8-
<PAGE> 13
6.7 Delegation of Duties.
---------------------
The Administrator may delegate any of its duties to employees
of A I M Advisors, Inc. or any of its affiliates or to any other person or
firm, provided that the Administrator shall prudently choose such agents and
rely in good faith on their actions.
6.8 Administrator's Action Conclusive.
----------------------------------
Any action on matters within the discretion of the
Administrator shall be final and conclusive.
6.9 Records and Reports.
--------------------
The Administrator shall maintain adequate records of its
actions and proceedings in administering this Plan and shall file all reports
and take all other actions as it deems appropriate in order to comply with any
federal or state law.
6.10 Information from the AIM Funds.
-------------------------------
The AIM Funds shall promptly furnish all necessary information
to the Administrator to permit it to perform its duties under this Plan. The
Administrator shall be entitled to rely upon the accuracy and completeness of
all information furnished to it by the AIM Funds, unless it knows or should
have known that such information is erroneous.
6.11 Reservation of Rights by Boards of Directors.
---------------------------------------------
When rights are reserved in this plan to the Boards of
Directors, such rights shall be exercised only by Majority Vote of the Boards
of Directors, except where the Boards of Directors, by unanimous written
resolution, delegate any such rights to one or more persons or to the
Administrator. Subject to the rights reserved to the Boards of Directors as
set forth in this Plan, no member of the Boards of Directors shall have any
duties or responsibilities under this Plan, except to the extent he shall be
acting in the capacity of an Administrator.
6.12 Liability and Indemnification.
------------------------------
(a) The Administrator shall perform all duties required
of it under this Plan in a prudent manner. The Administrator shall not be
responsible in any way for any action or omission of the AIM Funds or their
employees in the performance of their duties and obligations as set forth in
this Plan. The Administrator also shall not be responsible for any act or
omission of any of its agents provided that such agents were prudently chosen
by the Administrator and that the Administrator relied in good faith upon the
action of such agents.
(b) Except for its own gross negligence, willful
misconduct or willful breach of the terms of this Plan, the Administrator shall
be indemnified and held harmless by the AIM Funds against any and all
liability, loss, damages, cost and expense which may arise, occur by reason of,
or be based upon, any matter connected with or related to this Plan or its
-9-
<PAGE> 14
administration (including, but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending any litigation,
commenced or threatened, or in settlement of any such claim).
ARTICLE VII
AMENDMENTS AND TERMINATION
--------------------------
7.1 Amendments.
-----------
The Boards of Directors reserve the right at any time and from
time to time, and retroactively if deemed necessary or appropriate by them, to
amend in whole or in part by Majority Vote any or all of the provisions of this
Plan, provided that:
(a) No amendment shall make it possible for any part of a
Participant's or former Participant's Retirement Benefit to be used for, or
diverted to, purposes other than for the exclusive benefit of such Participant
or surviving spouse, except to the extent otherwise provided in this Plan;
(b) No amendment may reduce any Participant's or former
Participant's Retirement Benefit as of the effective date of the amendment;
Amendments may be made in the form of Board of Directors'
resolutions or separate written document.
7.2 Termination.
------------
Except as provided below, the Boards of Directors reserve the
right to terminate this Plan at any time by Majority Vote by giving to the
Administrator notice in writing of such desire to terminate. The Plan shall
terminate upon the date of receipt of such notice and the rights of all
Participants to their Retirement Benefits (determined as of the date the Plan
is terminated) shall become payable upon the effective date of the termination
of the Plan in quarterly installments or in an actuarially equivalent lump sum
as determined by the Administrator.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Rights of Creditors.
--------------------
(a) The Plan is unfunded. Neither the Participants nor
any other persons shall have any interest in any fund or in any specific asset
or assets of any of the AIM Funds by
-10-
<PAGE> 15
reason of any Accrued or Retirement Benefit hereunder, nor any rights to
receive distribution of any Retirement Benefit except and as to the extent
expressly provided hereunder.
(b) The Accrued and Retirement Benefits of each
Participant are unsecured and shall be subject to the claims of the general
creditors of the AIM Funds.
8.2 Liability Limited.
------------------
Neither the AIM Funds, the Administrator, nor any agents,
employees, officers, directors or shareholders of any of them, nor any other
person shall have any liability or responsibility with respect to this Plan,
except as expressly provided herein.
8.3 Incapacity.
-----------
If the Administrator shall receive evidence satisfactory to it
that a Participant or surviving spouse entitled to receive any benefit under
the Plan is, at the time when such benefit becomes payable, physically or
mentally incompetent to receive such benefit and to give a valid release
therefor, and that another person or an institution is then maintaining or has
custody of such Participant or surviving spouse and that no guardian, committee
or other representative of the estate of such Participant or surviving spouse
shall have been duly appointed, the Administrator may make payment of such
benefit otherwise payable to such Participant or surviving spouse to such other
person or institution, and the release of such other person or institution
shall be a valid and complete discharge for the payment of such benefit.
8.4 Cooperation of Parties.
-----------------------
All parties to this Plan and any person claiming any interest
hereunder agree to perform any and all acts and execute any and all documents
and papers which are necessary or desirable for carrying out this Plan or any
of its provisions.
8.5 Governing Law.
--------------
All rights under the Plan shall be governed by and construed
in accordance with rules of Federal law applicable to such plans and, to the
extent not preempted, by the laws of the State of Texas without regard to
principles of conflicts of law. No action shall be brought by or on behalf of
any Participant for or with respect to benefits due under this Plan unless the
person bringing such action has timely exhausted the Plan's claim review
procedure. Any such action must be commenced within three years. This
three-year period shall be computed from the earlier of (a) the date a final
determination denying such benefit, in whole or in part, is issued under the
Plan's claim review procedure or (b) the date such individual's cause of action
first accrued. Any dispute, controversy or claim arising out of or in
connection with this Plan (including the applicability of this arbitration
provision) and not resolved pursuant to the Plan's claim review procedure shall
be determined and settled by arbitration conducted by the American Arbitration
Association ("AAA") in the County and State of the Funds' principal place of
business and in accordance with the then existing rules, regulations, practices
and procedures of the AAA. Any award in such arbitration shall be final,
conclusive and binding upon the
-11-
<PAGE> 16
parties to the arbitration and may be enforced by either party in any court of
competent jurisdiction. Each party to the arbitration will bear its own costs
and fees (including attorney's fees).
8.6 Nonguarantee of Directorship.
-----------------------------
Nothing contained in this Plan shall be construed as a
guaranty or right of any Participant to be continued as a Director of one or
more of the AIM Funds (or of a right of a Director to any specific level of
Compensation) or as a limitation of the right of the AIM Funds to remove any of
its directors.
8.7 Counsel.
--------
The Administrator may consult with legal counsel, who may be
counsel for one or more of the Boards of Directors of the AIM Funds and for the
Administrator, with respect to the meaning or construction of this Plan, its
obligations or duties hereunder or with respect to any action or proceeding or
any question of law, and they shall be fully protected with respect to any
action taken or omitted by them in good faith pursuant to the advice of legal
counsel.
8.8 Spendthrift Provision.
----------------------
A Participant's interest in his Accrued Benefit or Retirement
Benefit may not be transferred, alienated, assigned nor become subject to
execution, garnishment or attachment, and any attempt to do so will render
benefits hereunder immediately forfeitable.
8.9 Forfeiture for Cause.
---------------------
Notwithstanding any other provision of this Plan to the
contrary, any benefits to which a Participant (or his surviving spouse) may
otherwise be entitled hereunder will be forfeited in the event the
Administrator, in its sole discretion, determines that a Participant's
termination of Service is due to such Participant's willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Director.
ARTICLE IX
CLAIMS PROCEDURE
----------------
9.1 Notice of Denial.
-----------------
If a Participant is denied any Retirement Benefit (or a
surviving spouse is denied a survivor's benefit) under this Plan, either in
total or in an amount less than the full Retirement Benefit to which he would
normally be entitled, the Administrator shall advise the Participant (or
surviving spouse) in writing of the amount of his Retirement Benefit (or
survivor's benefit), if any, and the specific reasons for the denial. The
Administrator shall also furnish the Participant (or surviving spouse) at that
time with a written notice containing:
-12-
<PAGE> 17
(a) A specific reference to pertinent Plan provisions.
(b) A description of any additional material or
information necessary for the Participant (or surviving spouse) to perfect his
claim, if possible, and an explanation of why such material or information is
needed.
(c) An explanation of the Plan's claim review procedure.
9.2 Right to Reconsideration.
-------------------------
Within 60 days of receipt of the information stated in Section
9.1 above, the Participant (or surviving spouse) shall, if he desires further
review, file a written request for reconsideration with the Administrator.
9.3 Review of Documents.
--------------------
So long as the Participant's (or surviving spouse's) request
for review is pending (including the 60 day period in 9.2 above), the
Participant (or surviving spouse) or his duly authorized representative may
review pertinent Plan documents and may submit issues and comments in writing
to the Administrator.
9.4 Decision by Administrator.
--------------------------
A final and binding decision shall be made by the
Administrator within 60 days of the filing by the Participant (or surviving
spouse) of his request for reconsideration, provided, however, that if the
Administrator, in its discretion, feels that a hearing with the Participant (or
surviving spouse) or his representative present is necessary or desirable, this
period shall be extended an additional 60 days.
9.5 Notice by Administrator.
------------------------
The Administrator's decision shall be conveyed to the
Participant (or surviving spouse) in writing and shall include specific reasons
for the provisions on which the decision is based.
-13-
<PAGE> 1
EXHIBIT 7(d)
THE AIM GROUP OF FUNDS
DEFERRED COMPENSATION PLAN
FOR ELIGIBLE DIRECTORS/TRUSTEES
<PAGE> 2
DEFERRED COMPENSATION AGREEMENT
SUMMARY
Your Deferred Compensation Agreement (the "Agreement") allows
you to defer some or all of your annual trustee's fees otherwise payable by the
Funds. Deferred fees are deemed invested in certain mutual funds selected by
you. The deferral is pre-tax, and the deferred amount and the credited gains,
losses and income are not subject to tax until paid out to you.
Your deferrals (and investment experience) are posted to a
bookkeeping account maintained by the Funds in your name. In order for you to
enjoy the tax deferral, the payments due under the Agreement will be paid from
the Funds' general assets, and you are considered a general unsecured creditor
of the Funds; you may not transfer your right to receive payments under the
Agreement to any other person, nor may you pledge that right to secure any debt
or other obligation; finally, an election to defer must be made in writing
before the first day of the calendar year for which the fees are earned (the
"Election Date") and elections can be changed only prospectively, effective for
the next calendar year.
An important change has been made to your Agreement to give
you greater flexibility to select the time of payment of amounts that you
defer: for amounts previously deferred and for future elections you now
designate a specific Payment Date.
PAYMENT DATE ELECTION
Deferred fees (and the income, gains and losses credited
during the deferral period) will be paid out in a single sum in cash within 30
days of the Payment Date elected for that deferral. (For payments in
connection with your termination of service as a trustee, see below.)
Deferrals must be for a minimum three year period (unless the
your retirement date under the Retirement Plan is earlier). Thus, the Payment
Date may be the first day of any calendar quarter that follows the third
anniversary of the applicable Election Date or your retirement date. For your
first Payment Date election that applies to previously deferred fees, the
Election Date is considered to be January 1, 1996. Thus, fees previously
deferred and fees payable for the calendar year beginning January 1, 1996 may
be deferred to the first day of any calendar quarter in any year from 1999.
EXTENDING A PAYMENT DATE
One year prior to any Payment Date, you will have a one-time
opportunity to extend that Date, provided that the additional period of
deferral satisfies the requirements described above.
<PAGE> 3
TERMINATION OF SERVICE
Upon your death, your account under the Agreement will be paid
out in a single sum in cash as soon as practicable. Payment will be made to
your designated Beneficiary or Beneficiaries or to your estate if there is no
surviving Beneficiary.
Upon termination of your service as trustee for any reason
other than death or your retirement (as defined in the Retirement Plan), your
account will be paid to you as a single sum (or in installments if you had
elected that method) in cash within three months following the end of the
fiscal year in which you terminate, regardless of the Payment Dates you
elected.
<PAGE> 4
ARTICLE Page
------- ----
1. Definitions of Terms and Construction 1
2. Period During Which Compensation Deferrals are Permitted 2
3. Compensation Deferrals 2
4. Distributions from Deferral Account 4
5. Amendments and Termination 5
6. Miscellaneous
<PAGE> 5
DEFERRED COMPENSATION AGREEMENT
-------------------------------
AGREEMENT, made on this __ day of _______, 19__, by and
between the registered open-end investment companies listed on Appendix A
hereto (the "Funds"), and
________________________________________________________________ (the
"Director") residing at ___________________________________________________.
WHEREAS, the Funds and the Director have entered into
agreements pursuant to which the Director will serve as a director/trustee of
the Funds; and
WHEREAS, the Funds and the Director have previously entered
into an additional agreement whereby the Funds will provide to the Director a
vehicle under which the Director can defer receipt of directors' fees payable
by the Funds and now desire to amend and restate such agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the Funds and the Director hereby
agree as follows:
1. DEFINITION OF TERMS AND CONSTRUCTION
------------------------------------
1.1 Definitions. Unless a different meaning is plainly implied by
the context, the following terms as used in this Agreement shall have the
following meanings:
(a) "Beneficiary" shall mean such person or persons
designated pursuant to Section 4.3 hereof to receive benefits after the death
of the Director.
(b) "Boards of Directors" shall mean the respective
Boards of Directors of the Funds.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute.
(d) "Compensation" shall mean the amount of directors'
fees paid by each of the Funds to the Director during a Deferral Year prior to
reduction for Compensation Deferrals made under this Agreement.
(e) "Compensation Deferral" shall mean the amount or
amounts of the Director's Compensation deferred under the provisions of Section
3 of this Agreement.
-1-
<PAGE> 6
(f) "Deferral Accounts" shall mean the accounts
maintained to reflect the Director's Compensation Deferrals made pursuant to
Section 3 hereof and any other credits or debits thereto.
(g) "Deferral Year" shall mean each calendar year during
which the Director makes, or is entitled to make, Compensation Deferrals under
Section 3 hereof.
(h) "Retirement" shall have the same meaning as set forth
under the Retirement Plan.
(i) "Retirement Plan" shall mean the "AIM Funds
Retirement Plan for Eligible Directors/Trustees."
(j) "Valuation Date" shall mean the last business day of
each calendar year and any other day upon which the Funds makes valuations of
the Deferral Accounts.
1.2 Plurals and Gender. Where appearing in this Agreement the
singular shall include the plural and the masculine shall include the feminine,
and vice versa, unless the context clearly indicates a different meaning.
1.3 Directors and Trustees. Where appearing in this Agreement,
"Director" shall also refer to "Trustee" and "Board of Directors" shall also
refer to "Board of Trustees."
1.4 Headings. The headings and sub-headings in this Agreement are
inserted for the convenience of reference only and are to be ignored in any
construction of the provisions hereof.
1.5 Separate Agreement for Each Fund. This Agreement is drafted,
and shall be construed, as a separate agreement between the Director and each
of the Funds.
2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED
--------------------------------------------------------
2.1 Commencement of Compensation Deferrals. The Director may
elect, on a form provided by, and submitted to, the Presidents of the
respective Funds, to commence Compensation Deferrals under Section 3 hereof for
the period beginning on the later of (i) the date this Agreement is executed or
(ii) the date such form is submitted to the Presidents of the Funds.
2.2 Termination of Deferrals. The Director shall not be eligible
to make Compensation Deferrals after the earliest of the following dates:
(a) The date on which he ceases to serve as a Director of
all of the Funds; or
(b) The effective date of the termination of this
Agreement.
-2-
<PAGE> 7
3. COMPENSATION DEFERRALS
----------------------
3.1 Compensation Deferral Elections.
(a) On or prior to the first day of any Deferral Year,
the Director may elect, on the form described in Section 2.1 hereof, to defer
the receipt of all or a portion of his Compensation for such Deferral Year.
Such writing shall set forth the amount of such Compensation Deferral (in whole
percentage amounts). Such election shall continue in effect for all subsequent
Deferral Years unless it is canceled or modified as provided below.
(b) Compensation Deferrals shall be withheld from each
payment of Compensation by the Funds to the Director based upon the percentage
amount elected by the Director under Section 3.1(a) hereof.
(c) The Director may cancel or modify the amount of his
Compensation Deferrals on a prospective basis by submitting to the Presidents
of the Funds a revised Compensation Deferral election form. Such change will
be effective as of the first day of the Deferral Year following the date such
revision is submitted to the Presidents of the Funds.
3.2 Valuation of Deferral Account.
(a) Each Fund shall establish a bookkeeping Deferral
Account to which will be credited an amount equal to the Director's
Compensation Deferrals under this Agreement made with respect to Compensation
earned from each such Fund. Compensation Deferrals shall be allocated to the
Deferral Accounts on the first business day following the date such
Compensation Deferrals are withheld from the Director's Compensation. As of
the date of this Agreement, the Deferral Accounts also shall be credited with
the amounts credited to the Director under each other outstanding elective
deferred compensation agreement entered into by and between the Funds and the
Director which is superseded by this Agreement pursuant to Section 6.11 hereof.
The Deferral Accounts shall be debited to reflect any distributions from such
Accounts. Such debits shall be allocated to the Deferral Accounts as of the
date such distributions are made.
(b) As of each Valuation Date, income, gain and loss
equivalents (determined as if the Deferral Accounts are invested in the manner
set forth under Section 3.3, below) attributable to the period following the
next preceding Valuation Date shall be credited to and/or deducted from the
Director's Deferral Accounts.
3.3 Investment of Deferral Account Balances.
(a) (1) The Director may select, from various options
made available by the Funds, the investment media in which all or part of his
Deferral Accounts shall be deemed to be invested.
-3-
<PAGE> 8
(2) The Director shall make an investment
designation on a form provided by the Presidents of the Funds which shall
remain effective until another valid direction has been made by the Director as
herein provided. The Director may amend his investment designation as of the
end of each calendar quarter by giving written direction to the Presidents of
the Funds at least thirty (30) days prior to the end of such calendar quarter.
A timely change to a Director's investment designation shall become effective
on the first day of the calendar quarter following receipt by the Presidents of
the Funds.
(3) The investment media deemed to be made
available to the Director, and any limitation on the maximum or minimum
percentages of the Director's Deferral Accounts that may be invested any
particular medium, shall be the same as from time-to-time communicated to the
Director by the Presidents of the Funds.
(b) Except as provided below, the Director's Deferral
Accounts shall be deemed to be invested in accordance with his investment
designations, provided such designations conform to the provisions of this
Section. If -
(1) the Director does not furnish the Presidents
of the Funds with complete, written investment instructions, or
(2) the written investment instructions from the
Director are unclear,
then the Director's election to make Compensation Deferrals hereunder shall be
held in abeyance and have no force or effect until such time as the Director
shall provide the Presidents of the Funds with complete investment
instructions. Notwithstanding the above, the Boards of Directors, in their
sole discretion, may disregard the Director's election and determine that all
Compensation Deferrals shall be deemed to be invested in a fund determined by
the Boards of Directors. In the event that any fund under which any portion of
the Director's Deferral Accounts is deemed to be invested ceases to exist, such
portion of the Deferral Accounts thereafter shall be held in the successor to
such fund, subject to subsequent deemed investment elections.
The Fund shall provide an annual statement to the Director
showing such information as is appropriate, including the aggregate amount in
the Deferral Accounts, as of a reasonably current date.
-4-
<PAGE> 9
4. DISTRIBUTIONS FROM DEFERRAL ACCOUNTS
------------------------------------
4.1 Payment Date and Methods.
(a) Designation of Date. Each deferral direction given
pursuant to Section 3.1 shall include designation of the Payment Date for the
value of the amount deferred. Such Payment Date shall be the first day of any
calendar quarter, subject to the limitation set forth in paragraph 4.1(c).
(b) Extension Date. One year before the Payment Date
initially designated pursuant to paragraph 4.1(a) above, the Participant may
irrevocably elect to extend such Payment Date to the first day of any calendar
quarter, subject to the limitation set forth in paragraph 4.1(c).
(c) Limitation. The Director shall select a Payment Date
(or extended Payment Date) that is no sooner than the earlier of (i) the
January 1 that follows the third anniversary of the Participant's deferral
election made pursuant to paragraph 4.1(a) or (b) or (ii) the January 1 of the
year after the Participant's Retirement.
(d) Methods of Payment. Distributions from the
Director's Deferral Accounts shall be paid in cash. A Participant may elect,
at the time a Payment Date is selected, to receive the amount which will become
payable as of such Payment Date in generally equal quarterly installments over
a period not to exceed ten (10) years. Except as may be elected pursuant to
this paragraph, all amounts becoming payable under this Plan shall be paid in a
single sum.
(e) Irrevocability. Except as provided in paragraph
4.1(b), a designation of a Payment Date and an election of installment payments
shall be irrevocable; provided, however, that payment shall be made or begin on
a different date as follows:
(1) Upon the Director's death, payment shall be
made in accordance with Section 4.2,
(2) Upon the Director's ceasing to serve as a
director of all of the Funds for reasons other than death or Retirement,
payment shall be made or begin within three months after the end of the
calendar year in which such termination occurs in accordance with the method
elected by the Director pursuant to paragraph 4.1(d), except that the Boards of
Directors, in their sole discretion, may accelerate the distribution of such
Deferral Accounts,
(3) Upon termination of this Agreement, payment
shall be made in accordance with Section 5.2, and
(4) In the event of the liquidation, dissolution
or winding up of a Fund or the distribution of all or substantially all of a
Fund's assets and property relating to one or
-5-
<PAGE> 10
more series of its shares to the shareholders of such series (for this purpose
a sale, conveyance or transfer of a Fund's assets to a trust, partnership,
association or corporation in exchange for cash, shares or other securities
with the transfer being made subject to, or with the assumption by the
transferee of, the liabilities of the Fund shall not be deemed a termination of
the Fund or such a distribution), all unpaid balances of the Deferral Accounts
related to such Fund as of the effective date thereof shall be paid in a lump
sum on such effective date.
4.2 Death Prior to Complete Distribution of Deferral Accounts.
Upon the death of the Director prior to the commencement of the distribution of
the amounts credited to his Deferral Accounts, the balance of such Accounts
shall be distributed to his Beneficiary in a lump sum as soon as practicable
after the Director's death. In the event of the death of the Director after
the commencement of such distribution, but prior to the complete distribution
of his Deferral Accounts, the balance of the amounts credited to his Deferral
Accounts shall be distributed to his Beneficiary over the remaining period
during which such amounts were distributable to the Director under Section 4.1
hereof. Notwithstanding the above, the Boards of Directors, in their sole
discretion, may accelerate the distribution of the Deferral Accounts.
4.3 Designation of Beneficiary. For purposes of Section 4.2
hereof, the Director's Beneficiary shall be the person or persons so designated
by the Director in a written instrument submitted to the Presidents of the
Funds. In the event the Director fails to properly designate a Beneficiary,
his Beneficiary shall be the person or persons in the first of the following
classes of successive preference Beneficiaries surviving at the death of the
Director: the Director's (1) surviving spouse or (2) estate.
4.4 Payments Due Missing Persons. The Funds shall make a
reasonable effort to locate all persons entitled to benefits under this
Agreement. However, notwithstanding any provisions of this Agreement to the
contrary, if, after a period of five (5) years from the date such benefit shall
be due, any such persons entitled to benefits have not been located, their
rights under this Agreement shall stand suspended. Before this provision
becomes operative, the Funds shall send a certified letter to all such persons
to their last known address advising them that their benefits under this
Agreement shall be suspended. Any such suspended amounts shall be held by the
Funds for a period of three (3) additional years (or a total of eight (8) years
from the time the benefits first become payable) and thereafter, if unclaimed,
such amounts shall be forfeited.
5. AMENDMENTS AND TERMINATION
--------------------------
5.1 Amendments.
(a) The Funds and the Director may, by a written
instrument signed by, or on behalf of, such parties, amend this Agreement at
any time and in any manner.
-6-
<PAGE> 11
(b) The Funds reserve the right to amend, in whole or in
part, and in any manner, any or all of the provisions of this Agreement by
action of their Boards of Directors for the purposes of complying with any
provision of the Code or any other technical or legal requirements, provided
that:
(1) No such amendment shall make it possible for
any part of the Director's Deferral Accounts to be used for, or diverted to,
purposes other than for the exclusive benefit of the Director or his
Beneficiaries, except to the extent otherwise provided in this Agreement;
and
(2) No such amendment may reduce the amount of
the Director's Deferral Accounts as of the effective date of such amendment.
5.2 Termination. The Director and the Funds may, by written
instrument signed by, or on behalf of, such parties, terminate this Agreement
at any time. In the event of the termination of this Agreement, the Boards of
Directors, in their sole discretion, may choose to pay out the Director's
Deferral Accounts prior to the designated Payment Dates. Otherwise, following
a termination of the Plan, such Accounts shall continue to be maintained in
accordance with the provisions of this Plan until the time they are paid out.
6. MISCELLANEOUS.
--------------
6.1 Rights of Creditors.
(a) This Agreement is unfunded. Neither the Director nor
any other persons shall have any interest in any specific asset or assets of
the Funds by reason of any Deferral Accounts hereunder, nor any rights to
receive distribution of his Deferral Accounts except and as to the extent
expressly provided hereunder. The Funds shall not be required to purchase,
hold or dispose of any investments pursuant to this Agreement; however, if in
order to cover their obligations hereunder the Funds elect to purchase any
investments the same shall continue for all purposes to be a part of the
general assets and property of the Funds, subject to the claims of their
general creditors and no person other than the Funds shall by virtue of the
provisions of this Agreement have any interest in such assets other than an
interest as a general creditor.
(b) The rights of the Director and the Beneficiaries to
the amounts held in the Deferral Accounts are unsecured and shall be subject to
the creditors of the Funds. With respect to the payment of amounts held under
the Deferral Accounts, the Director and his Beneficiaries have the status of
unsecured creditors of the Funds. This Agreement is executed on behalf of the
Funds by an officer, or other representative, of the Funds as such and not
individually. Any obligation of the Funds hereunder shall be an unsecured
obligation of the Funds and not of any other person.
-7-
<PAGE> 12
6.2 Agents. The Funds may employ agents and provide for such
clerical, legal, actuarial, accounting, advisory or other services as it deems
necessary to perform their duties under this Agreement. The Funds shall bear
the cost of such services and all other expenses they incur in connection with
the administration of this Agreement.
6.3 Liability and Indemnification. Except for their own gross
negligence, willful misconduct or willful breach of the terms of this
Agreement, the Funds shall be indemnified and held harmless by the Director
against liability or losses occurring by reason of any act or omission of the
Funds or any other person.
6.4 Incapacity. If the Funds shall receive evidence satisfactory
to them that the Director or any Beneficiary entitled to receive any benefit
under the Agreement is, at the time when such benefit becomes payable, a minor,
or is physically or mentally incompetent to receive such benefit and to give a
valid release therefor, and that another person or an institution is then
maintaining or has custody of the Director or Beneficiary and that no guardian,
committee or other representative of the estate of the Director or Beneficiary
shall have been duly appointed, the Funds may make payment of such benefit
otherwise payable to the Director or Beneficiary to such other person or
institution, including a custodian under a Uniform Gifts to Minors Act, or
corresponding legislation (who shall be an adult, a guardian of the minor or a
trust company), and the release of such other person or institution shall be a
valid and complete discharge for the payment of such benefit.
6.5 Cooperation of Parties. All parties to this Agreement and any
person claiming any interest hereunder agree to perform any and all acts and
execute any and all documents and papers which are necessary or desirable for
carrying out this Agreement or any of its provisions.
6.6 Governing Law. This Agreement is made and entered into in the
State of Texas and all matters concerning its validity, construction and
administration shall be governed by the laws of the State of Texas.
6.7 Nonguarantee of Directorship. Nothing contained in this
Agreement shall be construed as a contract or guarantee of the right of the
Director to be, or remain as, a director of any of the Funds or to receive any,
or any particular rate of, Compensation from any of the Funds.
6.8 Counsel. The Funds may consult with legal counsel with
respect to the meaning or construction of this Agreement, their obligations or
duties hereunder or with respect to any action or proceeding or any question of
law, and they shall be fully protected with respect to any action taken or
omitted by them in good faith pursuant to the advice of legal counsel.
6.9 Spendthrift Provision. The Director's and Beneficiaries'
interests in the Deferral Accounts may not be anticipated, sold, encumbered,
pledged, mortgaged, charged, transferred,
-8-
<PAGE> 13
alienated, assigned nor become subject to execution, garnishment or
attachment and any attempt to do so by any person shall render the Deferral
Accounts immediately forfeitable.
6.10 Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, or by nationally recognized overnight delivery service providing for a
signed return receipt, addressed to the Director at the home address set forth
in the Funds' records and to the Funds at the address set forth on the first
page of this Agreement, provided that all notices to the Funds shall be
directed to the attention of the Presidents of the Funds or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
6.11 Entire Agreement. This Agreement contains the entire
understanding between the Funds and the Director with respect to the payment of
non-qualified elective deferred compensation by the Fund to the Director.
Effective as of the date hereof, this Agreement replaces, and supersedes, all
other non-qualified elective deferred compensation agreements by and between
the Director and the Funds.
6.12 Interpretation of Agreement. Interpretations of, and
determinations (including factual determinations) related to, this Agreement
made by the Funds in good faith, including any determinations of the amounts of
the Deferral Accounts, shall be conclusive and binding upon all parties; and
the Funds shall not incur any liability to the Director for any such
interpretation or determination so made or for any other action taken by it in
connection with this Agreement in good faith.
6.13 Successors and Assigns. This Agreement shall be binding upon,
and shall inure to the benefit of, the Funds and their successors and assigns
and to the Director and his heirs, executors, administrators and personal
representatives.
6.14 Severability. In the event any one or more provisions of this
Agreement are held to be invalid or unenforceable, such illegality or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof and such other provisions shall remain in full force and
effect unaffected by such invalidity or unenforceability.
6.15 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument.
-9-
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
The Funds
________________________ By:_________________________
Witness Name:
Title:
________________________ ____________________________
Witness Director
-10-
<PAGE> 15
APPENDIX A
----------
AIM EQUITY FUNDS, INC.
AIMS FUNDS GROUP
AIM INTERNATIONAL FUNDS, INC.
AIM INVESTMENT SECURITIES FUNDS
AIM STRATEGIC INCOME FUND, INC.
AIM SUMMIT FUND, INC.
AIM TAX-EXEMPT FUNDS, INC.
AIM VARIABLE INSURANCE FUNDS, INC.
SHORT-TERM INVESTMENTS CO.
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
<PAGE> 16
DEFERRED COMPENSATION AGREEMENT
DEFERRAL ELECTION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the
"Agreement") dated as of ________________ by and between the undersigned and
the AIM Funds, I hereby make the following elections:
Deferral of Compensation
------------------------
Starting with Compensation to be paid to me with respect to
services provided by me to the AIM Funds after the date this election Form is
received by the AIM Funds, I hereby elect that ______ percent (_____%) of my
Compensation (as defined under the Agreement) be reduced and that the Fund
establish a bookkeeping account credited with amounts equal to the amount so
reduced (the "Deferral Account"). The Deferral Account shall be further
credited with income equivalents as provided under the Agreement. I understand
that this election will remain in effect with respect to Compensation I earn in
subsequent years unless I modify or revoke it. I further understand that such
modification or revocation will be effective only prospectively and will apply
commencing with the Compensation I earn in the calendar year that begins after
the change is received by you.
Payment Date
------------
I hereby designate ________ 1 (select the first month in any
calendar quarter) in the year ______ (select a year that is at least four years
after the year this election is made) as the Payment Date for the amounts
credited to my Deferral Account pursuant to the election made above. If my
Retirement (as defined in the Agreement) occurs sooner, I o do o do not (check
the appropriate box) want payment of such amounts to commence effective the
January 1 following my Retirement. I understand that amounts credited to my
Deferral Account may be paid to me prior to the Payment Date as provided in the
Agreement.
Payment Method
--------------
I hereby elect to receive the amounts credited to my Deferral
Account in (check one)
o a single payment in cash
o annual installments for a period of ____ (select no more than 10
years)
-12-
<PAGE> 17
beginning within 30 days following the payment date selected above.
I understand that the amounts credited to my Deferral Account
shall remain the general assets of the AIM Funds and that, with respect to the
payment of such amounts, I am merely a general creditor of the AIM Funds. I
may not sell, encumber, pledge, assign or otherwise alienate the amounts
credited to my Deferral Account.
I hereby agree that the terms of the Agreement are
incorporated herein and are made a part hereof. Dated as of the day and year
first above written.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-13-
<PAGE> 18
DEFERRED COMPENSATION AGREEMENT
INVESTMENT DIRECTION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the
"Agreement") dated as of ________________ by and between the undersigned and
the AIM Funds, I hereby elect that my Deferral Account under the Agreement be
considered to be invested as follows (in multiples of 10%):
AIM WEINGARTEN FUND ____________%
AIM CONSTELLATION FUND ____________%
AIM HIGH YIELD FUND ____________%
AIM INTERNATIONAL EQUITY FUND ____________%
AIM AGGRESSIVE GROWTH EQUITY FUND __________%
AIM LIMITED MATURITY TREASURY SHARES FUND __________%
AIM VALUE FUND _____________%
AIM MONEY MARKET FUND ___________%
AIM BALANCED FUND ____________%
AIM CHARTER FUND _____________%
I acknowledge that I may amend this Investment Agreement in
the manner, and at such time, as permitted under the Agreement. Furthermore, I
acknowledge that, pursuant to Section 3.3(b) of the Agreement, the Fund has
reserved the right to disregard the elections made above to consider my
Deferral Account to be deemed to be invested in a fund of its choosing.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
<PAGE> 19
DEFERRED COMPENSATION AGREEMENT
BENEFICIARY DESIGNATION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the
"Agreement") dated as of _____________ by and between the undersigned and the
AIM Funds, I hereby make the following beneficiary designations:
I. Primary Beneficiary
-------------------
I hereby appoint the following as my Primary Beneficiary(ies)
to receive at my death the amounts credited to my Deferral Account under the
Agreement. In the event I am survived by more than one Primary Beneficiary,
such Primary Beneficiaries shall share equally in such amounts unless I
indicate otherwise on an attachment to this form:
_________________________________________________________________
Name Relationship
_________________________________________________________________
Address
_________________________________________________________________
City State Zip
<PAGE> 20
II. Secondary Beneficiary
---------------------
In the event I am not survived by any Primary Beneficiary, I
hereby appoint the following as Secondary Beneficiary(ies) to receive death
benefits under the Agreement. In the event I am survived by more than one
Secondary Beneficiary, such Secondary Beneficiaries shall share equally unless
I indicate otherwise on an attachment to this form:
_________________________________________________________________
Name Relationship
_________________________________________________________________
Address
_________________________________________________________________
City State Zip
I understand that I may revoke or amend the above designations
at any time. I further understand that if I am not survived by a Primary or
Secondary Beneficiary, my Beneficiary shall be as set forth under the
Agreement.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-2-
<PAGE> 21
INITIAL PAYMENT DATE ELECTION FORM
FOR PREVIOUSLY DEFERRED COMPENSATION
------------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the
"Agreement") dated as of ________________ by and between the undersigned and
the AIM Funds, pursuant to which I have previously elected to defer
Compensation, I hereby designate ________ 1 (select the first month in any
calendar quarter) in the year ______ (select a year that is at least four years
after the year this election is made) as the Payment Date for the amounts
previously credited to my Deferral Account and amounts subsequently credited
thereto. If my Retirement (as defined in the Agreement) occurs sooner, I o do
o do not (check the appropriate box) want payment of such amounts to commence
effective the January 1 following my Retirement. I understand that amounts
credited to my Deferral Account may be paid to me prior to the Payment Date as
provided in the Agreement.
I understand that I may amend this Investment Agreement in the
manner, and at such time, as permitted under the Agreement.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-3-
<PAGE> 1
EXHIBIT 8(a)(ii)
SECOND AMENDED AND RESTATED
CUSTODY AGREEMENT
------------------------------
Agreement made as of this 16th day of June , 1987, between
SHORT-TERM INVESTMENTS CO., a Massachusetts business trust organized and
existing under the laws of the Commonwealth of Texas, having its principal
office and place of business at Eleven Greenway Plaza, Suite 1919, Houston,
Texas 77046 (hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New
York corporation authorized to do a banking business, having its principal
office and place of business at 48 Wall Street, New York, New York 10015
(hereinafter called the "Custodian").
W I T N E S S E T H:
that for and in consideration of the mutual promises hereinafter set forth the
Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include any person, whether or
not such person is an Officer or employee of the Fund, duly authorized by the
Board of Trustees of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund and listed in the Certificate annexed hereto
as Appendix A or such other Certificate as may be received by the Custodian
from time to time.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
<PAGE> 2
3. "Call Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof the
specified underlying Securities.
4. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian which is actually received by the Custodian and signed on behalf of
the Fund by any two officers.
5. "Clearing Member" shall mean a registered broker dealer which is a
clearing member under the rules of O.C.C. and a member of a national
securities exchange qualified to act as a custodian for an investment company,
or any broker dealer reasonably believed by the Custodian to be such a clearing
member.
6. "Collateral Account" shall mean a segregated account so denominated
which is specifically allocated to a Series and pledged to the Custodian as
security for, and in consideration of, the Custodian's issuance of (a) any Put
option guarantee letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII herein.
7. "Covered Call Option" shall mean an exchange traded option entitling
the holder, upon timely exercise and payment of the exercise price, as
specified therein, to purchase from the writer thereof the specified underlying
Securities (excluding Futures Contracts) which are owned by the writer thereof
and subject to appropriate restrictions.
8. "Depository" shall mean The Depository Trust Company ("DTC" ), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository"
shall further mean and include any other person authorized to act as a
depository under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees, specifically identified in a certified
copy of a resolution of the Fund's Board of Trustees specifically approving
deposits therein by the Custodian.
9. "Financial Futures Contract" shall mean the firm commitment to buy or
sell fixed income securities including, without limitation, U.S. Treasury
Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of
deposit, and Eurodollar certificates of deposit, during a specified month at an
agreed upon price.
- 2 -
<PAGE> 3
10. "Futures Contract" shall mean a Financial Futures Contract and/or
Stock Index Futures Contracts.
11. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
12. "Margin Account" shall mean a segregated account in the name of a
broker, dealer,, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities
held in the Book Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry in its books and records.
13. "Money Market Security" shall be deemed to include, without
limitation, certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and principal by the government of the United States
or agencies or instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public authority,
commercial paper, certificates of deposit and bankers' acceptances, repurchase
agreements with respect to the same and bank time deposits, where the purchase
and sale of such securities normally requires settlement in federal funds on
the same day as such purchase or sale.
14. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
15. "Officers" shall be deemed to include the President, any Vice
President, the Secretary, the Clerk, the Treasurer, the Controller, any
Assistant Secretary, any Assistant Clerk, any Assistant Treasurer, and any
other person or persons, whether or not any such other person is an officer of
the Fund, duly authorized by the Board of Trustees of the Fund to execute any
Certificate, instruction, notice or other instrument on behalf of the Fund and
listed in the Certificate annexed hereto as Appendix B or such
-3-
<PAGE> 4
other Certificate as may be received by the Custodian from time to time.
16. "Option" shall mean a Call Option, Covered Call Option, Stock
Index option and/or a Put Option.
17. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person.
18. "Put option" shall mean an exchange traded option with respect
to Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
19. "Reverse Repurchase Agreement" shall mean an agreement pursuant
to which the Fund sells Securities and agrees to repurchase such Securities at
a described or specified date and price.
20. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract Options, Financial Futures
Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements,
common stocks and other securities having characteristics similar to common
stocks, preferred stocks, debt obligations issued by state or municipal
governments and by public authorities, (including, without limitation, general
obligation bonds, revenue bonds and industrial bonds and industrial development
bonds), bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase, sell or subscribe for the same, or evidencing or
representing any other rights or interest therein, or any property or assets.
21. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.
-4-
<PAGE> 5
22. "Series" shall mean the various portfolios, if any, of the Fund
as described from time to time in the current and effective prospectus for the
Fund.
23. "Shares" shall mean the shares of beneficial interest of the
Fund, each of which is in the case of a Fund having Series allocated to a
particular Series.
24. "Stock Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the value
of a particular stock index at the close of the last business day of the
contract and the price at which the futures contract is originally struck.
25. "Stock Index Option" shall mean an exchange traded option
entitling the holder, upon timely exercise, to receive an amount of cash
determined by reference to the difference between the exercise price and the
value of the index on the date of exercise.
26. "Written Instructions" shall mean written communications
actually received by the Custodian from an Authorized Person or from a person
reasonably believed by the Custodian to be an Authorized Person by telex or any
other such system whereby the receiver of such communications is able to verify
by codes or otherwise with a reasonable degree of certainty the identity of the
sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned by the Fund during the
period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
-5-
<PAGE> 6
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article
and in Article VIII, the Fund will deliver or cause to be delivered to the
Custodian all Securities and all moneys owned by it, at any time during the
period of this Agreement, and shall specify with respect to such Securities and
money the Series to which the same are specifically allocated. The Custodian
shall segregate, keep and maintain the assets of the Series separate and apart.
The Custodian will not be responsible for any Securities and moneys not
actually received by it. The Custodian will be entitled to reverse any credits
made on the Fund's behalf where such credits have been previously made and
moneys are not finally collected. The Fund shall deliver to the Custodian a
certified resolution of the Board of Trustees of the Fund, substantially in the
form of Exhibit A hereto, approving, authorizing and instructing the Custodian
on a continuous and on-going basis to deposit in the Book-Entry System all
Securities eligible for deposit therein, regardless of the Series to which the
same are specifically allocated and to utilize the Book-Entry System to the
extent possible in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of Securities
collateral. Prior to a deposit of Securities specifically allocated to a
Series in the Depository, the Fund shall deliver to the Custodian a certified
resolution of the Board of Trustees of the Fund, substantially in the form of
Exhibit B hereto, approving, authorizing and instructing the Custodian on a
continuous and ongoing basis until instructed to the contrary by a Certificate
actually received by the Custodian to deposit in the Depository all Securities
specifically allocated to such Series eligible for deposit therein, and to
utilize the Depository to the extent possible with respect to such Securities
in connection with its performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities collateral. Securities
and moneys deposited in either the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including, but not limited to, accounts in which the Custodian acts
in a fiduciary or representative capacity and will be specifically allocated on
the Custodian's books to the separate account for the applicable Series. Prior
to the Custodian's accepting, utilizing and acting with respect to Clearing
Member confirmations for options and transac-
- 6 -
<PAGE> 7
tions in Options for a Series as provided in this Agreement, the Custodian
shall have received a certified resolution of the Fund's Board of Trustees,
substantially in the form of Exhibit C hereto, approving, authorizing and
instructing the Custodian on a continuous and on-going basis, until instructed
to the contrary by a Certificate actually received by the Custodian, to accept,
utilize and act in accordance with such confirmations as provided in this
Agreement with respect to such Series.
2. The Custodian shall establish and maintain separate accounts,
in the name of each Series, and shall credit to the separate account for each
Series all moneys received by it for the account of the Fund with respect to
such Series. Money credited to a separate account for a Series shall be
disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the
name and address of the person to whom the payment is to be made, the Series
account from which payment is to be made, and the purpose for which payment is
to be made; or
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series basis,
of all transfers to or from the account of the Fund for a Series, either
hereunder or with any co-custodian or sub-custodian appointed in accordance
with this Agreement during said day. Where Securities are transferred to the
account of the Fund for a Series, the Custodian shall also by book-entry or
otherwise identify as belonging to such Series a quantity of Securities in a
fungible bulk of Securities registered in the name of the Custodian (or its
nominee) or shown on the Custodian's account on the books of the Book-Entry
System or the Depository. At least monthly and from time to time, the Custodian
shall furnish the Fund with a detailed statement, on a per Series basis, of the
Securities and moneys held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article
and in Article VIII, all Securities held by the Custodian hereunder, which are
issued or issuable only in bearer form, except such Securities as are held ,
in the Book-Entry System, shall be held by the Custodian in that form; all
other Securities held hereunder may be registered in the name of the Fund, in
the name of any duly appointed
- 7 -
<PAGE> 8
registered nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the Depository or their
successor or successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the Custodian to
hold or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository
any Securities which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held in the
Book-Entry System or in the Depository in a separate account in the name of
such Series physically segregated at all times from those of any other person
or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by itself,
or through the use of the Book-Entry System or the Depository with respect to
Securities held hereunder and therein deposited, shall with respect to
all Securities held for the Fund hereunder in accordance with preceding
paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable
upon such Securities which are called, but only if either (i) the Custodian
receives a written notice of such call, or (ii) notice of such call appears in
one or more of the publications listed in Appendix C annexed hereto, which may
be amended at any time by the Custodian without the prior notification or
consent of the Fund;
(c) Present for payment and collect the amount payable
upon all Securities which mature;
(d) Surrender Securities in temporary form for definitive
Securities;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or
the Depository with respect to Securities therein deposited, for the account
of a Series, all rights and similar securities issued with respect to any
Securities held by the Custodian for such Series hereunder.
-8-
<PAGE> 9
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry System or the
Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any Securities held
by the Custodian hereunder for the Series specified in such Certificate may be
exercised;
(b) Deliver any Securities held by the Custodian hereunder
for the Series specified in such Certificate in exchange for other Securities
or cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege and receive and hold hereunder
specifically allocated to such Series any cash or other Securities received in
exchange;
(c) Deliver any Securities held by the Custodian hereunder
for the Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation and receive and hold hereunder specifically allocated to such
Series such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the
Series specified in such Certificate, and take such other steps as shall be
stated in such Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and
(e) Present for payment and collect the amount payable
upon Securities not described in preceding paragraph 5(b) of this Article which
may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or certificates
are available. The Fund shall deliver to the Custodian such a Certificate no
later than the business day preceding the availability of any such instrument
- 9 -
<PAGE> 10
or certificate. Prior to such availability, the Custodian shall comply with
Section 17(f) of the Investment Company Act of 1940, as amended, in connection
with the purchase, sale, settlement, closing out or writing of Futures
Contracts, Options, or Futures Contract Options by making payments or
deliveries specified in Certificates received by the Custodian in connection
with any such purchase, sale, writing, settlement or closing out upon its
receipt from a broker, dealer, or futures commission merchant of a statement or
confirmation reasonably believed by the Custodian to be in the form customarily
used by brokers, dealers, or future commission merchants with respect to such
Futures Contracts, Options, or Futures Contract Options, as the case may be,
confirming that such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise, in the name of the
Custodian (or any nominee of the Custodian) as custodian for the Fund,
provided, however, that payments to or deliveries from the Margin Account shall
be made in accordance with the terms and conditions of the Margin Account
Agreement. Whenever any such instruments or certificates are available, the
Custodian shall, notwithstanding any provision in this Agreement to the
contrary, make payment for any Futures Contract, Option, or Futures Contract
Option for which such instruments or such certificates are available only
against the delivery to the Custodian of such instrument or such certificate,
and deliver any Future Contract, Option or Futures Contract Option for which
such instruments or such instruments or such certificates are available only
against receipt by the Custodian of payment therefor. Any such instrument or
certificate delivered to the Custodian shall be held by the Custodian
hereunder in accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other
than a purchase of an Option, a Futures Contract, or a Futures Contract Option,
the Fund shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a Certificate, Oral
Instructions of Written Instructions, specifying with respect to each such
purchase:
- 10 -
<PAGE> 11
(a) the Series to which such Securities are to be specifically allocated;
(b) the name of the issuer and the title of the Securities; (c) the number of
shares or the principal amount purchased and accrued interest, if any; (d) the
date of purchase and settlement; (e) the purchase price per unit; (f) the total
amount payable upon such purchase; (g) the name of the person from whom or the
broker through whom the purchase was made, and the name of the clearing broker,
if any; and (h) the name of the broker to whom payment is to be made. The
Custodian shall, upon receipt of Securities purchased by or for the Fund, pay
to the broker specified in the Certificate out of the moneys held for the
account of such Series the total amount payable upon such purchase, provided
that the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions.
2. Promptly after each sale of Securities by the Fund, other than
a sale of any Option, Futures Contract, Futures Contract Option, or any Reverse
Repurchase Agreement, the Fund shall deliver to the Custodian (i) with respect
to each sale of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions, specifying with respect
to each such sale: (a) the Series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the Security; (c) the
number of shares or principal amount sold, and accrued interest, if any; (d)
the date of sale; (e) the sale price per unit; (f) the total amount payable to
the Fund upon such sale; (g) the name of the broker through whom or the person
to whom the sale was made, and the name of the clearing broker, if any; and (h)
the name of the broker to whom the Securities are to be delivered. The
Custodian shall deliver the Securities specifically allocated to such Series to
the broker specified in the Certificate upon the total amount payable to the
Fund upon such sale, provided that the same conforms to the total amount
payable as set forth in such Certificate, Oral Instructions or Written
Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the
Fund shall deliver to the Custodian a Certificate specifying with respect to
each Option purchased: (a) the
- 11 -
<PAGE> 12
Series to which such Option is specifically allocated; (b) the type of Option
(put or call); (c) the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Stock Index Option, the stock index
to which such Option relates and the number of Stock Index Options purchased;
(d) the expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the total amount payable by the Fund in connection with such
purchase; (h) the name of the Clearing Member through whom such Option was
purchased; and (i) the name of the broker to whom payment is to be made. The
Custodian shall pay, upon receipt of a Clearing Member's statement confirming
the purchase of such Option held by such Clearing Member for the account of the
Custodian (or any duly appointed and registered nominee of the Custodian) as
custodian for the Fund, out of moneys held for the account of the Series to
which such Option is to be specifically allocated, the total amount payable
upon such purchase to the Clearing Member through whom the purchase was made,
provided that the same conforms to the total amount payable as set forth in
such Certificate.
2. Promptly after the sale of any Option purchased by the Fund
pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a
Certificate specifying with respect to each such sale: (a) the Series to which
such Option was specifically allocated; (b) the type of Option (put or call);
(c) the name of the issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock index to which such
Option relates and the number of Stock Index Options sold; (d) the date of
sale; (e) the sale price; (f) the date of settlement; (g) the total amount
payable to the Fund upon such sale; and (h) the name of the Clearing Member
through whom the sale was made. The Custodian shall consent to the delivery
of the Option sold by the Clearing Member which previously supplied the
confirmation described in preceding paragraph 1 of this Article with respect
to such Option against payment to the Custodian of the total amount payable to
the Fund, provided that the same conforms to the total amount payable as set
forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with respect to such Call Option: (a)
the Series to which such Call Option was specifically allocated; (b) the name
of the issuer and the title and number of shares subject to the Call Option;
(c) the expiration date; (d) the date of exercise and settlement; (e) the
exercise price per share; (f) the total amount to be paid by the
-12 -
<PAGE> 13
Fund upon such exercise; and (g) the name of the Clearing Member through whom
such Call Option was exercised. The Custodian shall, upon receipt of the
Securities underlying the Call Option which was exercised, pay out of the
moneys held for the account of the Series to which such Call Option was
specifically allocated the total amount payable to the Clearing Member through
whom the Call Option was exercised, provided that the same conforms to the
total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the Custodian a Certificate specifying with respect to such Put Option: (a)
the Series to which such Put option was specifically allocated; (b) the name of
the issuer and the title and number of shares subject to the Put Option; (c)
the expiration date; (d) the date of exercise and settlement; (e) the exercise
price per share; (f) the total amount to be paid to the Fund upon such
exercise; and (g) the name of the Clearing Member through whom such Put Option
was exercised. The Custodian shall, upon receipt of the amount payable upon
the exercise of the Put Option, deliver or direct the Depository to deliver the
Securities specifically allocated to such Series, provided the same conforms to
the amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index
option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Stock
Index Option: (a) the Series to which such Stock Index Option was specifically
allocated; (b) the type of Stock Index Option (put or call); (c) the number of
options being exercised; (d) the stock index to which such Option relates; (e)
the expiration date; (f) the exercise price; (g) the total amount to be
received by the Fund in connection with such exercise; and (h) the Clearing
Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Covered Call option: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares for
which the Covered Call Option was written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be received by the
Fund; (f) the date such Covered Call Option was written; and (g) the name of
the Clearing Member through whom the premium is to be received. The Custodian
shall deliver or cause to
- 13 -
<PAGE> 14
be delivered, in exchange for receipt of the premium specified in the
Certificate with respect to such Covered Call Option, such receipts as are
required in accordance with the customs prevailing among Clearing Members
dealing in Covered Call Options and shall impose, or direct the Depository to
impose, upon the underlying Securities specified in the Certificate
specifically allocated to such Series such restrictions as may be required by
such receipts. Notwithstanding the foregoing, the Custodian has the right,
upon prior written notification to the Fund, at any time to refuse to issue
any receipts for Securities in the possession of the Custodian and not
deposited with the Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and
described in the preceding paragraph of this Article is exercised, the Fund
shall promptly deliver to the Custodian a Certificate instructing the Custodian
to deliver, or to direct the Depository to deliver, the Securities subject to
such Covered Call Option and specifying: (a) the Series for which such Covered
Call Option was written; (b) the name of the issuer and the title and number of
shares subject to the Covered Call Option; (c) the Clearing Member to whom the
underlying Securities are to be delivered; and (d) the total amount payable to
the Fund upon such delivery. Upon the return and/or cancellation of any
receipts delivered pursuant to paragraph 6 of this Article, the Custodian shall
deliver, or direct the Depository to deliver, the underlying Securities as
specified in the Certificate for the amount to be received as set forth in such
Certificate.
8. Whenever the Fund writes a Put option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put Option was written; (b) the name of
the issuer and the title and number of shares for which the Put Option is
written and which underlie the same; (c) the expiration date; (d) the exercise
price; (e) the premium to be received by the Fund; (f) the date such Put Option
is written; (g) the name of the Clearing Member through whom the premium is to
be received and to whom a Put Option guarantee letter is to be delivered; (h)
the amount of cash, and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior Security
Account for such Series; and (i) the amount of cash and/or the amount and kind
of Securities specifically allocated to such Series to be deposited into the
Collateral Account for such Series. The Custodian shall, after making the
deposits into the Collateral Account specified in the Certificate, issue a Put
Option guarantee letter substantially in the form utilized by the Custodian
- 14 -
<PAGE> 15
on the date hereof, and deliver the same to the Clearing Member specified in
the Certificate against receipt of the premium specified in said Certificate.
Notwithstanding the foregoing, the Custodian shall be under no obligation to
issue any Put Option guarantee letter or similar document if it is unable to
make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put Option was
written; (b) the name of the issuer and title and number of shares subject to
the Put option; (c) the Clearing Member from whom the underlying Securities are
to be received; (d) the total amount payable by the Fund upon such delivery;
(e) the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be withdrawn from the Collateral Account for such
Series and (f) the amount of cash and/or the amount and kind of Securities,
specifically allocated to such Series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put Option
guarantee letter or similar document issued by the Custodian in connection with
such Put Option, the Custodian shall pay out of the moneys held for the account
of the Series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set forth
in such Certificate, and shall make the withdrawals specified in such
Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Stock Index Option: (a) the Series for which such Stock Index Option was
written; (b) whether such Stock Index Option is a put or a call; (c) the number
of options written; (d) the stock index to which such option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through whom
such option was written; (h) the premium to be received by the Fund; (i) the
amount of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in the Senior Security Account for
such Series; (j) the amount of cash and/or the amount and kind of Securities,
if any, specifically allocated to such Series to be deposited in the Collateral
Account for such Series; and (k) the amount of cash and/or the amount and kind
of Securities, if any, specifically allocated to such Series to be deposited in
a Margin Account, and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium specified in the
Certificate, make
-15 -
<PAGE> 16
the deposits, if any, into the Senior Security Account specified in the
Certificate, and either (1) deliver such receipts, if any, which the
Custodian has specifically agreed to issue, which are in accordance with the
customs prevailing among Clearing Members in Stock Index Options and make the
deposits into the Collateral Account specified in the Certificate, or (2) make
the deposits into the Margin Account specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund and
described in the preceding paragraph of this Article is exercised, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect
to such Stock Index Option: (a) the Series for which such Stock Index Option
was written; (b) such information as may be necessary to identify the Stock
Index Option being exercised; (c) the Clearing Member through whom such Stock
Index Option is being exercised; (d) the total amount payable upon such
exercise, and whether such amount is to be paid by or to the Fund; (e) the
amount of cash and/or amount and kind of Securities, if any, to be withdrawn
from the Margin Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Senior Security Account for such
Series; and the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Collateral Account for such Series. Upon the
return and/or cancellation of the receipt, if any, delivered pursuant to the
preceding paragraph of this Article, the Custodian shall pay out of the moneys
held for the account of the Series to which such Stock Index Option was
specifically allocated to the Clearing Member specified in tihe Certificate the
total amount payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to a
previously written Option described in paragraphs, 6, 8 or 10 of this Article
in a transaction expressly designated as a "Closing Purchase Transaction" in
order to liquidate its position as a writer of an Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to the
Option being purchased: (a) that the transaction is a Closing Purchase
Transaction; (b) the Series for which the option was written; (c) the name of
the issuer and the title and number of shares subject to the option, or, in the
case of a Stock Index Option, the stock index to which such Option relates and
the number of Options held; (d) the exercise price; (e) the premium to be paid
by the Fund; (f) the expiration date; (g) the type of option (put or call) (h)
the date of such purchase; (i) the name of the Clearing Member to whom the
premium is to be paid; and (j) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account, a
- 16 -
<PAGE> 17
specified Margin Account, or the Senior Security Account for such Series.
Upon the Custodian's payment of the premium and the return and/or cancellation
of any receipt issued pursuant to paragraphs 6, 8 or 10 of this Article with
respect to the Option being liquidated through the Closing Purchase
Transaction, the Custodian shall remove, or direct the Depository to remove,
the previously imposed restrictions on the Securities underlying the Call
Option.
13. Upon the expiration, exercise or consummation of a Closing
Purchase Transaction with respect to, any Option purchased or written by the
Fund and described in this Articles, the Custodian shall delete such Option
from the statements delivered to the Fund pursuant to paragraph 3 Article III
herein, and upon the return and/or cancellation of any receipts issued by the
Custodian, shall make such withdrawals from the Collateral Account, and the
Margin Account and/or the Senior Security Account as may be specified in a
Certificate received in connection with such expiration, exercise, or
consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to such
Futures Contract, (or with respect to any number of identical Futures
Contract(s)): (a) the Series for which the Futures Contract is being entered;
(b) the category of Futures Contract (the name of the underlying stock index or
financial instrument); (c) the number of identical Futures Contracts entered
into; (d) the delivery or settlement date of the Futures Contract(s); (e) the
date the Futures Contract(s) was (were) entered into and the maturity date; (f)
whether the Fund is buying (going long) or selling (going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in the Senior Security Account for such Series; (h) the
name of the broker, dealer, or futures commission merchant through whom the
Futures Contract was entered into; and (i) the amount of fee or commission, if
any, to be paid and the name of the broker, dealer, or futures commission
merchant to whom such amount is to be paid. The Custodian shall make the
deposits, if any, to the Margin Account in accordance with the terms and
conditions of the Margin Account Agreement. The Custodian shall make payment
out of the moneys specifically allocated to such
- 17 -
<PAGE> 18
Series of the fee or commission, if any, specified in the Certificate and
deposit in the Senior Security Account for such Series the amount of cash
and/or the amount and kind of Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment required
to be made by the Fund to a broker, dealer, or futures commission merchant with
respect to an outstanding Futures Contract, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from
a broker, dealer, or futures commission merchant to the Fund with respect to an
outstanding Futures Contract, shall be received and dealt with by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian a Certificate specifying: (a)
the Futures Contract and the Series to which the same relates; (b) with respect
to a Stock Index Futures Contract, the total cash settlement amount to be paid
or received, and with respect to a Financial Futures Contract, the Securities
and/or amount of cash to be delivered or received; (c) the broker, dealer, or
futures commission merchant to or from whom payment or delivery is to be made
or received; and (d) the amount of cash and/or Securities to be withdrawn from
the Senior Security Account for such Series. The Custodian shall make the
payment or delivery specified in the Certificate, and delete such Futures
Contract from the statements delivered to the Fund pursuant to paragraph 3 of
Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to
offset a Futures Contract held by the Custodian hereunder, the Fund shall
deliver to the Custodian a Certificate specifying: (a) the items of information
required in a Certificate described in paragraph 1 of this Article, and (b) the
Futures Contract being offset. The Custodian shall make payment out of the
money specifically allocated to such Series of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3 of Article III
herein, and make such withdrawals from the Senior Security Account for such
Series as may be specified in such Certificate. The withdrawals, if any, to
be made from the Margin Account shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
-18-
<PAGE> 19
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the
Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying
with respect to such Futures Contract Option: (a) the Series to which such
option is specifically allocated; (b) the type of Futures Contract Option (put
or call); (c) the type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures Contract
Option purchased; (d) the expiration date; (e) the exercise price; (f) the
dates of purchase and settlement; (g) the amount of premium to be paid by the
Fund upon such purchase; (h) the name of the broker or futures commission
merchant through whom such option was purchased; and (i) the name of the
broker, or futures commission merchant, to whom payment is to be made. The
Custodian shall pay out of the moneys specifically allocated to such Series the
total amount to be paid upon such purchase to the broker or futures commissions
merchant through whom the purchase was made, provided that .the same conforms
to the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such sale: (a) Series
to which such Futures Contract Option was specifically allocated; (b) the type
of Future Contract Option (put or call); (c) the type of Futures Contract and
such other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund
upon such sale; and (h) the name of the broker of futures commission merchant
through whom the sale was made. The Custodian shall consent to the
cancellation of the Futures Contract Option being closed against payment to the
Custodian of the total amount payable to the Fund, provided the same conforms
to the total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Futures
Contract
- 19 -
<PAGE> 20
Option was specifically allocated; (b) the particular Futures Contract Option
(put or call) being exercised; (c) the type of Futures Contract underlying the
Futures Contract Option; (d) the date of exercise; (e) the name of the broker
or futures commission merchant through whom the Futures Contract Option is
exercised; (f) the net total amount, if any, payable by the Fund; (g) the
amount, if any, to be received by the Fund; and (h) the amount of cash and/or
the amount and kind of Securities to be deposited in the Senior Security
Account for such Series. The Custodian shall make, out of the moneys and
Securities specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the Series for which such Futures Contract Option
was written; (b) the type of Futures Contract Option (put or call); (c) the
type of Futures Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures Contract Option; (d) the
expiration date; (e) the exercise price; (f) the premium to be received by the
Fund; (g) the name of the broker or futures commission merchant through whom
the premium is to be received; and (h) the amount of cash and/or the amount and
kind of Securities, if any, to be deposited in the Senior Security Account for
such Series. The Custodian shall, upon receipt of the premium specified
in the Certificate, make out of the moneys and Securities specifically
allocated to such Series the deposits into the Senior Security Account, if any,
as specified in the Certificate. The deposits, if any, to be made to the
Margin Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is a call
is exercised, the Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying the Futures Contract Option; (d)
the name of the broker or futures commission merchant through whom such Futures
Contract Option was exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any, payable by the Fund
upon such exer-
- 20 -
<PAGE> 21
cise; and (g) the amount of cash and/or the amount and kind of Securities to be
deposited in the Senior Security Account for such Series. The Custodian shall,
upon its receipt of the net total amount payable to the Fund, if any, specified
in such Certificate make the payments, if any, and the deposits, if any, into
the Senior Security Account as specified in the Certificate. The deposits, if
any, to be made to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund and
which is a put is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Option was specifically
allocated; (b) the particular Futures Contract Option exercised; (c) the type
of Futures Contract underlying such Futures Contract Option; (d) the name of
the broker or futures commission merchant through whom such Futures Contract
Option is exercised; (e) the net total amount, if any, payable to the Fund upon
such exercise; (f) the net total amount, if any, payable by the Fund upon such
exercise; and (g) the amount and kind of Securities and/or cash to be withdrawn
from or deposited in, the Senior Security Account for such Series, if any.
The Custodian shall, upon its receipt of the net total amount payable to the
Fund, if any, specified in the Certificate, make out of the moneys and
Securities specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits to and/or withdrawals from the Margin Account, if
any, shall be made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical to a
previously written Futures Contract Option described in this Article in order
to liquidate its position as a writer of such Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect
to the Futures Contract Option being purchased: (a) the Series to which such
Option is specifically allocated; (b) that the transaction is a closing
transaction; (c) the type of Future Contract and such other information as may
be necessary to identify the Futures Contract underlying the Futures Option
Contract; (d) the exercise price; (e) the premium to be paid by the Fund; (f)
the expiration date; (g) the name of the broker or futures commission merchant
to whom the premium is to be paid; and (h) the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from the Senior Security
Account for such Series. The Custodian shall effect the
- 21 -
<PAGE> 22
withdrawals from the Senior Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or purchased
by the Fund and described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in
the case of an exercise such deposits into the Senior Security Account as may
be specified in a Certificate. The deposits to and/or withdrawals from the
Margin Account, if any, shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a
Futures Contract Option described in this Article shall be subject to Article
VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the Fund
shall promptly deliver to the Custodian a Certificate specifying: (a) the
Series for which such short sale was made; (b) the name of the issuer and the
title of the Security; (c) the number of shares or principal amount sold,, and
accrued interest or dividends, if any; (d) the dates of the sale and
settlement; (e) the sale price per unit; (f) the total amount credited to the
Fund upon such sale, if any, (g) the amount of cash and/or the amount and kind
of Securities, if any, which are to be deposited in a Margin Account and the
name in which such Margin Account has been or is to be established; (h) the
amount of cash and/or the amount and kind of Securities, if any, to be
deposited in a Senior Security Account, and (i) the name of the broker through
whom such short sale was made. The Custodian shall upon its receipt of a
statement from such broker confirming such sale and that the total amount
credited to the Fund upon such sale, if any, as specified in the Certificate is
held by such broker for the account of the Custodian (or any nominee of the
Custodian) as custodian of the Fund, issue a receipt or make the deposits into
the Margin Account and the Senior Security Account specified in the
Certificate.
- 22 -
<PAGE> 23
2. In connection with the closing-out of any short sale, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect
to each such closing-out: (a) the Series for which such transaction is being
made; (b) the name of the issuer and the title of the Security; (c) the number
of shares or the principal amount, and accrued interest or dividends, if any,
required to effect such closing-out to be delivered to the broker; (d) the
dates of closing-out and settlement; (e) the purchase price per unit; (f) the
net total amount payable to the Fund upon such closing-out; (g) the net total
amount payable to the broker upon such closing-out; (h) the amount of cash and
the amount and kind of Securities to be withdrawn, if any, from the Margin
Account; (i) the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Senior Security Account; and (j) the name of the
broker through whom the Fund is effecting such closing-out. The Custodian shall,
upon receipt of the net total amount payable to the Fund upon such closing-out,
and the return and/or cancellation of the receipts, if any, issued by the
Custodian with respect to the short sale being closed-out, pay out of the moneys
held for the account of the Fund to the broker the net total amount payable to
the broker, and make the withdrawals from the Margin Account and the Senior
Security Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, the Fund shall
deliver to the Custodian a Certificate or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions, or
Written Instructions specifying: (a) the Series for which the Reverse
Repurchase Agreement is entered; (b) the total amount payable to the Fund in
connection with such Reverse Repurchase Agreement and specifically allocated to
such Series; (c) the broker or dealer through or with whom the Reverse
Repurchase Agreement is entered; (d) the amount and kind of Securities to be
delivered by the Fund to such broker or dealer; (e) the date of such Reverse
Repurchase Agreement; and (f) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be deposited in a
Senior Security
- 23 -
<PAGE> 24
Account for such Series in connection with such Reverse Repurchase Agreement.
The Custodian shall, upon receipt of the total amount payable to the Fund
specified in the Certificate, Oral Instructions, or Written Instructions make
the delivery to the broker or dealer, and the deposits, if any, to the Senior
Security Account, specified in such Certificate, Oral Instructions, or Written
Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
preceding paragraph 1 of this Article, the Fund shall promptly deliver a
Certificate or, in the event such Reverse Repurchase Agreement is a Money
Market Security, a Certificate, Oral Instructions, or Written Instructions to
the Custodian specifying: (a) the Reverse Repurchase Agreement being terminated
and the Series for which same was entered; (b) the total amount payable by the
Fund in connection with such termination; (c) the amount and kind of Securities
to be received by the Fund and specifically allocated to such Series in
connection with such termination; (d) the date of termination; (e) the name of
the broker or dealer with or through whom the Reverse Repurchase Agreement is
to be terminated; and (f) the amount of cash and/or the amount and kind of
Securities to be withdrawn from the Senior Securities Account for such Series.
The Custodian shall, upon receipt of the.amount and kind of Securities to be
received by the Fund specified in the Certificate, Oral Instructions, or
Written Instructions, make the payment to the broker or dealer, and the
withdrawals, if any, from the Senior Security Account, specified in such
Certificate; Oral Instructions, or Written Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated. to a Series held by the Custodian hereunder, the Fund shall deliver
or cause to be delivered to the Custodian a Certificate specifying with respect
to each such loan: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title of the
Securities, (c) the number of shares or the principal amount loaned, (d) the
date of loan and delivery, (e) the total amount to be delivered to the
Custodian against the loan of the Securities, including the amount of cash
collateral and the premium, if any, separately identified, and (f) the name of
the broker, dealer, or financial institution to which the loan was made. The
- 24 -
<PAGE> 25
Custodian shall deliver the Securities thus designated to the broker, dealer or
financial institution to which the loan was made upon receipt of the total
amount designated as to be delivered against the loan of Securities. The
Custodian may accept payment in connection with a delivery otherwise than
through the Book-Entry System or Depository only in the form of a certified or
bank cashier's check payable to the order of the Fund or the Custodian drawn on
New York Clearing House funds and may deliver Securities in accordance with the
customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by the Fund,
the Fund shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination and return of Securities:
(a) the Series to which the loaned Securities are specifically allocated; (b)
the name of the issuer and the title of the Securities to be returned, (c) the
number of shares or the principal amount to be returned, (d) the date of
termination, (e) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The
Custodian shall receive all Securities returned from the broker, dealer, or
financial institution to which such Securities were loaned and upon receipt
thereof shall pay, out of the moneys held for the account of the Fund, the
total amount payable upon such return of Securities as set forth in the
Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Senior Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the Series for which
such deposit or withdrawal is to be made, and the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to be
deposited in, or withdrawn from, such Senior Security Account for such Series.
In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and the number of shares or the principal amount
of any particular Securities to be
- 25-
<PAGE> 26
deposited by the Custodian into, or withdrawn from, a Senior Securities
Account, the Custodian shall be under no obligation to make any such deposit or
withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer, futures commission merchant or Clearing Member in whose
name, or for whose benefit, the account was established as specified in the
Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may enforce
its lien and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.
5. on each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures commission merchant
specified in the name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account for any Series,
the Custodian shall furnish the Fund with a Statement with respect to such
Collateral Account specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business next succeeding
the delivery to the Fund of such statement, the Fund shall furnish to the
- 26 -
<PAGE> 27
Custodian a Certificate or Written Instructions specifying the then market
value of the Securities described in such statement. In the event such then
market value is indicated to be less than the Custodian's obligation with
respect to any outstanding Put Option guarantee letter or similar document, the
Fund shall promptly specify in a Certificate the additional cash and/or
Securities to be deposited in such Collateral Account to eliminate such
deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of
the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any
Assistant Secretary or any Assistant Clerk, either (i) setting forth with
respect to the Series specified therein the date of the declaration of a
dividend or distribution, the date of payment thereof, the record date as of
which shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date and the
total amount payable to the Dividend Agent and any sub-dividend agent or
co-dividend agent of the Fund on the payment date, or (ii) authorizing with
respect to the Series specified therein the declaration of dividends and
distributions on a daily basis and authorizing the Custodian to rely on Oral
Instructions, Written Instructions or a Certificate setting forth the date of
the declaration of such dividend or distribution, the date of payment thereof,
the record date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the shareholders of
record as of that date and the total amount payable to the Dividend Agent on
the payment date.
2. Upon the payment date specified in such resolution, Oral Instructions,
Written Instructions or Certificate, as the case may be, the Custodian shall
pay out of the moneys held for the account of each Series the total amount
payable to the Dividend Agent, and any sub-dividend agent or co-dividend agent
of the Fund with respect to such Series.
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<PAGE> 28
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall
deliver to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the Custodian for the
sale of such Shares and specifically allocated to the separate account in the
name of such Series.
2. Upon receipt of such money from the Transfer Agent, the
Custodian shall credit such money to the separate account in the name of the
Series for which such money was received.
3. Upon issuance of any Shares of any Series described in the
foregoing provisions of this Article, the Custodian shall pay, out of the
money held for the account of such Series, all original issue or other taxes
required to be paid by the Fund in connection with such issuance upon the
receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder in
connection with a redemption of any Shares, it shall furnish to the
Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the
Series and number of Shares received by the Transfer Agent for redemption and
that such Shares are in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the moneys held in the separate account in
the name of the Series the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the Custodian,
unless
- 28 -
<PAGE> 29
otherwise instructed by a Certificate, shall, upon receipt of an advice from
the Fund or its agent setting forth that the redemption is in good form for
redemption in accordance with the check redemption procedure, honor the check
presented as part of such check redemption privilege out of the moneys held in
the separate account of the Series of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held by
the Custodian in the separate account for such Series shall be insufficient to
pay the total amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate, Oral Instructions, or
Written Instructions or which results in an overdraft in the separate account
of such Series for some other reason, or if the Fund is for any other reason
indebted to the Custodian with respect to a Series (except a borrowing for
investment or for temporary .or emergency purposes using Securities as
collateral pursuant to a separate agreement and subject to the provisions of
paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Fund for such Series payable on demand
and shall bear interest from the date incurred at a rate per annum (based on a
360-day year for the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from time to time, such
rate to be adjusted on the effective date of any change in such prime
commercial lending rate but in no event to be less than 6% per annum. In
addition, the Fund hereby agrees that the Custodian shall have a continuing
lien and security interest in and to any property specifically allocated to
such Series at any time held by it for the benefit of such Series or in
which the Fund may have an interest which is then in the Custodian's possession
or control or in possession or control of any third party acting in the
Custodian's behalf. The Fund authorizes the Custodian, in its sole discretion,
at any time to charge any such overdraft or indebtedness together with interest
due thereon against any balance of account, standing to such Series' credit on
the Custodian's books.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pur-
- 29-
<PAGE> 30
suant to a separate agreement, the Custodian) from which it borrows money for
investment or for temporary or emergency purposes using Securities held by the
Custodian hereunder as collateral for such borrowings, a notice or undertaking
in the form currently employed by any such bank setting forth the amount which
such bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the Series to which such
borrowing relates; (b) the name of the bank, (c) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan agreement, (d) the
time and date, if known, on which the loan is to be entered into, (e) the date
on which the loan becomes due and payable, (f) the total amount payable to the
Fund on the borrowing date, (g) the market value of Securities to be delivered
as collateral for such loan, including the name of the issuer, the title and
the number of shares or the principal amount of any particular Securities, and
(h) a statement specifying whether such loan is for investment purposes or for
temporary or emergency purposes and that such loan is in conformance with the
Investment Company Act of 1940 and the Fund's prospectus. The Custodian shall
deliver on the borrowing date specified in a Certificate the specified
collateral and the executed promissory note, if any, against delivery by the
lending bank of the total amount of the loan payable, provided that the same
conforms to the total amount payable as set forth in the Certificate. The
Custodian may, at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights therein given
the lending bank by virtue of any promissory note or agreement. The Custodian
shall deliver such Securities as additional collateral as may be specified in a
Certificate to collateralize further any transaction described in this
paragraph. The Fund shall cause all Securities released from collateral status
to be returned directly to the Custodian, and the Custodian shall receive from
time to time such return of collateral as may be tendered to it. In the event
that the Fund fails to specify in a Certificate the Series, the name of the
issuer, the title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities.
- 30-
<PAGE> 31
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including counsel fees, resulting from
its action or omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage arising out of its
own negligence or willful misconduct. The Custodian may, with respect to
questions of law arising hereunder or under any Margin Account Agreement, apply
for and obtain the advice and opinion of counsel to the Fund or of its own
counsel, at the expense of the Fund, and shall be fully protected with respect
to anything done or omitted by it in good faith in conformity with such advice
or opinion. The Custodian shall be liable to the Fund for any loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or willful misconduct on the part of the
Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold,
or written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount paid or received therefor;
(b) The legality of the sale or redemption of any Shares, or the
propriety of the amount to be received or paid therefor;
(c) The legality of the declaration or payment of any dividend by
the Fund;
(d) The legality of any borrowing by the Fund using Securities as
collateral;
(e) The legality of any loan of portfolio Securities, nor shall
the Custodian be under any duty or obligation to see to it that any cash
collateral delivered to it by a broker, dealer, or financial institution or
held by it at any time as a result of such loan of portfolio Securities, of the
Fund is adequate collateral for the Fund against any loss it might sustain as
a result of such loan. The Custodian specifically, but not by way of limitation,
shall not be under any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for the Fund is
sufficient collateral for the Fund,
- 31 -
<PAGE> 32
but such duty or obligation shall be the sole responsibility of the Fund.
In addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of the
Fund are lent pursuant to Article XIV of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account, Exempt Account
or Collateral Account in connection with transactions by the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer, futures commission merchant or Clearing Member makes payment to
the Fund of any variation margin payment or similar payment which the Fund may
be entitled to receive from such broker, dealer, futures commission merchant or
Clearing Member, to see that any payment received by the Custodian from any
broker, dealer, futures commission merchant or Clearing Member is the amount
the Fund is entitled to receive, or to notify the Fund of the Custodian's
receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by
the final crediting of the account representing the Fund's interest at the
Book-Entry System or .the Depository.
4. The Custodian shall have no responsibility and shall not be liable for
ascertaining or acting upon any calls, conversions, exchange, offers, tenders,
interest rate changes or similar matters relating to Securities held in the
Depositary, unless the Custodian shall have actually received timely notice
from the Depositary. In no event shall the Custodian have any responsibility or
liability for the failure of the Depositary to collect, or for the late
collection or late crediting by the Depositary of any amount payable upon
Securities deposited in the Depositary which may mature or be redeemed,
retired, called or otherwise become payable. However, upon receipt of a
Certificate from the Fund of an overdue amount on Securities held in the
Depositary the Custodian shall make a claim against the Depositary on behalf of
the Fund, except that the Custodian
- 32 -
<PAGE> 33
shall not be under any obligation to appear in, prosecute or defend any action
suit or proceeding in respect to any Securities held by the Depositary which in
its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability be furnished as often as
may be required.
5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Transfer Agent of
the Fund nor to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount, if the Securities upon which such amount is
payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action
by a Certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as
Depository or Depositories, as Sub-Custodian or Sub-Custodians, or as
Co-Custodian or Co-Custodians including, but not limited to, banking
institutions located in foreign countries, of Securities and moneys at any time
owned by the Fund, upon such terms and conditions as may be approved in a
Certificate or contained in an agreement executed by the Custodian, the Fund
and the appointed institution.
8. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it, for
the account of the Fund and specifically allocated to a Series are such as
properly may be held by the Fund or such Series under the provisions of its
then current prospectus, or (b) to ascertain whether any transactions by the
Fund, whether or not involving the Custodian, are such transactions as may
properly be engaged in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The
Custodian may charge such compensation and any expenses with respect to a
Series incurred by the Custodian in the performance of its
- 33 -
<PAGE> 34
duties pursuant to such agreement against any money specifically allocated to
such Series. Unless and until the Fund instructs the Custodian by a
Certificate to apportion any loss, damage, liability or expense among the
Series in a specified manner, the Custodian shall also be entitled to charge
against any money held by it for the account of a Series such Series' pro rata
share (based on such Series net asset value at the time of the charge to the
aggregate net asset value of all Series at that time) of the amount of any loss,
damage, liability or expense, including counsel fees, for which it shall be
entitled to reimbursement under the provisions of this Agreement. The expenses
for which the Custodian shall be entitled to reimbursement hereunder shall
include, but are not limited to, the expenses of sub-custodians and foreign
branches of the Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of the Fund.
10. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the Custodian and reasonably
believed by the Custodian to be a Certificate. The Custodian shall be
entitled to rely upon any Oral Instructions and any Written Instructions
actually received by the Custodian hereinabove provided for. The Fund agrees
to forward to the Custodian a Certificate or facsimile thereof confirming such
Oral Instructions or Written Instructions in such manner so that such
Certificate or facsimile thereof is received by the Custodian, whether by hand
delivery, telecopier or other similar device, or otherwise, by the close of
business of the same day that such Oral Instructions or Written Instructions
are given to the Custodian. The Fund agrees that the fact that such
confirming instructions are not received by the Custodian shall in no way
affect the validity of the transactions or enforceability of the transactions
hereby authorized by the Fund. The Fund agrees that the Custodian shall incur
no liability to the Fund in acting upon Oral Instructions or Written
Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from an
Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any
Margin Account Agreement. Without limiting the generality of the foregoing,
the Custodian shall be under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
- 34 -
<PAGE> 35
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian its expenses of
providing such copies. Upon reasonable request of the Fund, the Custodian
shall provide in hard copy or on micro-film, whichever the Custodian elects,
any records included in any such delivery which are maintained by the Custodian
on a computer disc, or are similarly maintained, and the Fund shall reimburse
the Custodian for its expenses of providing such hard copy or micro-film.
13. The Custodian shall provide the Fund with any report obtained
by the Custodian on the system of internal accounting control of the
Book-Entry System, the Depository, or O.C.C., and with such reports on its own
systems of internal accounting control as the Fund may reasonably request from
time to time.
14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article XIII as part of any check redemption privilege program
of the Fund, except for any such liability, claim, loss and demand arising out
of the Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this Agreement, the
Custodian may deliver and receive Securities, and receipts with respect to
such Securities, and arrange for payments to be made and received by the
Custodian in accordance with the customs prevailing from time to time among
brokers or dealers in such Securities.
16. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth in this Agreement, and no covenant or obligation shall be implied in this
Agreement against the Custodian.
- 35 -
<PAGE> 36
ARTICLE XVI
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which shall be not less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board of Trustees of the Fund,
certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant
Clerk, electing to terminate this Agreement and designating a successor
custodian or custodians, each of which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits.
In the event such notice is given by the Custodian, the Fund shall, on or
before the termination date, deliver to the Custodian a copy of a resolution of
the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any
Assistant Secretary or any Assistant Clerk, designating a successor custodian
or custodians. In the absence of such designation by the Fund, the Custodian
may designate a successor custodian which shall be a bank or trust company
having not less than $2,000,000 aggregate capital, surplus and undivided
profits. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian shall upon receipt of a notice of acceptance by
the successor custodian on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and held by it as
Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and moneys then owned
by the Fund be deemed to be its own custodian and the Custodian shall thereby
be relieved of all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the Book Entry System
which cannot be delivered to the Fund to hold such Securities hereunder in
accordance with this Agreement.
- 36 -
<PAGE> 37
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its seal, setting forth the names and the
signatures of the present Authorized Persons. The Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or in the event
that other or additional Authorized Persons are elected or appointed. Until
such new Certificate shall be received, the Custodian shall be fully protected
in acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last delivered
Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Fund under its seal, setting forth the names and the
signatures of the present Officers of the Fund. The Fund agrees to furnish
to the Custodian a new Certificate in similar form in the event any such
present Officer ceases to be an Officer of the Fund, or in the event that other
or additional Officers are elected or appointed. Until such new Certificate
shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the officers as set forth
in the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10015, or at such other place as the
Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund may from time to
time designate in writing.
5. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality as this
Agreement and approved by a resolution of the Board of Trustees of the Fund.
-37-
<PAGE> 38
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided,, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of the Fund's Board of Trustees.
7. This Agreement shall be construed in accordance with the laws of the
State of New York.
8. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
9. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Board of Trustees of the Fund as
Trustees and not individually and that the obligations of this instrument are
not binding upon any of the Trustees or shareholders individually but are
binding only upon the assets and property of the Fund; provided, however, that
the Declaration of Trust of the Fund provides that the assets of a particular
Series of the Fund shall under no circumstances be charged with liabilities
attributable to any other Series of the Fund and that all persons extending
credit to, or contracting with or having any claim against a particular Series
of the Fund shall look only to the assets of that particular Series for payment
of such credit, contract or claim.
- 38-
<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
SHORT-TERM INVESTMENTS CO.
By: /s/ ROBERT H. GRAHAM
------------------------------------
Attest:
/s/ WILLIAM H. KLEH
- -------------------------------------
THE BANK OF NEW YORK
By: /s/ ILLEGIBLE
------------------------------------
Attest:
/s/ ILLEGIBLE
- --------------------------------------
-39-
<PAGE> 40
APPENDIX A
I, Robert H. Graham, Executive Vice President and I, William H. Kleh, Vice
President and Secretary of SHORT-TERM INVESTMENTS CO., a Massachusetts business
trust (the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the Board of
Trustees of the Fund in conformity with the Fund's Declaration of Trust and
By-Laws to give Oral Instructions and Written Instructions on behalf of the
Fund, and the signatures set forth opposite their respective names are their
true and correct signatures:
NAME SIGNATURE
Charles T. Bauer /s/ CHARLES T. BAUER
President -------------------------------------
Robert H. Graham /s/ ROBERT H. GRAHAM
Executive Vice President -------------------------------------
Gary T. Crum /s/ GARY T. CRUM
Vice President -------------------------------------
Harold F. McElraft /s/ HAROLD F. MCELRAFT
Vice President and Treasurer -------------------------------------
J. Abbott Sprague /s/ J. ABBOTT SPRAGUE
Vice President -------------------------------------
Gary V. Beauchamp /s/ GARY V. BEAUCHAMP
Vice President ------------------------------------
William H. Kleh /s/ WILLIAM H. KLEH
Vice President and Secretary ------------------------------------
Alex M. Ciccone /s/ ALEX M. CICCONE
Vice President ------------------------------------
(SEAL) Dated this 23rd day of June 1987
/s/ ROBERT H. GRAHAM
------------------------------------
Robert H. Graham
/s/ WILLIAM H. KLEH
------------------------------------
William H. Kleh
<PAGE> 41
APPENDIX B
I, Robert H. Graham, Executive Vice President and I, William H. Kleh, Vice
President and Secretary of SHORT-TERM INVESTMENTS CO., a Massachusetts business
trust (the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the Fund
and each has been duly elected or appointed by the Board of Trustees of the
Fund to each such position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws, and the signatures set forth opposite their
respective names are their true and correct signatures:
NAME SIGNATURE
Charles T. Bauer /s/ CHARLES T. BAUER
President ------------------------------------
Robert H. Graham /s/ ROBERT H. GRAHAM
Executive Vice President ------------------------------------
Gary T. Crum /s/ GARY T. CRUM
Vice President ------------------------------------
Harold F. McElraft /s/ HAROLD F. MCELRAFT
Vice President and Treasurer ------------------------------------
J. Abbott Sprague /s/ J. ABBOTT SPRAGUE
Vice President -----------------------------------
Gary V. Beauchamp /s/ GARY V. BEAUCHAMP
Vice President -----------------------------------
William H. Kleh /s/ WILLIAM H. KLEH
Vice President and Secretary -----------------------------------
Alex M. Ciccone /s/ ALEX M. CICCONE
Vice President -----------------------------------
Ray Walther /s/ RAY WALTHER
Assistant Treasurer -----------------------------------
<PAGE> 42
NAME SIGNATURE
Carol F. Relihan /s/ CAROL F. RELIHAN
Assistant Secretary ------------------------------------
Pauletta P. Cohn /s/ PAULETTA P. COHN
Assistant Secretary ------------------------------------
Nancy L. Martin /s/ NANCY L. MARTIN
Assistant Secretary ------------------------------------
(SEAL) Dated this 23rd day of June, 1987
/s/ ROBERT H. GRAHAM
-------------------------------------
Robert H. Graham
/s/ WILLIAM H. KLEH
-------------------------------------
William H. Kleh
<PAGE> 43
APPENDIX C
I, , an Assistant Vice President with THE BANK
OF NEW YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE> 44
EXHIBIT A
CERTIFICATION
The undersigned, hereby certifies that he or she is the duly elected
and acting of SHORT-TERM INVESTMENTS CO., a Massachusetts business
trust (the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on
, 1987, at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full force and effect
as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as
of , 1987,(the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis to deposit in the
Book-Entry System, as defined in the Custody Agreement,all securities
eligible for deposit therein, regardless of the Series to which the
same are specifically allocated, and to utilize the Book-Entry System
to the extent possible in connection with its performance thereunder,
including, without limitation, in connection with settlements of
purchases and sales of securities, loans of securities, and deliveries
and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of
, as of the day of ,1987.
______________________________________
<PAGE> 1
EXHIBIT 8(a)(iii)
AMENDMENT
AMENDMENT made as of this 17th day of May, 1993 to that certain Second
Amended and Restated Custody Agreement dated June 16, 1987 (the "Custody
Agreement") between The Bank of New York as custodian (the "Custodian") and
Short-Term Investment Co. (the "Fund"), a Massachusetts business trust.
WHEREAS, the Custodian and Fund have previously entered into a Custody
Agreement;
WHEREAS, the Fund and the Custodian desire. to amend the Custody Agreement
to provide for the electronic transmission of instructions from the Fund to the
Custodian; and
WHEREAS, the Board of Trustees of the Fund has approved the amendment of
the Custody Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration for the mutual promises set forth, the
Fund and the Custodian agree to amend the Custody Agreement as follows:
1. The definition of the term "Certificate" in Article I is hereby
amended to read in its entirety as follows:
"Certificate" shall mean any notice, instruction, or any other
instrument in writing, authorized or required by this
Agreement to be given to the Custodian which is actually
received by the Custodian and signed on behalf of the Fund by
any two officers, and the term Certificate shall also include
instructions by the Fund to the Custodian communicated by a
Terminal Link.
2. The definition of the term "Officer" in Article I is hereby amended to
read in its entirety as follows:
"Officer" shall be deemed to include the President, any Vice
President, the Secretary, the Treasurer, the Controller, any
Assistant Secretary, any Assistant Treasurer, and any other
person or persons, whether or not any such other person is an
officer of the Fund, duly authorized by the Board of Trustees
of the Fund to execute any Certificate, instruction, notice or
other instrument on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix B or such other
Certificate as may be received by the Custodian from time to
time.
<PAGE> 2
2
3. Article I is hereby further amended by the addition of the following
defined term:
"Terminal Link" shall mean an electronic data transmission link
between the Fund and the Custodian requiring in connection with each
use of the Terminal Link by or on behalf of the Fund use of an
authorization code provided by the Custodian and at least two access
codes established by the Fund.
4. A new Article shall be added to read in its entirety as follows:
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be
obligated to have or utilize the Terminal Link, and the provisions of
this Article shall apply if, but only if, the Fund in its sole and
absolute discretion elects to utilize the Terminal Link to transmit
Certificates to the Custodian.
2. The Terminal Link shall be utilized by the Fund only for the
purpose of the Fund providing Certificates to the Custodian with
respect to transactions involving Securities or for the transfer of
money to be applied to the payment of dividends, distributions or
redemptions of Fund Shares, and shall be utilized by the Custodian
only for the purpose of providing notices to the Fund. Such use
shall commence only after the Fund shall have delivered to the
Custodian a Certificate substantially in the form of Appendix 1 and
shall have established access codes and safekeeping procedures to
safeguard and protect the confidentiality and availability of such
access codes. Each use of the Terminal Link by the Fund shall
constitute a representation and warranty that the Terminal Link is
being used only for the purposes permitted hereby, that at least two
Officers have each utilized an access code, that such safekeeping
procedures have been established by the Fund, and that such use does
not contravene the Investment Company Act of 1940, as amended, or the
rules or regulations thereunder.
3. The Fund shall obtain and maintain at its own cost and expense
all equipment and services, including, but not limited to
communications services, necessary for it to utilize the Terminal
Link, and the Custodian shall not be responsible for the reliability
or availability of any such equipment or services.
4. The Fund acknowledges that any data bases made available as
part of, or through the Terminal Link and any proprietary data,
software, processes, information and
<PAGE> 3
3
documentation (other than which are or become part of the public domain or are
legally required to be made available to the public) (collectively, the
"Information"), are the exclusive and confidential property of the Custodian.
The Fund shall, and shall cause others to which it discloses the Information,
to keep the Information confidential by using the same care and discretion it
uses with respect to its own confidential property and trade secrets, and shall
neither make nor permit any disclosure without the express prior written
consent of the Custodian.
5. Upon termination of this Agreement for any reason, the Fund shall
return to the Custodian any and all copies of the Information which are in the
Fund's possession or under its control, or which the Fund distributed to third
parties. The provisions of this Article shall not affect the copyright status
of any of the Information. which may be copyrighted and shall apply to all
Information whether or not copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from time
to time without notice to the Fund, except that the Custodian shall give the
Fund notice not less than 75 days in advance of any modification which would
materially adversely affect the Fund's operation, and the Fund agrees not to
modify or attempt to modify the Terminal Link without the Custodian's prior
written consent. The Fund acknowledges that any software or procedures provided
the Fund as part of the Terminal Link are the property of the Custodian and,
accordingly, the Fund agrees that any modifications to the Terminal Link,
whether by the Fund or the Custodian and whether with or without the Custodian's
consent, shall become the property of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it utilizes
or the Fund utilizes in connection with the Terminal Link makes any warranties
or representations, express or implied, in fact or in law, including but not
limited to warranties of merchantability and fitness for a particular purpose.
8. The Fund will cause its Officers and employees to treat the
authorization codes and the access codes applicable to Terminal Link with
extreme care, and irrevocably authorizes the Custodian to act in accordance
with and rely on Certificates received by it through the Terminal Link.
The Fund acknowledges that it is its responsibility to assure that only its
Officers use the Terminal Link on its behalf, and that the Custodian shall not
be responsible nor liable for use of the Terminal Link on the Fund's behalf by
persons other than Officers or by only a single Officer.
<PAGE> 4
4
9(a). Except as otherwise specifically provided in Section 9 (b) of
this Article, the Custodian shall have no liability for any losses, damages,
injuries, claims, costs or expenses arising out of or in connection with any
failure, malfunction or other problem relating to the Terminal Link except for
money damages suffered as the direct result of the negligence of the Custodian
in an amount not exceeding for any incident $25,000, provided however, that the
Custodian shall have no liability under this Section 9 if the Fund fails to
comply with the provisions of Section 11.
9(b). The Custodian's liability for its negligence in executing or
failing to act in accordance with a Certificate received through Terminal Link
shall be only with respect to a transfer of funds which is not made in
accordance with such Certificate after such Certificate shall have been duly
acknowledged by the Custodian, and shall be contingent upon the Fund complying
with the provisions of section 11 of this Article, and shall be limited to (i)
restoration of the principal amount mistransferred, if and to the extent that
the Custodian would be required to make such restoration under applicable law,
and (ii) the lesser of (A) the Fund's actual pecuniary loss incurred by reason
of its loss of use of the mistransferred funds or the funds which were not
transferred, as the case may be, or (B) compensation for the loss of use of the
mistransferred funds or the funds which were not transferred, as the case may
be, at a rate per annum equal to the average federal funds rate as computed
from the Federal Reserve Bank of New York's daily determination of the
effective rate for federal funds, for the period during which the Fund has lost
use of such funds. In no event shall the Custodian have any liability for
failing to transfer funds in accordance with a Certificate received by the
Custodian through Terminal Link other than through the applicable transfer
module for the particular instructions contained in such Certificate.
10. Without limiting the generality of the foregoing, in no event
shall the Custodian or any manufacturer or supplier of its computer equipment,
software or services relating to the Terminal Link be responsible for any
special, indirect, incidental or consequential damages which the Fund may incur
or experience by reason of its use of the Terminal Link, even if the Custodian
or any manufacturer or supplier has been advised of the possibility of such
damages, nor with respect to the use of the Terminal Link shall the Custodian
or any such manufacturer or supplier be liable for acts of God, or with respect
to the following to the extent beyond such person's reasonable control: machine
or computer breakdown or malfunction, interruption or malfunction of
communication facilities, labor difficulties or any other similar or dissimilar
cause.
<PAGE> 5
5
11. The Fund shall notify the Custodian of any errors,
omissions or interruptions in, or delay or unavailability of, the
Terminal Link as promptly as practicable, and in any event within 24
hours after the earliest of (i) discovery thereof, (ii) the business
day on which discovery should have occurred through the exercise of
reasonable care, and (iii) in the case of any error, the date of actual
receipt of the earliest notice which reflects such error, it being
agreed that discovery and receipt of notice may only occur on a
business day. The Custodian shall promptly advise the Fund whenever
the Custodian learns of any errors, omissions or interruption in, or
delay or unavailability of, the Terminal Link.
12. The Custodian shall verify to the Fund, by use of the
Terminal Link, receipt of each Certificate the Custodian receives
through the Terminal Link, and in the absence of such verification the
Custodian shall not be liable for any failure to act in accordance
with such Certificate and the Fund may not claim that such Certificate
was received by the Custodian. Such verification, which may occur
after the Custodian has acted upon such Certificate, shall be
accomplished on the same day on which such Certificate is received.
5. References in this Amendment to the Custody Agreement are to the
Custody Agreement as amended hereby.
<PAGE> 6
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers, thereunto duly authorized and their
respective seals to be hereto affixed as of the day and year first above
written.
THE BANK OF NEW YORK
By: ILLEGIBLE
--------------------------------
Title: VICE PRESIDENT
ATTEST:
/s/ JOSEPH F. KEENAN
- -------------------------------
SHORT-TERM INVESTMENT CO.
By: /s/ WILLIAM H. KLEH
-------------------------------------
Title: VICE PRESIDENT
ATTEST:
/s/ CAROL F. RELIHAN
- ---------------------------------
<PAGE> 7
APPENDIX 1
The undersigned, _____________, hereby certifies that he or
she is the duly elected and acting Assistant Secretary of Short-Term
Investments Co. (the "Fund"), further certifies that the following resolution
was adopted by the Board of Trustees of the Fund at a meeting duly held on
_____________ , at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full force and effect
as of the date hereof.
RESOLVED, that the officers of the Fund be and they hereby are
authorized to negotiate and execute an amendment to the Fund's
custodian contract in order to implement the Automated Funds Transfer
Processing system available through The Bank of New York; provided,
that such amendment shall not be executed until such time as the
officers of the Fund are satisfied that appropriate safeguards and
controls by The Bank of New York regarding use of such system will
prevent the Fund, its advisor and/or its distributor from being
considered a "self-custodian" under Investment Company Act Rule
17f-4.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of
the Fund as of this ____ day of ___________________, 19__.
___________________________
<PAGE> 8
APPENDIX B
The undersigned, ____________ Vice President and Assistant
Secretary of Short-Term Investments Co. (the "Company"), a Massachusetts
business trust, hereby certifies that the following individuals serve in the
positions shown with the Company, that each individual has been duly elected or
appointed to each such position and qualified therefor in conformity with the
Company's Declaration of Trust and By-Laws, and that the signatures set forth
opposite their respective names are their true and correct signatures:
<TABLE>
<CAPTION>
Name Position Signature
---- -------- ---------
<S> <C> <C>
Charles T. Bauer Chairman & President _________________
Robert H. Graham Executive Vice President _________________
John J. Arthur Vice President & Treasurer _________________
William H. Kleh Vice President & Secretary _________________
Carol F. Relihan Vice President & _________________
Assistant Secretary
Polly A. Ahrendts Vice President _________________
Gary V. Beauchamp Vice President _________________
Melville B. Cox Vice President _________________
Gary T. Crum Vice President _________________
Karen Dunn Kelley Vice President _________________
J. Abbott Sprague Vice President _________________
Dana R. Sutton Assistant Vice President _________________
& Assistant Treasurer
Joseph A. Dichiara Assistant Vice President _________________
Sidney M. Dilgren Assistant Vice President _________________
Dineen Hughes Assistant Vice President _________________
Nancy L. Martin Assistant Secretary _________________
Kathleen J. Pflueger Assistant Secretary _________________
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C>
Samuel D. Sirko Assistant Secretary _________________
Mary J. Benson Assistant Treasurer _________________
</TABLE>
In addition, I hereby certify that in accordance with the terms of the
Company's Custodian Agreement, the Custodian for the Company be, and hereby is,
authorized to act upon written instructions executed by any two of the
following individuals and that the signatures set forth opposite their
respective names are their true and correct signatures:
<TABLE>
<CAPTION>
Name Signature
---- ---------
<S> <C>
Polly A. Ahrendts __________________
John J. Arthur __________________
Charles T. Bauer __________________
Gary V. Beauchamp __________________
Stuart W. Coco __________________
Gary T. Crum __________________
Robert H. Graham __________________
William E. Hoppe __________________
Karen Dunn Kelley __________________
William H. Kleh __________________
Mark E. McMeans __________________
Margaret A. Reilly __________________
Carol F. Relihan __________________
J. Abbott Sprague __________________
</TABLE>
IN WITNESS WHEREOF, I have hereunto set my hand as Assistant
Secretary of the Company and affixed the seal this _____ day of _________,
19___.
(SEAL)
_____________________________________
<PAGE> 1
EXHIBIT 8(a)(iv)
ASSIGNMENT AND ACCEPTANCE OF ASSIGNMENT
OF
CUSTODY AGREEMENT
DATED OCTOBER 15, 1993
SHORT-TERM INVESTMENTS CO., a Massachusetts business trust, on behalf
of its Prime Portfolio, Treasury Portfolio, Limited Maturity Treasury
Portfolio, and Treasury TaxAdvantage Portfolio, ("ASSIGNOR") does hereby assign
all of its rights and obligations under the Custody Agreement dated June 16,
1987, as amended, between ASSIGNOR and The Bank of New York (the "Custody
Agreement") to SHORT-TERM INVESTMENTS CO., a Maryland corporation, on behalf of
its Prime Portfolio, to SHORT-TERM INVESTMENTS TRUST, a Delaware business
trust, on behalf of its Treasury Portfolio and Treasury TaxAdvantage Portfolio,
and to AIM INVESTMENT SECURITIES FUNDS, a Delaware business trust, on behalf of
its Limited Maturity Treasury Portfolio (individually, an "ASSIGNEE" and
collectively, the "ASSIGNEES").
ASSIGNEE does hereby accept this assignment and warrants that:
a. ASSIGNEE is a trust/corporation duly organized and existing
and in good standing under the laws in which it is duly
organized.
b. ASSIGNEE is empowered under applicable laws and by its Charter
and By-Laws to enter into and perform the Custody Agreement.
c. All corporate proceedings required by said Charter and By-Laws
have been taken to authorize ASSIGNEE to enter into and
perform the Custody Agreement.
d. ASSIGNEE is an open-end, diversified management investment
company registered under the Investment Company Act of 1940,
as amended.
e. A registration statement under the Securities Act of 1933, as
amended on behalf of ASSIGNEE'S shares is currently effective
and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with
respect to all ASSIGNEE'S shares being offered for sale.
<PAGE> 2
IN WITNESS WHEREOF the Parties have caused this Assignment and
Acceptance thereof to be executed as of this 19th day of Oct., 1994.
SHORT-TERM INVESTMENTS CO.
(a Massachusetts business trust)
ASSIGNOR
Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER
----------------------- -----------------------
Title: Asst. Secretary Title: Chairman CEO
----------------------- -----------------------
SHORT-TERM INVESTMENTS CO.
(a Maryland corporation)
ASSIGNEE
Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER
----------------------- -----------------------
Title: Asst. Secretary Title: Chairman CEO
----------------------- -----------------------
SHORT-TERM INVESTMENTS TRUST
(a Delaware business trust)
ASSIGNEE
Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER
----------------------- -----------------------
Title: Asst. Secretary Title: Chairman CEO
----------------------- -----------------------
AIM INVESTMENT SECURITIES FUNDS
(a Delaware business trust)
ASSIGNEE
Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER
----------------------- -----------------------
Title: Asst. Secretary Title: Chairman CEO
----------------------- -----------------------
<PAGE> 3
CONSENT TO ASSIGNMENT
THE BANK OF NEW YORK
By: /s/ FRED RICCIAD
--------------------------
Title: Senior Vice President
--------------------------
Attest: /s/ JOSEPH F. KEENAN
--------------------------
Title: Assistant Vice President
--------------------------
<PAGE> 1
EXHIBIT 8(b)
SUBCUSTODIAN AGREEMENT
WITH
TEXAS COMMERCE BANK
The undersigned custodian (the "Custodian") for the funds listed on
Schedule A hereto (the "Funds"), each an open-end investment company registered
under the Investment Company Act of 1940 (the "1940 Act"), hereby appoints
Texas Commerce Bank National Association as subcustodian (the "Subcustodian")
for each of the Funds and their respective series, if any, and the Subcustodian
hereby accepts such appointment on the following terms and conditions as of the
date set forth below and along with A I M Fund Services, Inc. ("AFS"), transfer
agent for the Funds, agree as follows:
1. Qualification. The Custodian and the Subcustodian each
represent to the other and to the Funds that it is qualified to act as
custodian for a registered investment company under the 1940 Act, and the
Custodian represents to the Subcustodian that it is the duly appointed,
qualified and acting Custodian of the Funds, with all necessary power and
authority to enter into this Agreement.
2. Subcustody. The Subcustodian shall maintain custodian
accounts for the Funds ("Subscription Accounts"). Checks issued in payment for
purchases of the Funds' shares ("Subscription Checks") shall be deposited by
AFS with the Subcustodian and AFS shall instruct Subcustodian into which
Subscription Account to deposit such checks. The Subcustodian shall debit AFS
account no. 100366815 (the "Bounced Check Account") for the aggregate amount of
all Subscription Checks returned to the Subcustodian for non-payment ("Return
Items"), informing AFS daily of any returned Subscription Checks. In the event
that the available funds in the Bounced Check Account are insufficient to cover
the amount of the Return Items, Subcustodian shall promptly notify Transfer
Agent in writing of the amount of such insufficiency. Upon receipt of such
written notice, Transfer Agent agrees to remit to Subcustodian the full amount
of such insufficiency.
Each business day AFS shall provide instructions to the Subcustodian
to wire transfer certain funds to Boston Safe Deposit & Trust Company and other
entities that AFS may specify from time to time, which shall deposit the
proceeds of such wire transfers from the Subcustodian into the Settlement
Account at Boston Safe Deposit & Trust Company. The Subcustodian agrees that
it will comply with the instructions of AFS so long as the instructions do not
require the transfer of funds in an amount in excess of the aggregate of the
ledger balances in the Subscription Accounts in question and the Subcustodian
is not prohibited from making the transfer by applicable law or regulation.
Boston Safe Deposit & Trust Company will net the Subscription Check proceeds
with the redemption proceeds and the net amount will be wired to the Settlement
Account at the Custodian. The Funds will compensate the Subcustodian for (i)
service fees charged by the Subcustodian for processing Subscription Checks as
set forth on Schedule 1 to this Agreement (these amounts will be paid monthly
and computed based on overall account relationship), (ii) other miscellaneous
fees as described in Schedule 1 and (iii) Return Items not paid by the Transfer
Agent within five (5) days following a payment by Subcustodian pursuant to
paragraph 2 hereof.
-1-
<PAGE> 2
3. Instructions; Other Communications. Any one officer or other
authorized representative of AFS designated as hereinafter provided as an
officer or other authorized representative of AFS authorized to give
instructions to the Subcustodian with respect to the Funds' assets held in the
Subscription Accounts (an "Authorized Officer"), shall be authorized to
instruct the Subcustodian as to the deposit, withdrawal or any other action
with respect to the Funds' assets from time to time by telephone, or in writing
signed by such Authorized Officer and delivered by telecopy, tested telex,
tested computer printout or such other reasonable methods as AFS and
Subcustodian shall agree upon; provided, however, the Subcustodian is
authorized to accept and act upon instructions from AFS, whether orally, by
telephone or otherwise, which it reasonably believes to be given by an
Authorized Officer. The Subcustodian may require that any instructions given
orally or by telecommunications be promptly confirmed in writing.
The Authorized Officers shall be as set forth on Schedule 2 attached
hereto or as otherwise from time to time certified in writing by AFS to the
Subcustodian signed by the President or any Vice President and any Assistant
Vice President, Assistant Secretary or Assistant Treasurer of AFS. In addition
to a written list of authorized officers, AFS will provide Subcustodian with
additional information and signature cards as reasonably requested by
Subcustodian relating to the Authorized Officers. The Subcustodian shall
furnish to AFS (i) prompt telephonic and written notice of Return Items, (ii)
monthly reports on activity in each of the Subscription Accounts mailed within
five (5) days after the end of each calendar month and (iii) a daily statement
of activity in each of the Subscription Accounts, which will be made available
via the MicroLink balance reporting service. AFS will furnish a copy of the
information provided by Subcustodian to (i) each Fund, and (ii) the Custodian
(as to the Custodian, only items (ii) and (iii) above are required).
4. Fees. The service fees charged by the Subcustodian under the
Agreement are as set forth in Schedule 1 attached hereto. Schedule 1 may be
amended by the parties in writing provided written notice is furnished to the
Funds thirty (30) days in advance of any increase in fees.
5. Liabilities. (i) The Subcustodian shall be indemnified and
held harmless by AFS and the Funds and not be liable for any action taken or
omitted to be taken by it in good faith or for any mistake of law or fact, or
for anything Subcustodian may do or refrain from doing in connection with or as
required by this Agreement, except for failure to exercise ordinary care or act
in good faith. Except as otherwise set forth herein, the Subcustodian shall
have no responsibility with respect to Fund assets. The Subcustodian shall,
for the benefit of the Custodian, AFS and the Funds, use the same care with
respect to the handling of the Funds' assets in the Subscription Accounts as it
uses with respect to its own assets similarly held. The Subcustodian shall
have no responsibility with respect to any monies or any wire transfer, checks
or other instruments for the payment of money unless and until actually
received or secured by wire transfer by the Subcustodian. IN NO EVENT WILL THE
SUBCUSTODIAN BE LIABLE TO THE CUSTODIAN, AFS OR THE FUNDS FOR ANY INDIRECT
DAMAGES, LOST PROFITS, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES WHICH ARISE
OUT OF OR IN CONNECTION WITH THE SERVICES CONTEMPLATED HEREIN.
(ii) The Subcustodian shall indemnify, defend and save harmless the
Custodian, AFS and each Fund from and against all loss, liability, claims and
demands incurred by the Custodian, AFS or the Funds and any related
out-of-pocket expenses, arising directly from the Subcustodian's bad
-2-
<PAGE> 3
faith, willful malfeasance or negligence in connection with its obligations
under this Agreement and the Investment Company Act of 1940, as amended.
(iii) The Custodian agrees to indemnify and hold the Subcustodian
harmless from and against any and all loss, liability, claims and demands
incurred by Subcustodian in connection with the performance by the Subcustodian
in good faith of any activity under this Agreement pursuant to instructions of
the Custodian.
(iv) It is understood and stipulated that neither the shareholders
of any Fund nor the members of the Board of such Fund shall be personally
liable hereunder.
6. Termination. Each party may terminate this Agreement at any
time by not less than thirty (30) days prior written notice which shall specify
the date of such termination; provided, however, that the Custodian may
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Subcustodian by the Federal Deposit Insurance
Corporation or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction. Upon
termination of this Agreement, the Subcustodian shall promptly make delivery of
all assets of the Funds held in the Subscription Accounts to the Custodian or
any third party, qualified to act as a custodian pursuant to the rules and
regulations of the Investment Company Act of 1940, as amended, specified by the
Custodian in writing. If any Subscription Checks are subsequently returned
unpaid, the Funds shall direct AFS to pay the Subcustodian the amount thereof
on behalf of the Funds promptly upon demand. All indemnities provided pursuant
to this Agreement shall survive the termination of this Agreement.
7. Communications. All communications required or permitted to
be given under this Agreement shall be in writing (including telex, telegraph
or telefax, facsimile or similar electronic transmittal device) and shall be
deemed given (a) upon delivery in person to the persons indicated below, or (b)
three days after deposit in the United States postal service, postage prepaid,
registered or certified mail, return receipt requested, or (c) upon receipt by
facsimile (provided that receipt of such facsimile is confirmed telephonically
by the addressee) or (d) by overnight delivery service (with receipt of
delivery) sent to the address shown below, or to such different address(es) as
such party shall designate by written notice to the other parties hereto at
least ten days in advance of the date on which such change of address shall be
effective. All communications required or permitted to be given under this
Agreement shall be addressed as follows:
(i) to the Subcustodian: Texas Commerce Bank National Association
P.O. Box 2558
Houston, Texas 77252-8084
Attn: Kathy Wallace
(ii) to the Custodian: State Street Bank and Trust Company
Mutual Fund Services
Boston, Massachusetts 02105
Attn: AIM Funds
-3-
<PAGE> 4
(iii) to the Transfer Agent: A I M Fund Services, Inc.
11 Greenway Plaza
Suite 1919
Houston, Texas 77046
Attn: Robert Frazer
8. Records. The books and records pertaining to the Subscription
Accounts which are in the possession of the Subcustodian shall be preserved by
the Subcustodian for six years, the first two years of which the books and
records shall be maintained by the Subcustodian in an easily accessible place.
The Subcustodian will not refuse any reasonable request for inspection and
audit of its books and records concerning transactions and balances of the
Subscription Accounts by an agent of any Fund, AFS or the Custodian.
9. Cooperation. The Subcustodian shall cooperate with each Fund
and the Custodian and their respective independent public accountants in
connection with annual and other audits of the books and records of the
Custodian or the Funds and shall take all reasonable actions to assure that
such information is made available to such accountants for the expression of
their opinion.
10. Terms and Conditions of Deposit Accounts. The handling of the
Subscription Accounts and the Bounced Check Account and all other accounts
maintained with the Subcustodian in connection with or relating to this
Agreement will be subject to the Subcustodian's Terms and Conditions of Deposit
Accounts, and any and all rules or regulations now or hereafter promulgated by
the Subcustodian which relate to such accounts, and the Uniform Commercial Code
as adopted in the State of Texas (except in the event any of the same are
contrary to the specific provisions hereof). In the event of any specific
conflict between the provisions hereof and the provisions of any of the
foregoing, the provisions of this Agreement shall control.
11. Miscellaneous. This Agreement shall be (i) governed by and
construed in accordance with the laws of the State of Texas without regard to
conflicts of law rules, (ii) may be executed in counterparts each of which
shall be deemed an original but all of which shall constitute the same
instrument, and (iii) may only be amended by the parties hereto in writing.
12. Signature Authority. Each of the undersigned represents and
warrants that he/she has the requisite authority to execute this Agreement on
behalf of the party for whom the undersigned signs; that all necessary action
has been taken to authorize this Agreement; that this Agreement, upon execution
and delivery, shall be a binding obligation of such party.
-4-
<PAGE> 5
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed this 9th day of September, 1994.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
(as Subcustodian)
By: /s/ KATHY WALLACE
----------------------------------
Title: Financial Services Officer
-------------------------------
STATE STREET BANK AND TRUST COMPANY
(as Custodian)
By: /s/ N. GRADY
----------------------------------
Title: Vice President
-------------------------------
A I M FUND SERVICES, INC.
(as Transfer Agent)
By: /s/ Illegible
----------------------------------
Title: Senior Vice President
-------------------------------
Each of the Funds hereby consents and agrees to the terms of the
foregoing Subcustodian Agreement; provided, however, that the same shall not
relieve the Custodian of any of its responsibilities to the Fund as set forth
in the Custodian Agreements between the Funds and the Custodian.
EACH OF THE FUNDS LISTED ON
SCHEDULE A HERETO
By: /s/ Illegible
----------------------------------
Title: Senior Vice President &
Treasurer
------------------------------
-5-
<PAGE> 6
SCHEDULE A
AIM Equity Funds, Inc.
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds
AIM Tax-Exempt Funds, Inc.
<PAGE> 7
Schedule 1
<TABLE>
<S> <C>
TCB-HOUSTON
PRICES ARE GUARANTEED FOR 90 DAYS FROM: 6/09/94
PRO-FORMA ACCOUNT ANALYSIS STATEMENT
AIM FUNDS SERVICES, INC. ANALYSIS PERIOD PAGE
LEVEL ENDING NO.
ACCOUNT DETAIL 04/30/94 1 OF 1
CHECK PROCESSING
</TABLE>
<TABLE>
<CAPTION>
EARNINGS RESERVE BALANCE
AVERAGE DEMAND BALANCES THIS PERIOD CREDIT REQUIREMENT MULTIPLIER
- ----------------------------------- -------- ----------- ---------
<S> <C> <C> <C>
LEDGER BALANCE $0.00 3.55% 10.00% 362.72
LESS UNCOLLECTED FUNDS $0.00
-----
COLLECTED BALANCE $0.00
LESS INTEREST BEARING BALANCE $0.00
-----
NET COLLECTED BALANCE $0.00
LESS RESERVE REQUIREMENT $0.00
-----
NET AVAILABLE BALANCE $0.00
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED
SERVICES RENDERED UNIT PRICE ACTIVITY TOTAL PRICE BALANCE EQUIVALENT
----------------- ---------- -------- ----------- ------------------
<S> <C> <C> <C> <C>
AUTOMATED CLEARING HOUSE
Night Cycle CR/DE - One Day 0.0750 2,200 $ 165.00 $ 56,568.80
Day Cycle CR/DE - Two Day 0.0750 26,000 $ 1,950.00 $ 668,304.00
ACI Data Transmission 10.0000 1 $ 10.00 $ 3,427.20
Monthly Maintenance - TexID/Acct 50.0000 1 $ 30.00 $ 17,136.00
Return Items 2.5000 137 $ 342.50 $ 117,381.60
CUSTOMER ACCOUNTING
Account Maintenance 20.0000 9 $ 180.00 $ 61,689.60
Return Items - Received 2.5000 246 $ 615.00 $ 210,772.80
Return Items - Receivers 1.5000 492 $ 738.00 $ 252,927.36
FDIC Assessment $.16/$1000 Ledger 469.3300 1 $ 469.33 $ 160,848.78
Customer Research - per copy 2.0000 1 $ 2.00 $ 685.44
ITEM PROCESSING
Tier I/Local City 0.0300 560 $ 16.80 $ 5,757.70
Tier II/Local RCPC 0.0450 124 $ 5.58 $ 1,912.38
Tier III/Texas Fed Cities 0.0550 628 $ 34.54 $ 11,837.55
Tier IV/Other Texas 0.0600 1,118 $ 67.08 $ 22,989.66
Tier V/Other Transit 0.0600 34,050 $ 2,043.00 $ 700,176.96
NICROLINE
APC Transactions 0.1000 2,200 $ 220.00 $ 75,398.40
APC Maintenance w/ Cash Manager 25.0000 1 $ 25.00 $ 8,568.00
Cash Manager Software Maintenance 35.0000 1 $ 35.00 $ 11,995.20
Bank Account - TCB 20.5500 9 $ 184.95 $ 65,386.06
Bank Account - Other Banks 28.3300 15 $ 424.95 $ 145,638.86
Previous Day Items 0.1500 26,039 $ 3,905.85 $1,338,612.91
TEX-COM
TX Corp. DX TCB Accounts 25.5600 9 $ 230.04 $ 78,839.31
TX Corp. DX TCB Accts D8/CR Items 0.2000 3,039 $ 607.80 $ 208,305.22
WIRE TRANSFER
Incoming transfer - Autopost 4.5000 660 $ 2,970.00 $1,017,878.40
Account Maintenance 5.0000 1 $ 5.00 $ 1,713.60
IDA Repetitive - Outgoing 6.0000 22 $ 132.00 $ 45,239.04
TOTALS BEFORE RESERVES $ 15,429.42 $5,287,970.82
SUMMARY ANALYSIS
NET AVAILABLE BALANCE $0.00
LESS BALANCES REQUIRED TO SUPPORT SERVICES $5,250,970.82
-------------
BALANCES AVAILABLE FOR OTHER SERVICES ($5,287,970.82)
COLLECTED BALANCE REQUIRED $5,875,523.14
OR
FEES DUE FOR COLLECTED BALANCE DEFICIENCY $17,143.80
</TABLE>
<PAGE> 8
Average Demand Balances This Period
- -----------------------------------
-- Ledger Balance -- The average gross balance that includes all
collected and uncollected funds. It is the sum of each day's ending
ledger inclusive of aggregate adjustments divided by the number of
days in the reporting month.
-- Less Funds in Process of Collection -- The average float incurred for
the reporting month calculated by subtracting average collected
balance from the average ledger balance.
-- Collected Balance -- The sum of each day's ending collected balance
inclusive of aggregate adjustments divided by the number of days in
the reporting month.
-- Less Interest Bearing Balance -- The average collected balance
maintained in interest bearing accounts.
-- Net Collected Balance -- Collected balance minus interest bearing
balance.
-- Less Reserve Requirement -- The amount of every dollar of collected
balances that must be held in reserve. Net collected balance
multiplied by the reserve requirement rate.
-- Net Available Balance -- The balance available to apply towards
compensation for services rendered. Net collected balance minus the
reserve requirement.
Earnings Credit -- This percent approximates the value of the alternative use
of cash in short term investment. The rate is adjusted monthly to reflect
market trends during the period.
Reserve Requirement -- This percentage is determined by state or federal
regulations. This percentage of every dollar of collected balances must be held
in reserve by the bank.
Balance Multiplier -- This shows the available balances required to compensate
for $1.00 of service activity for one month. It is calculated by applying the
earnings credit rate to $1.00 of services as follows:
$1.00 Days in the Year
---------------- X -------------------
Earnings Credit Days in the Month
Services Rendered -- The description of services provided during the reporting
month.
Weighted Unit Price -- Total price divided by total activity.
Activity -- The total number of units rendered for each service.
Total Price -- The unit price multiplied by the activity.
Balance Equivalent -- The available balances required to compensate for
services rendered. Total price multiplied by the balance multiplier.
Summary Analysis
-- Balance Available for Other Services -- this represents the
difference between the net available balance and the balances
required to support services rendered.
-- Collected Balance Equivalent -- This represents the collected
balances equivalent that is available to support additional services.
The formula for calculation is:
Balances Available For Other Services
-------------------------------------
1-Reserve Requirement
-- Collected Balances Required -- This represents the collected balance
required to compensate for a current month deficient available
balance. The formula for calculation is:
Balances Available For Other Services
-------------------------------------
1-Reserve Requirement
-- Fees Due for Collected Balance Deficiency -- The amount due in fees
for a collected balance deficiency. The formula for calculation is:
Collected Balance Required
--------------------------
Balance Multiplier
<PAGE> 9
June 2, 1994
PRO-FORMA ACCOUNT ANALYSIS ADDENDA Page 1
AIM Fund Services, Inc.
BANK/PRODUCT/ACTIVITY UNIT PRICE MINIMUM
- --------------------- ---------- -------
TCB-Houston
MICROLINK
Cash Manager Software Setup $325.00 0.00
Automated Payments and
Collections (APC) Software
and Setup $225.00 0.00
ACH Transmission Setup $200.00 0.00
<PAGE> 10
SCHEDULE 2
AUTHORIZED OFFICERS
-------------------
Jack Caldwell President
Ira Cohen Vice President
Mary Corcoran Vice President
Sidney M. Dilgren Vice President
Robert A. Frazer Assistant Vice President
Mary Gentempo Vice President
Richard Snyder Senior Vice President
AUTHORIZED REPRESENTATIVES
--------------------------
Torri Evans
Debi Folse
Ann Marie Mahoney
Tim McDonough
Robert Thompson
<PAGE> 1
EXHIBIT 11(a)
CONSENT OF COUNSEL
AIM INVESTMENT SECURITIES FUNDS
We hereby consent to the use of our name and to the references
to our firm under the caption "General Information - - Legal Counsel" in the
Prospectuses for each of AIM Limited Maturity Treasury Shares and Limited
Maturity Treasury Portfolio Institutional Shares, each a class of the Limited
Maturity Treasury Portfolio, and under the caption "Miscellaneous Information
- - - Legal Matters" in the Statement of Additional Information for AIM Limited
Maturity Treasury Shares, all of which form a part of Post-Effective Amendment
No. 7 to the Registration Statement of AIM Investment Securities Funds on Form
N-1A under the Securities Act of 1933 (Reg. No. 33-39519).
/s/BALLARD SPAHR ANDREWS & INGERSOLL
------------------------------------
Ballard Spahr Andrews & Ingersoll
Philadelphia, Pennsylvania
November 21, 1996
<PAGE> 1
EXHIBIT 11(b)
[LETTERHEAD OF DECHERT PRICE & RHOADS]
November 12, 1996
Board of Trustees
AIM Investment Securities Funds
Suite 1919
11 Greenway Plaza
Houston, Texas 77046
Gentlemen:
We hereby consent to the reference to our name appearing under the
caption "Investment Restrictions" in the Statement of Additional Information
for the AIM Limited Maturity Treasury Shares, a class of the Limited Maturity
Treasury Portfolio, to be filed with the Securities and Exchange Commission in
Post-Effective Amendment No. 7 to the registration statement of AIM Investment
Securities Funds on Form N-1A.
We further consent to the reference to our name appearing under the
caption "Investment Program and Restrictions -- Investment Restrictions" in the
Statement of Additional Information for the Institutional Shares, a class of
the Limited Maturity Treasury Portfolio, to be filed with the Securities and
Exchange Commission in Post- Effective Amendment No. 7 to the registration
statement of AIM Investment Securities Funds on Form N-1A.
Very truly yours,
/s/ DECHERT PRICE & RHOADS
<PAGE> 1
EXHIBIT 11(c)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders of
AIM Investment Securities Funds:
We consent to the use of our reports on the AIM Limited Maturity Portfolio (a
series of AIM Investment Securities Funds) dated August 23, 1996 included
herein and to the references to our firm under the headings "Financial
Highlights" in the Prospectus and "Audit Reports" in the Statement of
Additional Information.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
November 12, 1996
<PAGE> 1
EXHIBIT 11(d)
[LETTERHEAD OF THE LAW OFFICES OF
DECHERT PRICE & RHOADS]
November 23, 1994
Ms. Carol F. Relihan
General Counsel
A I M Advisors, Inc.
11 Greenway Plaza
Suite 1919
Houston, Texas 77046
Re: AIM Investment Securities Funds: Limited Maturity Treasury
Portfolio
Dear Ms. Relihan:
You have asked that we confirm to you that the conclusions expressed
in the legal opinions referenced below, regarding the eligibility of the shares
of Limited Maturity Treasury Portfolio (the "Fund") for investment by certain
types of depository institutions, remain valid.
The Fund, which is a portfolio of AIM Investment Securities Funds (the
"Trust"), consists of two classes: AIM Limited Maturity Treasury Shares (the
"Retail Class") and the Institutional Shares. (1) We have previously opined
that the shares of the Retail Class and/or the Institutional Shares are
permissible investments for national banks, federal savings and loan
associations, or federal credit unions. The opinions that you have asked us to
review are as follows: (1) an October 8, 1993 opinion, concluding that shares
of the Retail Class and the Institutional Shares are permissible investments
for federally chartered credit unions; (2) a December 10, 1992 opinion,
concluding that the opinions expressed in several earlier opinions (noted
below) remain valid; (3) a January 11, 1989 opinion concluding that the shares
of the Retail Class are a permissible investment for a
- -------------------------
1. The Fund previously had been a series portfolio of Short-Term Investments
Co. On October 15, 1993 the Trust was reorganized as a Delaware business trust
and the Fund was redomesticated as a portfolio of the Trust. Although our
prior opinions predate the reorganization of the Fund, it is our understanding
that the reorganization did not materially affect the investment objectives,
policies or restrictions of the Fund.
<PAGE> 2
Ms. Carol F. Relihan
November 23, 1994
Page 2
national bank; (4) a December 17, 1987 opinion, concluding that the Retail
Class and the Institutional Shares are a permissible investment for a federal
savings and loan association; and (5) two opinions, dated January 21, 1988 and
February 2, 1988, concluding that the Retail Class shares are a permissible
investment for a federal credit union.
The Trust is a Delaware business trust that is organized as an
open-end series management investment company and is registered with the
Securities and Exchange Commission. The Trust currently offers the Fund as its
sole portfolio. The Fund, in turn, consists of two classes, the Retail Class
and the Institutional Shares. Both classes have the same investment objectives
and restrictions and have common portfolio investments.
The types of securities and other instruments in which each class may
invest, as well as restrictions applicable to their investments and investment
practices, are fully described in the prospectuses ("Prospectuses") and
statements of additional information ("SAIs") for each class, which we hereby
incorporate by reference into this opinion. (2) Each class may invest in direct
obligations of the United States Treasury, repurchase agreements of Treasury
securities (although neither class presently invests in repurchase agreements),
and may lend its portfolio securities. Each class also may enter into reverse
repurchase agreements and may purchase Treasury securities on a when-issued,
and may purchase and sell such securities on a delayed delivery basis.
We have reviewed the Prospectuses, SAI's, our prior legal opinions,
the applicable statutes, regulations, interpretations, and opinions of the
various federal banking agencies, and such other documents as we believe
appropriate. The applicable laws and regulations authorizing national banks,
federal savings and loan associations, and federal credit unions to invest in
certain mutual funds, on which the prior opinions were based, have not
materially changed since the date of those opinions. Although the Fund has
reorganized since the date of those opinions, the applicable investment
policies and restrictions have not been altered materially since the date of
the prior opinions. For the reasons stated in each of our opinions, which we
hereby incorporated by reference, it is our opinion that the shares of each
class of the Fund continue to be eligible.
- -------------------------
(2) The Prospectus and SAI for each class of shares are dated December 1,
1994. You have provided us with marked copies of the Prospectus and SAI for
each class, which are to be filed with the Securities and Exchange Commission
as post-effective amendment No. 5 to the registration statement on Form N-1A,
scheduled to become effective on December 1, 1994. You also have represented
to us that the investment objectives, policies and restrictions as described in
the Prospectus and SAI have not materially changed in any respect relevant to
this or our prior legal opinions and are accurate and will not materially
differ from their final form.
<PAGE> 3
Ms. Carol F. Relihan
November 23, 1994
Page 3
investments for the type of depository institution referred to in the
particular opinions, as referenced below. Our present opinion remains subject
to all conditions, qualifications, caveats, or limitations expressed in each of
the original opinions, and for purposes of this opinion we have relied on the
continued accuracy of any and all representations made by you to us in
connection with the prior opinions.
I. Federal Credit Unions
Our most recent opinion, dated October 8, 1993, concluded that the
Retail Class and the Institutional Shares were permissible investments for
federal credit unions under 12. C.F.R. section 703.4(j), the law in effect at
that time. That opinion incorporated the December 10, 1992 opinion, which in
turn incorporated the January 21, and February 2, 1988 opinions that the shares
of the Retail Class were permissible investments for a federal credit union.
Our review of the Prospectus and SAI for the Retail Class and the
Institutional Shares indicates that the investment policies and investment
restrictions have not materially changed since the date of our most recent
opinion, nor have the laws, regulations, and legal opinions applicable to
federal credit unions. Accordingly, it is our opinion that the shares of the
Retail Class and the Institutional Shares remain eligible investments for a
federal credit union pursuant to 12 C.F.R. section 703.4(j) (1994).
II. Federal Savings and Loan Associations
Our December 10, 1992 opinion concluded that the shares of the Retail
Class and the Institutional Shares were eligible investments for a federal
savings and loan association pursuant to 12 U.S.C. section 1464(c)(1)(Q) and 12
C.F.R. section 545.76. That opinion reaffirmed the views expressed in an
earlier opinion, dated December 17, 1987, to the same effect.
The conditions under which a federal savings and loan association may
invest in an open-end mutual fund are the same as those discussed in the prior
opinions. As noted in those opinions, the fundamental nature of the investment
restrictions, which limit the Fund to investing in direct obligations of the
U.S. Treasury or repurchase agreements with respect to such obligations,
satisfies the statutory requirement that the portfolio of an eligible fund must
be limited as a fundamental matter solely to those instruments in which a
federal association may invest without limit as to a percentage of assets.
For the reasons stated in our opinions, the Fund continues to comply with the
remaining requirements of 12 U.S.C. section 1464(c)(1)(Q) and 12 C.F.R. section
545.76, and it is our opinion that the shares of each class are an eligible
investment for a federal savings and loan association.
<PAGE> 4
Ms. Carol F. Relihan
November 23, 1994
Page 4
III. National Banks
Our December 10, 1992 opinion reaffirmed the conclusions expressed in
our January 11, 1989 opinion that the shares of the Retail Class are a
permissible investment for a national bank. Since the date of those opinions,
the Trust has been reorganized as a Delaware business trust and the Fund, which
formerly had been a portfolio of another investment company, was redomesticated
as a portfolio of the Trust. In all other respects that are material to the
eligibility of the Retail Class for investment by a national bank, the Fund and
the Retail Class have not changed since the date of our prior opinions.
As described in our prior opinions, the authority of a national bank
to invest in the shares of an open-end investment company is conferred by
Banking Circular No. 220 (November 21, 1986), issued by the Comptroller of the
Currency. With the exception of the Trust now being a Delaware business trust,
it is our view that the investment policies, practices, and restrictions of the
Fund comport with the requirements of BC-220, for the reasons expressed in our
prior opinions. As to the Trust being organized as a Delaware business trust,
it is our opinion that the change to that business form does not affect the
eligibility of the Retail Class for investment by a national bank.
Among other things, BC-220 provides that in order for an investment
company to be an eligible investment for a national bank, the shareholders of
the fund must be shielded from personal liability for acts or obligations of
the investment company. The staff of the Comptroller of the Currency has
determined that a fund organized as a Massachusetts business trust satisfies
this requirement, as was described in our January 11, 1989 opinion. See
Investment Securities Letter No. 16 (Feb. 18, 1987). As noted in both our
prior opinion and the OCC Staff Letter, the principal factors shielding the
shareholders from personal liability were a disclaimer of shareholder liability
in the declaration of trust (notice of which must be given as part of each
contractual undertaking of the trust) and a requirement that the trust
indemnify its shareholders for any liabilities incurred as a result of any
person being a shareholder of the Fund.
Although the OCC appears not to have considered whether a Delaware
business trust would be accorded that same treatment as a Massachusetts
business trust, it is our view that a Delaware business trust would be an
eligible investment under the terms of BC-220. Under Delaware law, the
beneficial owners of a Delaware business trust are given the same limits on
personal liability as are shareholders of Delaware corporations, except as
otherwise provided in the trust instrument. 12 Del. Code section 3803. The
declaration of trust under which the Trust was organized disclaims shareholder
liability for acts or obligations of the Trust and requires that notice of such
disclaimer be given in each agreement entered into by the Trust with third
parties, and that each such third party must expressly waive all rights of
action directly against the shareholders of the
<PAGE> 5
Ms. Carol F. Relihan
November 23, 1994
Page 5
Trust. The declaration also provides for indemnification out of the Trust's
property for all losses incurred by any shareholder held liable on account of
being a shareholder.
In light of each of those provisions, it is our belief that the
shareholders of the Fund would be shielded from personal liability for the acts
of the Fund, for purposes of satisfying the requirements of BC-220.
Accordingly, it is our opinion that the shares of the Retail Class continue to
be eligible for investment by a national bank.
We note that BC-220 further provides that if a mutual fund were to
invest in obligations that would be subject to the lending or investment limits
applicable to national banks, then the amount that a national bank could invest
in that fund would be capped at an amount equal to 10% of the capital and
surplus of the investing bank. This provision does not affect the eligibility
of a fund for investment by a national bank, only the amount that may be
invested. Loans of portfolio securities and repurchase agreements would, if
conducted by a national bank, likely be considered as loans subject to a
national bank's lending limit. Accordingly, if the portfolio of the Fund
includes such instruments a national bank could invest no more than 10% of its
capital and surplus in the shares of the Fund.
Very truly yours,
/s/ DECHERT PRICE & RHOADS
<PAGE> 1
EXHIBIT 15(b)(2)
EXHIBIT A
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE] FOR SALE OF SHARES
A I M Distributors, Inc. OF THE AIM MUTUAL FUNDS
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each
of the AIM-managed mutual funds (or designated classes of such funds) listed on
Schedule A to this Agreement (the "Funds"), under a Distribution Plan (the
"Plan") adopted pursuant to said Rule. This Agreement, being made between A I M
Distributors, Inc. ("Distributors"), solely as agent for the Funds, and the
undersigned authorized dealer, defines the services to be provided by the
authorized dealer for which it is to receive payments pursuant to the Plan
adopted by each of the Funds. The Plan and the Agreement have been approved by
a majority of the directors of each of the Funds, including a majority of the
directors who are not interested persons of such Funds, and who have no direct
or indirect financial interest in the operation of the Plan or related
agreements (the "Dis-interested Directors"), by votes cast in person at a
meeting called for the purpose of voting on the Plan. Such approval included a
determination that in the exercise of their reasonable business judgement and
in light of their fiduciary duties, there is a reasonable likelihood that the
Plan will benefit such Fund and its shareholders. The Plan has also been
approved by a vote of at least a majority of each of such Funds' (or applicable
class of such Funds) outstanding securities, as defined in the 1940 Act.
1 To the extent that you provide distribution-related continuing personal
shareholder services to customers who may, from time to time, directly or
beneficially own shares of the Funds, including but not limited to,
distributing sales literature, answering routine customer inquiries
regarding the Funds, assisting customers in changing dividend options,
accounting designation and addresses, and in enrolling into any of several
special investment plans offered in connection with the purchase of the
Fund's shares, assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions, investing dividends and capital gains distributions
automatically in shares and providing such other services as the Funds or
the customer may reasonably request, we, solely as agent for the Funds,
shall pay you a fee periodically or arrange for such fee to be paid to you.
2 The fee paid with respect to each Fund will be calculated at the end of each
payment period (as indicated in Schedule A) for each business day of the
Fund during such payment period at the annual rate set forth in Schedule A
as applied to the average net asset value of the shares of such Fund
purchased or acquired through exchange on or after the Plan Calculation
Date shown for such Fund on Schedule A. Fees calculated in this manner
shall be paid to you only if your firm is the dealer of record at the close
of business on the last business day of the applicable payment period, for
the account in which such shares are held (the "Subject Shares"). In cases
where Distributors has advanced payment to you of the first year's fee for
shares sold at net asset value and subject to contingent deferred sales
charge, no additional payments will be made to you during the first year
the Subject Shares are held.
3 The total of the fees calculated for all of the Funds listed on Schedule A
for any period with respect to which calculations are made shall be paid
to you within 45 days after the close of such period.
4 We reserve the right to withhold payment with respect to the Subject Shares
purchased by you and redeemed or repurchased by the Fund or by us as Agent
within seven (7) business days after the date of our confirmation of such
purchase. We reserve the right at any time to impose minimum fee payment
requirements before any periodic payments will be made to you hereunder.
5 This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
6 You shall furnish us and the Funds with such information as shall
reasonably be requested either by the directors of the Funds or by us with
respect to the fees paid to you pursuant to this Agreement.
7 We shall furnish the directors of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under the Plan by
us and the purposes for which such expenditures were made.
<PAGE> 2
8 Neither you nor any of your employees or agents are authorized to make any
representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds, and you shall have no authority
to act as agent for the Funds or for Distributors.
9 We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10 This Agreement and Schedule A may be amended at any time without your
consent by Distributors mailing a copy of an amendment to you at the address
set forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this Agreement
within thirty (30) days of your receipt of such amendment.
11 This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty by the vote of a majority of the directors
of such Fund who are Dis-interested Directors or by a vote of a majority of
the Fund's outstanding shares, on sixty (60) days' written notice. It will
be terminated by any act which terminates either the Fund's Distribution
Agreement with us, the Selected Dealer Agreement between your firm and us
or the Fund's Distribution Plan, and in any event, it shall terminate
automatically in the event of its assignment as that term is defined in the
1940 Act.
12 The provisions of the Distribution Agreement between any Fund and us,
insofar as they relate to the Plan, are incorporated herein by reference.
This Agreement shall become effective upon execution and delivery hereof
and shall continue in full force and effect as long as the continuance of
the Plan and this related Agreement are approved at least annually by a
vote of the directors, including a majority of the Dis-interested
Directors, cast in person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to the address of
Distributors as shown at the bottom of this Agreement. Any notice to you
shall be duly given if mailed or telegraphed to you at the address
specified by you below.
13 You represent that you provide to your customers who own shares of the
Funds personal services as defined from time to time in applicable
regulations of the National Association of Securities Dealers, Inc., and
that you will continue to accept payments under this Agreement only so long
as you provide such services.
14 This Agreement shall be construed in accordance with the laws of the State
of Texas.
A I M DISTRIBUTORS, INC.
/S/ MICHAEL J. CEMO
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 3
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund A Shares 0.25 September 15, 1994
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Tax-Exempt Bond Fund of Connecticut 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund 0.10 July 1, 1992
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
</TABLE>
*Frequency of Payments: Quarterly, B share payments begin after an initial
12 month holding period.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
<PAGE> 1
EXHIBIT 15(c)(2)
EXHIBIT B
[LOGO APPEARS HERE] BANK SHAREHOLDER
A I M Distributors, Inc. SERVICE AGREEMENT
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms and
conditions of this Agreement shall be as follows:
1 We shall provide continuing personal shareholder and administration
services for holders of the Shares who are also our clients. Such services
to our clients may include, without limitation, some or all of the
following: answering shareholder inquiries regarding the Shares and the AIM
Funds; performing subaccounting; establishing and maintaining shareholder
accounts and records; processing and bunching customer purchase and
redemption transactions; providing periodic statements showing a
shareholder's account balance and the integration of such statements with
those of other transactions and balances in the shareholder's other
accounts serviced by us; forwarding applicable AIM Funds prospectuses, proxy
statements, reports and notices to our clients who are holders of Shares;
and such other administrative services as you reasonably may request, to
the extent we are permitted by applicable statute, rule or regulations to
provide such services. We represent that we shall accept fees hereunder
only so long as we continue to provide personal shareholder services to our
clients.
2 Shares purchased by us as agents for our clients will be registered (choose
one) (in our name or in the name of our nominee) (in the names of our
clients). The client will be the beneficial owner of the Shares purchased
and held by us in accordance with the client's instructions and the client
may exercise all applicable rights of a holder of such Shares. We agree to
transmit to the AIM Funds' transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each
client any proxy statements, periodic shareholder reports and other
communications received from the Company by us on behalf of our clients.
The Company agrees to pay all out-of-pocket expenses actually incurred by
us in connection with the transfer by us of such proxy statements and
reports to our clients as required by applicable law or regulation. We
agree to transfer record ownership of a client's Shares to the client
promptly upon the request of a client. In addition, record ownership will
be promptly transferred to the client in the event that the person or
entity ceases to be our client.
3 Within five (5) business days of placing a purchase order we agree to send
(i) a cashiers check to the Company, or (ii) a wire transfer to the AIM
Funds' transfer agent, in an amount equal to the amount of all purchase
orders placed by us on behalf of our clients and accepted by the Company.
4 We agree to make available to the Company, upon the Company's request, such
information relating to our clients who are beneficial owners of Shares and
their transactions in such Shares as may be required by applicable laws and
regulations or as may be reasonably requested by the Company. The names of
our customers shall remain our sole property and shall not be used by the
Company for any other purpose except as needed for servicing and
information mailings in the normal course of business to holders of the
Shares.
5 We shall provide such facilities and personnel (which may be all or any
part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying out
the purposes of this Agreement.
6 Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are
authorized to assist in distribution of any of the AIM Funds' shares except
those contained in the then current Prospectus applicable to the Shares;
and we shall have no authority to act as agent for the Company or the AIM
Funds. Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors,
Inc. will be a party, nor will they be represented as a party, to any
agreement that we may enter into with our clients.
<PAGE> 2
7 In consideration of the services and facilities described herein, we shall
receive from the Company on behalf of the AIM Funds an annual service fee,
payable at such intervals as may be set forth in Schedule A hereto, of a
percentage of the aggregate average net asset value of the Shares owned
beneficially by our clients during each payment period, as set forth in
Schedule A hereto. We understand that this Agreement and the payment of
such service fees has been authorized and approved by the Boards of
Directors/Trustees of the AIM Funds, and is subject to limitations imposed
by the National Association of Securities Dealers, Inc. In cases where the
Company has advanced payments to us of the first year's fee for shares sold
with a contingent deferred sales charge, no payments will be made to us
during the first year the subject Shares are held.
8 The AIM Funds reserve the right, at their discretion and without notice, to
suspend the sale of any Shares or withdraw the sale of Shares.
9 We understand that the Company reserves the right to amend this Agreement
or Schedule A hereto at any time without our consent by mailing a copy of
an amendment to us at the address set forth below. Such amendment shall
become effective on the date specified in such amendment unless we elect to
terminate this Agreement within thirty (30) days of our receipt of such
amendment.
10 This Agreement may be terminated at any time by the Company on not less
than 15 days' written notice to us at our principal place of business. We,
on 15 days' written notice addressed to the Company at its principal place
of business, may terminate this Agreement, said termination to become
effective on the date of mailing notice to us of such termination. The
Company's failure to terminate for any cause shall not constitute a waiver
of the Company's right to terminate at a later date for any such cause.
This Agreement shall terminate automatically in the event of its assigment,
the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940, as amended.
11 All communications to the Company shall be sent to it at Eleven Greenway
Plaza, Suite 1919, Houston, Texas, 77046-1173. Any notice to us shall be
duly given if mailed or telegraphed to us at this address shown on this
Agreement.
12 This Agreement shall become effective as of the date when it is executed
and dated below by the Company. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
/S/ MICHAEL J. CEMO
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 3
SCHEDULE "A" TO BANK
[AIM LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund A Shares 0.25 September 15, 1994
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Tax-Exempt Bond Fund of Connecticut 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund 0.10 July 1, 1992
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
</TABLE>
*Frequency of Payments: Quarterly, B share payments begin after an initial
12 month holding period.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
<PAGE> 1
EXHIBIT 15(d)(2)
EXHIBIT C
SERVICE AGREEMENT FOR
CERTAIN RETIREMENT PLANS
(THE AIM FAMILY OF FUNDS--Registered Trademark--)
This Agreement is entered into as of the_____ of __________________,
199___, between __________________________ ______________________________ (the
"Plan Provider") and A I M Distributors, Inc. (the "Distributor").
RECITAL
-------
Plan Provider acts as a trustee and/or servicing agent for defined
contribution plans and/or deferred compensation plans (the "Plans") and invests
and reinvests such Plans' assets as specified by an investment advisor, sponsor
or administrative committee of the Plan (a "Plan Representative") generally
upon the direction of Plan beneficiaries (the "Participants").
Plan Provider and Distributor desire to facilitate the purchase and
redemption of shares (the "Shares") of the funds listed on Exhibit A hereto
(the "Fund" or "Funds"), registered investment companies distributed by
Distributor, on behalf of the Plans, through one or more accounts (not to
exceed one per Plan) in each Fund (individually an "Account" and collectively
the "Accounts"), subject to the terms and conditions of this Agreement.
Distributor shall, on behalf of the Funds, pay to Plan Provider a fee in
accordance with Exhibit A hereto.
AGREEMENT
---------
1. PRICING INFORMATION
Each Fund or its designee will furnish Plan Provider on each business
day that the New York Stock Exchange is open for business ("Business
Day"), with (i) net asset value information as of the close of trading
(currently 4:00 p.m. Eastern Time) on the New York Stock Exchange or
as at such later times at which a Fund's net asset value is calculated
as specified in such Fund's prospectus ("Close of Trading"), (ii)
dividend and capital gains information as it becomes available, and
(iii) in the case of income Funds, the daily accrual or interest rate
factor (mil rate). The Funds shall use their best efforts to provide
such information to Plan Provider by 6:00 p.m. Central Time on the
same Business Day.
2. ORDERS AND SETTLEMENT
Plan Provider will calculate order allocations among designated
investment media and transmit to Distributor orders to purchase or
redeem Shares for specified Accounts. Plan Provider agrees that
orders for net purchases or net redemptions of Shares derived from
instructions received in proper form by Plan Provider from Plan
Representatives prior to the Close of Trading on any given Business
Day will be processed that same evening and transmitted to Distributor
or its designee by 9:00 a.m. Central Time on the following Business
Day. Plan Provider agrees that payment for net purchases of Shares
attributable to all orders executed for the Accounts on a given
Business Day will be wired by Plan Provider or its designee no later
than 3:00 p.m. Central Time to a custodial account designated by
Distributor. Distributor agrees that payment for net redemptions of
Shares attributable to all orders executed for the Accounts on a given
Business Day will be wired by Distributor on the next Business Day
after such redemption orders are transmitted to Distributor or its
designee
<PAGE> 2
no later than the close of business on the next Business Day to an
account designated by Plan Provider.
Subject to Plan Provider's compliance with the foregoing, Plan
Provider will be considered agent for the Funds and the Business Day
on which instructions are received in proper form by Plan Provider
from Participants or Plan Representatives by the Close of Trading will
be the date as of which Shares will be purchased and redeemed as a
result of such instructions. Plan Provider will record time and date
of instructions received from Participants or Plan Representatives and
will make such instructions and other records relating to the services
performed hereunder (the "Services") available for audit by
Distributor's auditors upon request. Instructions received in proper
form by Plan Provider from Participants or Plan Representatives after
the Close of Trading on any given Business Day shall be treated as if
received on the next following Business Day. Dividends and capital
gains distributions will be automatically reinvested on payable date
at net asset value in accordance with each Fund's then current
prospectus.
3. PARTICIPANT RECORD KEEPING
Record keeping and other services to Plan Participants shall be the
responsibility of the record keeper for the Plans and shall not be the
responsibility of the Distributor or its transfer agent. Distributor
will recognize each Plan as a single shareholder and as an unallocated
account in the Funds, and will not maintain separate accounts for Plan
participants.
4. ACCOUNT INFORMATION
Distributor will provide Plan Provider (a) daily confirmations of
Account activity within five Business Days after each day on which a
purchase or redemption of Shares is effected for the particular
Account, (b) if requested by Plan Provider, quarterly statements
detailing activity in each Account within fifteen Business Days after
the end of each quarter, and (c) such other reports as may be
reasonably requested by Plan Provider.
5. MAINTENANCE OF RECORDS
Each party shall maintain and preserve all records as required by law
to be maintained and preserved in connection with providing the
Services and in making Shares available to the Plans. Upon the
request of Distributor, the Plan Provider shall provide copies of all
records relating to the Funds as may reasonably be requested to enable
the Funds or their representatives to comply with any request of a
governmental body or self-regulatory organization.
6. COMPLIANCE WITH LAWS
At all times Plan Provider shall comply with all laws, rules and
regulations applicable to it by virtue of entering into this
Agreement, including but not limited to those applicable to a transfer
agent under the Federal securities laws, including, without
limitation, all prospectus delivery requirements. The parties agree
that Plan Provider may satisfy prospectus delivery requirements by
sub-contracting with Plan Representatives. At all times, Distributor
and the Funds shall comply with all laws, rules and regulations
applicable to them by virtue of entering into this Agreement. The
Plan Provider and Plan Representatives, and not the Distributor shall
take such action as may be necessary so that the transactions
contemplated
-2-
<PAGE> 3
by this Service Agreement shall not be "Prohibited Transactions" under
section 406 of the Employee Retirement Income Security Act of 1974,
or section 4975 of the Internal Revenue Code.
7. REPRESENTATIONS WITH RESPECT TO THE DISTRIBUTOR AND THE FUNDS
Plan Provider and its agents shall not make representations concerning
a Fund or Shares except those contained in the then current prospectus
of such Fund, in current sales literature furnished by Distributor to
Plan Provider, in publicly available databases, such as those
databases created by Standard & Poor's Corporation and Morningstar,
and in current sales literature created by Plan Provider and submitted
to and approved in writing by Distributor prior to its use.
8. EXPENSES
(a) Each party shall bear all expenses incidental to the
performance of its obligations under this Agreement.
(b) Each Fund shall pay the cost of registration of its shares
with the Securities and Exchange Commission and in states
where required. Each Fund shall distribute or cause to be
distributed to Plan Provider its proxy material, periodic Fund
reports to shareholders and other material as such Fund may
require to be sent to shareholders. The cost of preparing and
printing this material shall be paid by the applicable Fund or
Distributor, and the cost of distributing such items shall be
borne by Plan Provider or the Plan(s) Representatives.
9. RELATIONSHIP OF PARTIES
Except to the extent provided in Section 2, it is understood and
agreed that all Services performed hereunder by Plan Provider shall be
as an independent contractor and not as an employee or agent of
Distributor or any of the Funds, and none of the parties shall hold
itself out as an agent of any other party with the authority to bind
such party.
10. USE OF NAMES
Plan Provider and its affiliates will not, without the prior written
approval of Distributor, make public references to A I M Management
Group Inc. or any of its subsidiaries, or to the Funds. For purposes
of this provision, the public does not include Plan Providers'
representatives who are actively engaged in promoting the Funds. Any
brochure or other communication to the public that mentions the Funds
shall be submitted to the compliance officer of Distributor, or its
affiliates, for his written approval prior to use by Plan Provider or
its affiliates. Plan Provider shall provide copies to Distributor's
or its affiliates' compliance officer of any of Plan Provider's
regulatory filings that include any reference to A I M Management
Group Inc. or its subsidiaries or the Funds. If Plan Provider or its
affiliates should make unauthorized references or representations,
Plan Provider agrees to indemnify and hold harmless the Funds, A I M
Management Group Inc. and its subsidiaries from any claims, losses,
expenses or liability arising in any way out of or connected in any
way with such references or representations.
-3-
<PAGE> 4
11. TERMINATION
(a) This Agreement may be terminated with respect to any
Fund at any time without payment of any penalty by
the vote of a majority of the directors of such Fund
who are "disinterested directors", as that term is
defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), or by a vote of a majority
of the Fund's outstanding shares, on sixty (60) days'
written notice. It will be terminated by any act
which terminates either the Fund's distribution
agreement with the Distributor, or any related
agreement thereunder, and in any event, it shall
terminate automatically in the event of its
assignment as that term is defined in the 1940 Act.
(b) Either party may terminate this Agreement upon sixty
(60) days' prior written notice to the other party.
12. INDEMNIFICATION
(a) Plan Provider agrees to indemnify and hold harmless
the Distributor, its affiliates, the Funds, the
Funds' investment advisors, and each of their
directors, officers, employees, agents and each
person, if any, who controls them within the meaning
of the Securities Act of 1933, as amended (the
"Securities Act"), (the "Distributor Indemnitees")
against any losses, claims, damages, liabilities or
expenses to which a Distributor Indemnitee may become
subject insofar as those losses, claims, damages,
liabilities or expenses or actions in respect
thereof, arise out of or are based upon (i) Plan
Provider's negligence or willful misconduct in
performing the Services, (ii) any breach by Plan
Provider of any material provision of this Agreement,
or (iii) any breach by Plan Provider of a
representation, warranty or covenant made in this
Agreement; and Plan Provider will reimburse the
Distributor Indemnitee for any legal or other
expenses reasonably incurred, as incurred, by them in
connection with investigating or defending such loss,
claim or action. This indemnity agreement will be in
addition to any liability which Plan Provider may
otherwise have.
(b) Distributor agrees to indemnify and hold harmless
Plan Provider and its affiliates, and each of its
directors, officers, employees, agents and each
person, if any, who controls Plan Provider within the
meaning of the Securities Act (the "Plan Provider
Indemnitees") against any losses, claims, damages,
liabilities or expenses to which a Plan Provider
Indemnitee may become subject insofar as such losses,
claims, damages, liabilities or expenses (or actions
in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement
of any material fact contained in the Registration
Statement or Prospectus of a Fund, or the omission or
the alleged omission to state therein a material fact
required to be stated therein or necessary to make
statements therein not misleading, (ii) any breach by
Distributor of any material provision of this
Agreement, (iii) Distributor's negligence or willful
misconduct in carrying out its duties and
responsibilities under this Agreement, or (iv) any
breach by Distributor of a representation, warranty
or covenant made in this Agreement; and Distributor
will reimburse the Plan Provider Indemnitees for any
legal or other expenses reasonably incurred, as
incurred, by them, in connection with investigating
or defending any such loss, claim or action. This
indemnity agreement will be in addition to any
liability which Distributor may otherwise have.
-4-
<PAGE> 5
(c) If any third party threatens to commence or commences
any action for which one party (the "Indemnifying
Party") may be required to indemnify another person
hereunder (the "Indemnified Party"), the Indemnified
Party shall promptly give notice thereof to the
Indemnifying Party. The Indemnifying Party shall be
entitled, at its own expense and without limiting its
obligations to indemnify the Indemnified Party, to
assume control of the defense of such action with
counsel selected by the Indemnifying Party which
counsel shall be reasonably satisfactory to the
Indemnified Party. If the Indemnifying Party assumes
the control of the defense, the Indemnified Party may
participate in the defense of such claim at its own
expense. Without the prior written consent of the
Indemnified Party, which consent shall not be
withheld unreasonably, the Indemnifying Party may not
settle or compromise the liability of the Indemnified
Party in such action or consent to or permit the
entry of any judgment in respect thereof unless in
connection with such settlement, compromise or
consent each Indemnified Party receives from such
claimant an unconditional release from all liability
in respect of such claim.
13. NOTICE
Each notice required by this Agreement shall be given in writing and
delivered personally or mailed by certified mail or courier service to
the other party at the following address or such other address as each
party may give notice to the other.
If to Plan Provider, to:
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
If to Distributor or any Fund, to:
Michael J. Cemo, President
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
and
J. Abbott Sprague, President
Fund Management Company
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
with a copy to the General Counsel of Distributor.
-5-
<PAGE> 6
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Texas applicable to agreements fully
executed and to be performed therein.
15. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each party represents that it is free to enter into this Agreement and
that by doing so it will not breach or otherwise impair any other
agreement or understanding with any other person, corporation or other
entity. Plan Provider further represents, warrants, and covenants
that:
(a) it has full power and authority under applicable law, and has
taken all action necessary, to enter into and perform this
Agreement and the person executing this Agreement on its
behalf is duly authorized and empowered to execute and deliver
this Agreement;
(b) it is registered as a transfer agent pursuant to Section 17A
of the Securities Exchange Act of 1934, as amended (the "1934
Act"), or is exempt from such registration;
(c) the arrangements provided for in this Agreement will be
disclosed to the Plan Representatives;
(d) it is registered as a broker-dealer under the 1934 Act or any
applicable state securities laws, or, including as a result of
entering into and performing the services set forth in this
Agreement, is exempt from such registration; and
(e) this Agreement, when executed and delivered, shall constitute
the valid, legal and binding obligation of Plan Provider,
enforceable in accordance with its terms.
Distributor further represents, warrants and covenants, that:
(a) it has full power and authority under applicable law,
and has taken all action necessary, to enter into and
perform this Agreement and the person executing this
Agreement on its behalf is duly authorized and
empowered to execute and deliver this Agreement;
(b) it is registered as a broker-dealer under the 1934
Act and any applicable state securities laws;
(c) the Funds' advisors are registered as investment
advisors under the Investment Advisers Act of 1940,
the Funds are registered as investment companies
under the Investment Company Act of 1940 and Fund
Shares are registered under the Securities Act of
1933; and
(d) this Agreement, when executed and delivered, shall
constitute the valid, legal and binding obligation of
Distributor, enforceable in accordance with its
terms.
-6-
<PAGE> 7
16. COMPLETE AGREEMENT
This Agreement contains the full and complete understanding of the
parties and supersedes all prior representations, promises,
statements, arrangements, agreements, warranties and understandings
between the parties with respect to the subject matter hereof, whether
oral or written, express or implied.
17. MODIFICATION
This Agreement may be modified or amended, and the terms of this
Agreement may be waived, only by a writing signed by each of the
parties.
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 shall
constitute one and the same Agreement.
19. ASSIGNMENT
This Agreement shall not be assigned by a party hereto, without the
prior written consent of the other parties hereto, except that a party
may assign this Agreement to an affiliate having the same ultimate
ownership as the assigning party without such consent.
20. SURVIVAL
The provisions of Sections 5, 10, and 12 shall survive termination of
this Agreement.
21. NON-EXCLUSIVITY
Each of the parties acknowledges and agrees that this Agreement and
the arrangement described herein are intended to be non-exclusive and
that each of the parties is free to enter into similar agreements and
arrangements with other entities.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the undersigned have executed this Agreement by
their duly authorized officers as of this __ ___ day of ______________________,
19_____.
---------------------------------------
(PLAN PROVIDER)
By:
------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
A I M DISTRIBUTORS, INC.
(DISTRIBUTOR)
By:
------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
-8-
<PAGE> 9
EXHIBIT A
---------
For the term of this Agreement, Distributor, or its affiliates, shall
pay Plan Provider the following amounts for each of the following Funds with
respect to the average daily net asset value of the Plans' balances for the
prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- -------- ----------
<S> <C>
AIM Equity Funds, Inc. (Class A Shares Only)
- -------------------------------------------------------------
AIM Aggressive Growth Fund* .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group (Class A Shares Only)
- -------------------------------------------------------
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM Growth Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Value Fund .25%
AIM International Funds, Inc. (Class A Shares Only)
- ----------------------------------------------------------------------
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Securities Funds
- ---------------------------------------------
Limited Maturity Treasury Portfolio (AIM
Limited Maturity Treasury Shares) .15%
</TABLE>
Distributor or its affiliates shall calculate the amount of quarterly
payment and shall deliver to Plan Provider a quarterly statement showing the
calculation of the quarterly amounts payable to Plan Provider. Distributor
reserves the right at any time to impose minimum fee payment requirements
before any quarterly payments will be made to Plan Provider. Payment to Plan
Provider shall occur within 30 days following the end of each quarter. All
parties agree that the payments referred to herein are for record keeping and
administrative services only and are not for legal, investment advisory or
distribution services.
Minimum Payments: $50 (with respect to all Funds in the aggregate.)
* AIM Aggressive Growth Fund is currently closed to new investors.
<PAGE> 1
EXHIBIT 15(e)(2)
EXHIBIT D
A I M DISTRIBUTORS, INC.
[AIM LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
(BANK TRUST DEPARTMENTS)
A I M Distributors, Inc.
____________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating to shares
of the Funds owned by our clients. AIM Distributors, on behalf of the
Funds, agrees
<PAGE> 2
Shareholder Service Agreement Page 2
(Bank Trust Departments)
to pay all out-of-pocket expenses actually incurred by us in connection
with the transfer by us of such proxy statements and reports to our
clients as required under applicable laws or regulations.
3. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
4. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
5. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
6. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
7. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
8. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
9. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not
<PAGE> 3
Shareholder Service Agreement Page 3
(Bank Trust Departments)
constitute a waiver of AIM Distributors's right to terminate at a later
date for any such cause. This Agreement may be terminated with respect
to any Fund at any time by the vote of a majority of the directors or
trustees of such Fund who are disinterested directors or by a vote of a
majority of the Fund's outstanding shares, on not less than 60 days'
written notice to us at our principal place of business. This Agreement
will be terminated by any act which terminates a Fund's Distribution
Agreement with AIM Distributors, the Agreement for Purchase of Shares of
The AIM Family of Funds--Registered Trademark-- between us and AIM
Distributors or a Fund's Distribution Plan, and in any event, it shall
terminate automatically in the event of its assignment by us, the term
"assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
10. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
11. This Agreement and the Agreement for Purchase of Shares of The AIM
Family of Funds--Registered Trademark-- through Bank Trust Departments
constitute the entire agreement between us and AIM Distributors and
supersede all prior oral or written agreements between the parties
hereto. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which shall constitute the same
instrument.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 4
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-------------------------------------
(Firm Name)
-------------------------------------
(Address)
-------------------------------------
City/State/Zip/County
By:
------------------------------
Name:
--------------------------------
Title:
------------------------------
Dated:
-------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Dated:
----------------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Equity Funds, Inc.
AIM Blue Chip Fund (Retail Class)
AIM Capital Development Fund (Retail Class)
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
* AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
Limited Maturity Treasury Portfolio
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
</TABLE>
__________________________________
*Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 6
A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
[AIM LOGO APPEARS HERE]
(BROKERS FOR BANK TRUST DEPARTMENTS)
A I M Distributors, Inc.
____________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating to shares
of the Funds owned by our clients. AIM Distributors, on behalf of the
Funds, agrees
<PAGE> 7
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
to pay all out-of-pocket expenses actually incurred by us in connection
with the transfer by us of such proxy statements and reports to our
clients as required under applicable laws or regulations.
3. We agree to transfer to AIM Distributors in a timely manner as set forth
in the applicable prospectus, federal funds in an amount equal to the
amount of all purchase orders placed by us and accepted by AIM
Distributors. In the event that AIM Distributors fails to receive such
federal funds on such date (other than through the fault of AIM
Distributors), we shall indemnify the applicable Fund and AIM
Distributors against any expense (including overdraft charges) incurred
by the applicable Fund and/or AIM Distributors as a result of the
failure to receive such federal funds.
4. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
7. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
8. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
9. All communications to AIM Distributors shall be duly given if mailed to
<PAGE> 8
Shareholder Service Agreement Page 3
(Brokers for Bank Trust Departments)
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
10. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation
by us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for any such cause. This Agreement may be terminated
with respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates a Fund's
Distribution Agreement with AIM Distributors, the Selected Dealer
Agreement between us and AIM Distributors or a Fund's Distribution Plan,
and in any event, shall terminate automatically in the event of its
assignment by us, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the 1940 Act.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same
instrument. This Agreement shall not relieve us or AIM Distributors
from any obligations either may have under any other agreements between
us.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 9
Shareholder Service Agreement Page 4
(Brokers for Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-------------------------------------------------
(Firm Name)
-------------------------------------------------
(Address)
-------------------------------------------------
City/State/Zip/County
By:
------------------------------------------
Name:
--------------------------------------------
Title:
------------------------------------------
Dated:
-------------------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Dated:
-----------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 10
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Equity Funds, Inc.
AIM Blue Chip Fund (Retail Class)
AIM Capital Development Fund (Retail Class)
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
* AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
Limited Maturity Treasury Portfolio
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
</TABLE>
__________________________________
*Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 1
Exhibit 16
Schedule of Performance Quotations
a) Average Annual Total Returns Pursuant to SEC Rules
SEC Formula:
n
P(1 + T) = ERV
where:
P = initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of hypothetical
$1,000 payment made at the beginning of the
1, 5 or 10 year periods at the end of the 1,
5 or 10 year periods (for purposes of the
following calculations, the maximum sales
load has been deducted from the initial
investment in order to compute ERV)
b) Aggregate or Cumulative Total Return Pursuant to Non-Standardized
Computation
ERV-P
ATR = -----
P
where:
P = $1,000 = initial investment
ERV = ending redeemable value of a hypothetical
investment of $1,000 made at the beginning of
the 1, 5 and 10 year periods at the end of
the 1, 5 and 10 year periods (for purposes of
the following calculation, the maximum sales
load has been deducted from the initial
investment in order to compute ERV).
ATR = the aggregate total return of the investment
over the specified period
<PAGE> 2
c) Current Distribution Rate
Obtained by dividing the aggregate amount of dividends declared from net
investment income for the specified number of days, by the maximum offering
price and annualizing the results.
CDR = ( DAP / OFF ) * AF
where:
CDR = Current Distribution Rate
DAP = Dividend Amount Paid for Period
OFF = Maximum Offering Price
AF = Annualizing Factor
d) 30-day Yield Formula
6
2 a - b + 1 - 1
-----
YIELD = cd
where:
a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = maximum offering price per share on last day
of period
<PAGE> 1
EXHIBIT 18
MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS
1. This Multiple Class Plan (the "Plan") adopted in accordance with Rule
18f-3 under the Act shall govern the terms and conditions under which
the Funds may issue separate Classes of Shares representing interests
in one or more Portfolios of each Fund.
2. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
a. Act - Investment Company Act of 1940, as amended.
b. CDSC - contingent deferred sales charge.
c. CDSC Period - the period of years following acquisition of
Shares during which such Shares may be assessed a CDSC upon
redemption.
d. Class - a class of Shares of a Fund representing an interest
in a Portfolio.
e. Class A Shares - shall mean those Shares designated as Class A
Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class A Shares for purposes of this Plan.
f. Class B Shares - shall mean those Shares designated as Class B
Shares in the Fund's organizing documents.
g. Class C Shares - shall mean those Shares designated as Class C
Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class C Shares for purposes of this Plan.
h. Directors - the directors or trustees of a Fund.
i. Distribution Expenses - expenses incurred in activities which
are primarily intended to result in the distribution and sale
of Shares as defined in a Plan of Distribution and/or
agreements relating thereto.
j. Distribution Fee - a fee paid by a Fund to the Distributor to
compensate the Distributor for Distribution Expenses.
k. Distributor - A I M Distributors, Inc. or Fund Management
Company, as applicable.
l. Fund - those investment companies advised by A I M Advisors,
Inc. which have adopted this Plan.
1
<PAGE> 2
m. Institutional Shares - shall mean Shares of a Fund
representing an interest in a Portfolio offered for sale to
institutional customers as may be approved by the Directors
from time to time and as set forth in the Fund's prospectus.
n. Plan of Distribution - Any plan adopted under Rule 12b-1 under
the Act with respect to payment of a Distribution Fee.
o. Portfolio - a series of the Shares of a Fund constituting a
separate investment portfolio of the Fund.
p. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of personal services to Fund shareholders
and/or the maintenance of shareholder accounts.
q. Share - a share of common stock of or beneficial interest in a
Fund, as applicable.
3. Allocation of Income and Expenses.
a. Distribution and Service Fees - Each Class shall bear directly
any and all Distribution Fees and/or Service Fees payable by
such Class pursuant to a Plan of Distribution adopted by the
Fund with respect to such Class.
b. Transfer Agency and Shareholder Recordkeeping Fees - Each
Class shall bear directly the transfer agency and other
shareholder recordkeeping fees attributable to that Class.
c. Allocation of Other Expenses - Each Class shall bear
proportionately all other expenses incurred by a Fund based on
the relative net assets attributable to each such Class.
d. Allocation of Income, Gains and Losses - The Portfolio will
allocate income and realized and unrealized capital gains and
losses to a Class based on the relative net assets of each
Class; provided, however, that if permitted by Rule 18f-3
under the Act, as amended, the Portfolio may allocate its
income on the basis of settled shares in the manner described
in Rule 18f-3 under the Act, as amended.
e. Waiver and Reimbursement of Expenses - A Portfolio's adviser,
underwriter or any other provider of services to the Portfolio
may waive or reimburse the expenses of a particular Class or
Classes.
4. Distribution and Servicing Arrangements. The distribution and
servicing arrangements identified below will apply for the following
Classes offered by a Fund with respect to a Portfolio. The provisions
of the Fund's prospectus describing the distribution and servicing
arrangements in detail are incorporated herein by this reference.
a. Class A Shares. Class A Shares shall be offered at net asset
value plus a front-end sales charge as approved from time to
time by the Directors and set forth in the Fund's prospectus,
may be reduced or eliminated for certain money market fund
shares, for larger purchases, under a combined purchase
privilege, under a right of
2
<PAGE> 3
accumulation, under a letter of intent or for certain
categories of purchasers as permitted by Rule 22(d) of the Act
and as set forth in the Fund's prospectus. Class A Shares that
are not subject to a front-end sales charge as a result of the
foregoing shall be subject to a CDSC for the CDSC Period set
forth in Section 5(a) of this Plan if so provided in the Fund's
prospectus. The offering price of Shares subject to a front-end
sales charge shall be computed in accordance with Rule 22c-1
and Section 22(d) of the Act and the rules and regulations
thereunder. Class A Shares shall be subject to ongoing Service
Fees and/or Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus. Although
shares of AIM Limited Maturity Treasury Shares, AIM Tax-Exempt
Bond Fund of Connecticut, AIM Tax- Exempt Cash Fund and AIM
Tax-Free Intermediate Shares are not designated as "Class A"
they are substantially similar to Class A Shares as defined
herein and shall be deemed to be Class A Shares for the
purposes of this Plan.
b. Class B Shares. Class B Shares shall be (1) offered at net
asset value, (2) subject to a CDSC for the CDSC Period set
forth in Section 5(b), (3) 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 (4) converted to
Class A Shares eight years from the end of the calendar month
in which the shareholder's order to purchase was accepted as
set forth in the Fund's prospectus.
c. Class C Shares. Class C Shares shall be (1) offered at net
asset value and (2) subject to ongoing Service Fees approved
from time to time by the Directors and set forth in the Fund's
prospectus.
d. Institutional Shares. Institutional Shares shall be (1)
offered at net asset value, (2) offered only to certain
categories of institutional customers as approved from time to
time by the Directors and as set forth in the Fund's
prospectus and (3) may be subject to ongoing Service Fees
and/or Distribution Fees as approved from time to time by the
Directors and set forth in the Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that
do not incur a front-end sales charge and of Class B Shares as
follows:
a. Class A Shares. The CDSC Period for Class A Shares shall be
18 months. The CDSC Rate shall be as set forth in the Fund's
prospectus, the relevant portions of which are incorporated
herein by this reference. No CDSC shall be imposed on Class A
Shares unless so provided in a Fund's prospectus.
b. Class B Shares. The CDSC Period for the Class B Shares shall
be six years. The CDSC Rate for the Class B Shares shall be
as set forth in the Fund's prospectus, the relevant portions
of which are incorporated herein by this reference.
c. Method of Calculation. The CDSC shall be assessed on an
amount equal to the lesser of the then current market value or
the cost of the Shares being redeemed. No sales charge shall
be imposed on increases in the net asset value of the Shares
being redeemed above the initial purchase price. No CDSC
shall be assessed on Shares derived from reinvestment of
dividends or capital gains distributions. The order in which
Shares are to be redeemed when not all of such Shares would be
3
<PAGE> 4
subject to a CDSC shall be determined by the Distributor in
accordance with the provisions of Rule 6c-10 under the Act.
d. Waiver. The Distributor may in its discretion waive a CDSC
otherwise due upon the redemption of Shares and disclosed in
the Fund's prospectus or statement of additional information
and, for the Class A Shares, as allowed under Rule 6c-10 under
the Act.
6. Exchange Privileges. Exchanges of Shares shall be permitted between
Funds as follows:
a. Class A Shares may be exchanged for Class A Shares of another
Portfolio, subject to certain limitations set forth in the
Fund's prospectus as it may be amended from time to time,
relevant portions of which are incorporated herein by this
reference.
b. Class B Shares may be exchanged for Class B Shares of another
Portfolio at their relative net asset value.
c. Class C Shares may be exchanged for Class A Shares of any
other Portfolio.
d. Depending upon the Portfolio from which and into which an
exchange is being made and when the shares were purchased,
shares being acquired in an exchange may be acquired at their
offering price, at their net asset value or by paying the
difference in sales charges, as disclosed in the Fund's
prospectus and statement of additional information.
e. CDSC Computation. The CDSC payable upon redemption of Class
A Shares and Class B Shares subject to a CDSC shall be
computed in the manner described in the Fund's prospectus.
7. Service and Distribution Fees. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's
prospectus, relevant portions of which are incorporated herein by this
reference. All other terms and conditions with respect to Service
Fees and Distribution Fees shall be governed by the Plan of
Distribution adopted by the Fund with respect to such fees and Rule
12b-1 of the Act.
8. Conversion of Class B Shares.
a. Shares Received upon Reinvestment of Dividends and
Distributions - Shares purchased through the reinvestment of
dividends and distributions paid on Shares subject to
conversion shall be treated as if held in a separate
sub-account. Each time any Shares in a Shareholder's account
(other than Shares held in the sub-account) convert to Class A
Shares, a proportionate number of Shares held in the sub-
account shall also convert to Class A Shares.
b. Conversions on Basis of Relative Net Asset Value - All
conversions shall be effected on the basis of the relative net
asset values of the two Classes without the imposition of any
sales load or other charge.
4
<PAGE> 5
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
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information for the Institutional
Shares of the Limited Maturity Treasury Portfolio for the year ended July 31,
1996.
</LEGEND>
<CIK> 0000842790
<NAME> AIM INVESTMENT SECURITIES FUNDS
<SERIES>
<NUMBER> 2
<NAME> LIMITED MATURITY TREASURY INSTITUTIONAL SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 498,859,636
<INVESTMENTS-AT-VALUE> 496,578,354
<RECEIVABLES> 8,937,020
<ASSETS-OTHER> 149,663
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 505,665,037
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,149,232
<TOTAL-LIABILITIES> 3,149,232
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 511,800,420
<SHARES-COMMON-STOCK> 50,399,269
<SHARES-COMMON-PRIOR> 40,285,235
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,003,333)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,281,282)
<NET-ASSETS> 502,515,805
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 27,949,530
<OTHER-INCOME> 0
<EXPENSES-NET> 2,132,159
<NET-INVESTMENT-INCOME> 25,817,371
<REALIZED-GAINS-CURRENT> 3,022,827
<APPREC-INCREASE-CURRENT> (6,292,910)
<NET-CHANGE-FROM-OPS> 22,547,288
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,817,371)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 31,057,767
<NUMBER-OF-SHARES-REDEEMED> (22,509,171)
<SHARES-REINVESTED> 1,565,438
<NET-CHANGE-IN-ASSETS> 98,505,431
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (10,026,160)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 933,207
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,132,159
<AVERAGE-NET-ASSETS> 140,898,895
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> (0.06)
<PER-SHARE-DIVIDEND> (0.58)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.97
<EXPENSE-RATIO> 0.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information for the AIM Limited
Maturity Treasury Shares of the Limited Maturity Treasury Portfolio for the year
ended July 31, 1996.
</LEGEND>
<CIK> 0000842790
<NAME> AIM INVESTMENT SECURITIES FUNDS
<SERIES>
<NUMBER> 003
<NAME> AIM LIMITED MATURITY TREASURY SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 498,859,636
<INVESTMENTS-AT-VALUE> 496,578,354
<RECEIVABLES> 8,937,020
<ASSETS-OTHER> 149,663
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 505,665,037
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,149,232
<TOTAL-LIABILITIES> 3,149,232
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 511,800,420
<SHARES-COMMON-STOCK> 50,399,269
<SHARES-COMMON-PRIOR> 40,285,235
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,003,333)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,281,282)
<NET-ASSETS> 502,515,805
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 27,949,530
<OTHER-INCOME> 0
<EXPENSES-NET> 2,132,159
<NET-INVESTMENT-INCOME> 25,817,371
<REALIZED-GAINS-CURRENT> 3,022,827
<APPREC-INCREASE-CURRENT> (6,292,910)
<NET-CHANGE-FROM-OPS> 22,547,288
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,817,371)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 31,057,767
<NUMBER-OF-SHARES-REDEEMED> (22,509,171)
<SHARES-REINVESTED> 1,565,438
<NET-CHANGE-IN-ASSETS> 98,505,431
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (10,026,160)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 933,207
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,132,159
<AVERAGE-NET-ASSETS> 325,704,724
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> (0.06)
<PER-SHARE-DIVIDEND> (0.55)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.97
<EXPENSE-RATIO> 0.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
