<PAGE> 1
As filed with the Securities and Exchange Commission on November 21, 1997
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. 8 X
----- ---
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 12
----
(Check appropriate box or boxes.)
AIM INVESTMENT SECURITIES FUNDS
-------------------------------
(Exact name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, 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 100, Houston, TX 77046
------------------------------------------------
(Name and Address of Agent for Service)
Copy to:
Stephen I. Winer, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Amendment
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
-----
X on November 28, 1997 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.
Title of Securities Being Registered: Shares of Beneficial Interest
<PAGE> 3
CROSS-REFERENCE SHEET
(AS REQUIRED BY RULE 495)
I. AIM LIMITED MATURITY TREASURY FUND - CLASS A SHARES
PART A - PROSPECTUS
Item No. Prospectus Location
- -------- -------------------
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
PART B - STATEMENT OF ADDITIONAL INFORMATION
Statement of Additional
Item No. Information Location
- -------- --------------------
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 Securities Being
Offered How to Purchase and Redeem Shares;
Net Asset 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
<PAGE> 4
II. AIM LIMITED MATURITY TREASURY FUND - INSTITUTIONAL CLASS
PART A - PROSPECTUS
Item No. Prospectus Location
- -------- -------------------
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
PART B - STATEMENT OF ADDITIONAL INFORMATION
Statement of Additional
Item No. Information Location
- -------- --------------------
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 Being Offered Purchase and Redemptions
20. Tax Status Taxes
21. Underwriters Purchases and Redemptions - The
Distribution Agreement
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
<PAGE> 5
APPLICATION INSIDE
[AIM LOGO APPEARS HERE]
THE AIM FAMILY OF FUNDS--Registered Trademark--
AIM Investment Securities Funds
RETAIL CLASS OF AIM LIMITED MATURITY
TREASURY FUND
PROSPECTUS
NOVEMBER 28, 1997
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:
AIM LIMITED MATURITY TREASURY FUND (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 28,
1997, 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. Additional information about the
Fund may also be obtained on the Web at http://www.aimfunds.com.
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-9
Performance......................... 6 Exchange Privilege.................. A-11
Investment Program.................. 6 How to Redeem Shares................ A-13
Management.......................... 8 Determination of Net Asset Value.... A-17
Organization of the Trust........... 9 Dividends, Distributions and Tax
INVESTOR'S GUIDE TO THE AIM FAMILY OF Matters.......................... A-18
FUNDS--Registered Trademark--....... A-1 General Information................. A-20
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: AIM LIMITED MATURITY
TREASURY FUND (the "Fund"). The Fund consists of two classes: a retail class,
the Class A shares and the Institutional Class. This Prospectus relates solely
to the Class A shares of the Fund.
Shares of the Institutional Class of the Fund are offered to investors
pursuant to a separate prospectus. Class A shares 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 subsidiaries, manages or advises 55
investment company portfolios. 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."
PURCHASING SHARES. Class A shares 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 investments in the Class A shares generally must be at least $500, and
subsequent investments must be at least $50. The distributor of the Class A
shares 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 Fund is one of several mutual funds distributed by
AIM Distributors (collectively, "The AIM Family of Funds"). Class A shares 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
2
<PAGE> 7
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."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, La Familia AIM de
Fondos and La Familia AIM de Fondos and Design are registered service marks and
aimfunds.com and Invest With Discipline are service marks of A I M Management
Group Inc.
3
<PAGE> 8
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Class A shares
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 Class A shares of the Fund for the fiscal year
ended July 31, 1997. 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>
CLASS A
SHARES
-------
<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>
- ------------
* 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 Class A shares, 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 the Class A shares of the Fund, assuming (1) a 5% annual return
and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
CLASS A
SHARES
-------
<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
CLASS A 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 CLASS A 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 AMOUNTS
FOR TOTAL FUND OPERATING EXPENSES REMAIN THE SAME FOR EACH YEAR.
4
<PAGE> 9
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below are the financial highlights during each of the fiscal years
ended July 31, 1997, 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,
---------------------------------------------- -------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period.................. $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78
Income from investment
operations:
Net investment income...... 0.54 0.55 0.54 0.35 0.42 0.58 0.72 0.77
Net gains (losses) on
securities (both realized
and unrealized).......... 0.10 (0.06) 0.07 (0.20) 0.05 0.29 0.22 0.01
-------- -------- -------- -------- -------- -------- -------- -------
Total from investment
operations........... 0.64 0.49 0.61 0.15 0.47 0.87 0.94 0.78
-------- -------- -------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income........ (0.54) (0.55) (0.54) (0.35) (0.42) (0.58) (0.72) (0.77)
Distributions from net
realized capital gains... -- -- -- (0.08) (0.02) (0.09) -- --
-------- -------- -------- -------- -------- -------- -------- -------
Total distributions.... (0.54) (0.55) (0.54) (0.43) (0.44) (0.67) (0.72) (0.77)
-------- -------- -------- -------- -------- -------- -------- -------
Net asset value, end of
period..................... $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79
======== ======== ======== ======== ======== ======== ======== =======
Total return(a)............. 6.55% 4.98% 6.36% 1.52% 4.65% 8.93% 9.95% 8.32%
======== ======== ======== ======== ======== ======== ======== =======
Ratios/supplemental data
Net assets, end of period
(000s omitted)........... $389,812 $359,048 $274,480 $329,942 $348,937 $260,454 $131,880 $79,871
======== ======== ======== ======== ======== ======== ======== =======
Ratio of expenses to
average net assets....... 0.54%(b)(c) 0.54% 0.51% 0.47%(d) 0.46% 0.48% 0.54% 0.50%(e)
======== ======== ======== ======== ======== ======== ======== =======
Ratio of net investment
income to average net
assets................... 5.35%(b) 5.45% 5.44% 3.75%(d) 4.07% 5.60% 7.25% 7.90%(e)
======== ======== ======== ======== ======== ======== ======== =======
Portfolio turnover rate.... 130% 117% 120% 120% 123% 120% 215% 192%
======== ======== ======== ======== ======== ======== ======== =======
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). -- -- -- -- -- -- -- $ 5,101
Average number of shares
outstanding during the
period (000s
omitted)(g).............. 36,600 32,350 28,337 34,101 30,416 18,378 10,559 7,389
Average amount of debt per
share during the period.. -- -- -- -- -- -- -- $ 0.69
<CAPTION>
AUGUST 31,
------------------
1989 1988
------- -------
<S> <C> <C>
Net asset value, beginning
of period.................. $ 9.80 $ 9.92
Income from investment
operations:
Net investment income...... 0.84 0.52
Net gains (losses) on
securities (both realized
and unrealized).......... (0.02) (0.12)
------- -------
Total from investment
operations........... 0.82 0.40
------- -------
Less distributions:
Dividends from net
investment income........ (0.84) (0.52)
Distributions from net
realized capital gains... -- --
------- -------
Total distributions.... (0.84) (0.52)
------- -------
Net asset value, end of
period..................... $ 9.78 $ 9.80
======= =======
Total return(a)............. 8.71% 4.11%
======= =======
Ratios/supplemental data
Net assets, end of period
(000s omitted)........... $70,781 $62,342
======= =======
Ratio of expenses to
average net assets....... 0.45%(f) 0.35%(d)(f)
======= =======
Ratio of net investment
income to average net
assets................... 8.59%(f) 7.02%(d)(f)
======= =======
Portfolio turnover rate.... 220% 141%
======= =======
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)(g).............. $14,301 $ 4,110
Average number of shares
outstanding during the
period (000s
omitted)(g).............. 7,295 2,429
Average amount of debt per
share during the period.. $ 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 $366,506,207.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(d) Annualized.
(e) After waiver of advisory fees.
(f) After waiver of advisory fees and expense reimbursements.
(g) 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 the Class A shares, the agreement with The Bank of New
York as custodian and the agreement with AFS as transfer agent for the Class A
shares 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.
Information concerning the Board of Trustees may be found in the Statement of
Additional Information. 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis.
INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046, serves as the investment advisor to the Fund pursuant to a
Master Investment Advisory Agreement, dated February 28, 1997 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises 55 investment company portfolios (including the Fund). 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 February 28, 1997, 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,
1997, the Fund paid 0.20% of its average daily net assets to AIM for its
advisory services, and the Class A shares' total expenses of the same period,
stated as a percentage of average daily net assets of the Class A shares, was
0.54%.
For the year ended July 31, 1997, the Fund paid 0.02% 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 approximately 125
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 15 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 ten years of experience as an investment
professional. Paula A. Permenter has been responsible for the Fund since 1996.
Ms. Permenter has been associated with AIM since 1996 and has nine 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 February 28, 1997, relating to the Class A shares (the "Distribution
Agreement") with AIM Distributors, a registered broker-dealer and a wholly owned
subsidiary of AIM, to act as the distributor of the Class A shares. 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 the Class A shares 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 Class A
shares. Under the Plan the Fund with respect to the Class A shares will pay
compensation of 0.15% per annum of the average daily net assets of the Class A
shares to AIM Distributors for the purpose of financing any activity which is
primarily intended to result in the sale of the Class A shares. 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
Class A shares.
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 Class A shares 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 Class A shares
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 Class A shares. The Plan may not be amended to increase
materially the limit upon distribution expenses described above unless approved
by shareholders of the Class A shares, 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 the Class A shares on an agency basis, may
receive payments from the Class A shares pursuant to the Plan. AIM Distributors
does not act as principal, but rather as agent, for the Class A shares in making
such payments. The Class A shares 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 Class A shares to
no more than 0.25% per annum of the average daily net assets of the Class A
shares 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 Class A shares. 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. Pursuant to an Agreement and Plan of
Reorganization the Fund was reorganized on October 15, 1993 as a portfolio of
the 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 Class A shares 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 Class A shares 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 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR CASH MANAGEMENT FUND(2) AIM GLOBAL INCOME FUND
AIM ADVISOR FLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR INCOME FUND(2) AIM GROWTH FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM HIGH YIELD FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM INCOME FUND
AIM ADVISOR MULTIFLEX FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ADVISOR REAL ESTATE FUND AIM INTERNATIONAL EQUITY FUND
AIM AGGRESSIVE GROWTH FUND AIM LIMITED MATURITY TREASURY FUND
AIM ASIAN GROWTH FUND AIM MONEY MARKET FUND(1)
AIM BALANCED FUND AIM MUNICIPAL BOND FUND
AIM BLUE CHIP FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CAPITAL DEVELOPMENT FUND AIM TAX-EXEMPT CASH FUND(1)
AIM CHARTER FUND AIM TAX-FREE INTERMEDIATE FUND
AIM CONSTELLATION FUND AIM VALUE FUND
AIM EUROPEAN DEVELOPMENT FUND AIM WEINGARTEN FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
</TABLE>
(1) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
(2) Fund closed to investments on October 3, 1997. Please refer to
"Exchange Privilege" herein and the Fund's prospectus dated August 4, 1997.
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
MCF-11/97
A-1
<PAGE> 16
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.
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND,
AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE
FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND,) the "Multiple Class Funds," may
be purchased at their respective net asset value plus a sales charge as
indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and
Class B shares (the "Class B shares") and Class C shares ("Class C shares") of
the Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem Shares --
Multiple Distribution System." Securities dealers and other persons entitled to
receive compensation for selling or servicing shares of a Multiple Class Fund
may receive different compensation for selling or servicing one particular class
of shares over another class in the same Multiple Class Fund. Factors an
investor should consider prior to purchasing Class A, Class B or Class C shares
(or, if applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are
described below under "Special Information Relating to Multiple Class Funds."
For information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-11/97
A-2
<PAGE> 17
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM ADVISOR REAL ESTATE FUND, 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
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-11/97
A-3
<PAGE> 18
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) (0.35% for AIM ADVISOR INCOME FUND) is intended
in part to permit AIM Distributors to recoup a portion of on-going sales
commissions to dealers plus financing costs, if any. After the first full year,
AIM Distributors will make such payments quarterly to dealers and institutions
based on the average net asset value of Class C shares which are attributable to
shareholders for whom the dealers and institutions are designated as dealers of
record.
MCF-11/97
A-4
<PAGE> 19
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND)
are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the
average daily net assets of a Multiple Class Fund attributable to Class C
shares. See the discussion under the caption "Management -- Distribution
Plans." In addition, Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) redeemed within one year from the date such shares
were purchased are subject to a 1.00% contingent deferred sales charge. No
contingent deferred sales charge will be imposed if Class C shares are
redeemed after one year from the date such shares were purchased.
Redemptions of Class C shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge. (A contingent deferred sales charge may be imposed upon redemptions
of Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND when such
shares were purchased in an exchange. See "How to Redeem Shares -- Multiple
Distribution System -- Class C Shares" and "How to Redeem Shares --
Contingent Deferred Sales Charge Program for Large Purchases"). AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are, however, subject to the other
fees and expenses described in the prospectus for AIM MONEY MARKET FUND.
MCF-11/97
A-5
<PAGE> 20
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM ADVISOR CASH MANAGEMENT FUND, AIM MONEY
MARKET FUND, AND AIM TAX-EXEMPT CASH FUND (THE "MONEY MARKET FUNDS"). Because
each Money Market Fund uses the amortized cost method of valuing the securities
it holds and rounds its per share net asset value to the nearest whole cent, it
is anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class
B and Class C shares of the Multiple Class Funds will not be taken into account
in determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP") where the employer has
notified AIM Distributors in writing that all of its related employee SEP or
SARSEP accounts should be linked;
MCF-11/97
A-6
<PAGE> 21
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds)
within the following 13 consecutive months. By marking the LOI section on the
account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii)
Class B and Class C shares of the Multiple Class Funds) at the time of the
proposed purchase. Rights of Accumulation are also available to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C
shares of AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) owned by such purchaser, calculated at their then current public offering
price. If a purchaser so qualifies for a reduced sales charge, the reduced sales
charge applies to the total amount of money then being invested by such
purchaser and not just to the portion that exceeds the breakpoint above which a
reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund with a maximum
MCF-11/97
A-7
<PAGE> 22
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 total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any Class A shares of
AIM Limited Maturity Treasury Fund sold at net asset value to an employee
benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided:
MCF-11/97
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<PAGE> 23
(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
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual checks in any amount (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND, it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan a draft
is drawn on the shareholder's bank account in the amount specified by the
shareholder (minimum $50 per investment, per account) and on a day or date(s)
specified by the shareholder. The proceeds of the draft are invested in shares
of the designated AIM Fund at the applicable offering price determined on the
date of the draft. An Automatic Investment Plan may be discontinued upon 10
days' prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
MCF-11/97
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<PAGE> 24
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE FUND, 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; SARSEP plans; and SEP
plans (collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).
MCF-11/97
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<PAGE> 25
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND -- CLASS A
CLASS A FUND -- CLASS A AIM TAX-FREE INTERMEDIATE
AIM ADVISOR INCOME FUND -- AIM GLOBAL INCOME FUND -- CLASS A
CLASS A FUND -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A AIM ADVISOR CASH MANAGEMENT FUND
AIM ADVISOR LARGE CAP AIM GROWTH FUND -- CLASS A -- CLASS A
VALUE FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A AIM MONEY MARKET FUND
AIM ADVISOR MULTIFLEX AIM INCOME FUND -- CLASS A -- AIM CASH RESERVE SHARES
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM AGGRESSIVE GROWTH FUND -- CLASS A
FUND -- CLASS A AIM MONEY MARKET
AIM ASIAN GROWTH FUND -- CLASS A
FUND -- CLASS A AIM MUNICIPAL BOND
AIM BALANCED FUND -- CLASS A FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM CAPITAL DEVELOPMENT OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A
AIM CONSTELLATION
FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT
FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) no share of any Load
Fund, Class C of a Multiple Class Fund, Lower Load Fund or No Load Fund may be
exchanged for shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM ADVISOR INCOME
FUND; (ii) Load Fund share purchases of $1,000,000 or more which are subject to
a contingent deferred sales charge may not be exchanged for Lower Load Funds or
for AIM TAX-EXEMPT CASH FUND; (iii) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM Cash Reserve Shares of AIM MONEY MARKET FUND and AIM
TAX-EXEMPT CASH FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS
OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES
CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED
FROM THE DATE OF SUCH EXCHANGE; (iv) Class A shares may be exchanged for Class A
shares , (v) Class B shares may be exchanged only for Class B shares; (vi) Class
C shares may only be exchanged for Class C shares; (vii) Class A shares of AIM
ADVISOR CASH MANAGEMENT FUND may be exchanged for Class A shares of any Load
Fund, Lower Load Fund or No-Load Fund at net asset value; (viii) Class C shares
of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged for Class C shares of any
Multiple Class Fund at net asset value; and (ix) AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET
FUND or for Class B or Class C shares.
MCF-11/97
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<PAGE> 26
Broker-dealers and institutions of record for Class A or Class C shares
purchased pursuant to an exchange from Class A or Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND will be compensated according to the sales commission or
concession that would apply if these Class A or Class C share purchases had been
purchased in a manner other than pursuant to an exchange.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load
Funds.......... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load
Funds.......... Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8
(certificate of foreign status) or Form W-9 (certifying exempt status) must have
been received by the fund; (g) newly acquired shares (through either an initial
or subsequent investment) are held in an account for at least ten business days,
and all other shares are held in an account for at least one day, prior to the
exchange; and (h) certificates representing shares must be returned before
shares can be exchanged. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
MCF-11/97
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<PAGE> 27
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," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares (except for Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-11/97
A-13
<PAGE> 28
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, and AIM ADVISOR REAL ESTATE FUND, by shareholders of record on
April 30, 1995 of these funds (shareholders whose broker/dealers maintain a
single omnibus account with the Transfer Agent on behalf of those shareholders,
perform sub-accounting functions with respect to those shareholders, and are
unable to segregate shareholders of record prior to April 30, 1995 from
shareholders whose accounts were opened after that date will be subject to a
CDSC on all purchases made after March 1, 1996); or (v) on Class C shares of AIM
ADVISOR CASH MANAGEMENT FUND except in certain cases when the shares were
purchased in an exchange. Redemptions of shares of AIM ADVISOR CASH MANAGEMENT
FUND are generally not subject to a contingent deferred sales charge; however, a
contingent deferred sales charge may be applicable to redemptions of shares of
AIM ADVISOR CASH MANAGEMENT FUND if the redeemed shares were exchanged from
another Class C share fund and the one year holding period in such fund has not
been completed.
Contingent deferred sales charges on Class B and Class C shares will be waived
on redemptions (1) following the death or post-purchase disability, as defined
in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust
(provided AIM Distributors is notified of such death or post-purchase disability
at the time of the redemption request and is provided with satisfactory evidence
of such death or post-purchase disability), (2) in connection with certain
distributions from individual retirement accounts, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the fifth paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70-1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
MCF-11/97
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(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund, Class A shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM Cash Reserve
Shares of AIM MONEY MARKET FUND which were acquired through an exchange of
shares which previously were subject to the 1% contingent deferred sales charge
will be credited with the period of time such exchanged shares were held, and
(ii) shares of any Load Fund which are subject to the 1% contingent deferred
sales charge and which were acquired through an exchange of shares of a Lower
Load Fund or a No Load Fund which previously were not subject to the 1%
contingent deferred sales charge will not be credited with the period of time
such exchanged shares were held. The charge will be waived in the following
circumstances: (1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under Section
403(b) of the Code and sponsored by nonprofit organizations as defined under
Section 501(c)(3) of the Code, where shares are being redeemed in connection
with employee terminations or withdrawals, and (a) the total amount invested in
a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a letter of
intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the
shares being redeemed were purchased by an employer-sponsored Plan with at least
100 eligible employees; provided, however, that Plans created under Section
403(b) of the Code which are sponsored by public educational institutions shall
qualify under (a), (b) or (c) above on the basis of the value of each Plan
participant's aggregate investment in the AIM Funds, and not on the aggregate
investment made by the Plan or on the number of eligible employees; (2)
redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59- 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within
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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 generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT FUND and
the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does not
apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
MCF-11/97
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Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as
certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund (except Class A shares of AIM ADVISOR CASH MANAGEMENT
FUND) at the net asset value next computed after receipt by the Transfer Agent
of the funds to be reinvested; provided, however, if the redemption was made
from Class A shares of either AIM LIMITED MATURITY TREASURY FUND or AIM TAX-FREE
INTERMEDIATE FUND, the reinvested proceeds will be subject to the difference in
sales charge between the shares redeemed and the shares the proceeds are
reinvested in. The shareholder must ask the Transfer Agent for such privilege at
the time of reinvestment. A realized gain on the redemption is taxable, and
reinvestment may alter any capital gains payable. If there has been a loss on
the redemption and shares of the same fund are repurchased, all of the loss may
not be tax deductible, depending on the timing and amount reinvested. Under the
Code, if the redemption proceeds of fund shares on which a sales charge was paid
are reinvested in (or exchanged for) shares of another AIM Fund at a reduced
sales charge within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption; however, the shareholder's basis in the fund
shares purchased will include the sales charge. Each AIM Fund may amend, suspend
or cease offering this privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE. The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE
INTERMEDIATE FUND value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which
reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
MCF-11/97
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<PAGE> 32
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR CASH MANAGEMENT FUND.......... declared daily; paid monthly annually annually
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INCOME FUND................... declared and paid monthly monthly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) are expected to be lower than those for Class A shares or
AIM Cash Reserve Shares because of higher distribution fees paid by Class B and
Class C shares
MCF-11/97
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<PAGE> 33
(except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND).
Dividends on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to 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 (the "Tax-Exempt Funds") which are exempt from federal tax.
Dividends paid by a fund (other than capital gain distributions) may qualify for
the federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR CASH
MANAGEMENT FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL
INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE FUND will
qualify for this dividends received deduction. Shortly after the end of each
year, shareholders will receive information regarding the amount and federal
income tax treatment of all distributions paid during the year. Certain
dividends declared in October, November or December of a calendar year are
taxable to shareholders as though received on December 31 of that year if paid
to shareholders during January of the following calendar year. No gain or loss
will be recognized by shareholders upon the automatic conversion of Class B
shares of a Multiple Class Fund into Class A shares of such Fund. With respect
to tax-exempt shareholders, distributions from the Funds will not be subject to
federal income taxation to the extent permitted under the applicable
tax-exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of inter-
MCF-11/97
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<PAGE> 34
est 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 INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. Government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM MUNICIPAL BOND
FUND, AIM LIMITED MATURITY TREASURY FUND AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND, for
which The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, serves as custodian. Texas Commerce Bank National Association, P.O. Box
2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of
the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
legal matters.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
MCF-11/97
A-20
<PAGE> 35
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-1 09/97
B-1
<PAGE> 36
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice.
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
MCF-1 09/97
B-2
<PAGE> 37
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
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
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.
LTD PRO-1
<PAGE> 38
STATEMENT OF
ADDITIONAL INFORMATION
AIM INVESTMENT SECURITIES FUNDS
-----------------------
RETAIL CLASS OF THE AIM LIMITED MATURITY TREASURY FUND
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
-----------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE ABOVE-NAMED FUND,
A COPY OF WHICH MAY BE OBTAINED FREE OF CHARGE FROM AUTHORIZED DEALERS OR
BY WRITING
A I M DISTRIBUTORS, INC., P.O. BOX 4739,
HOUSTON, TEXAS 77210- 4739
OR BY CALLING (800) 347-4246.
-----------------------
STATEMENT OF ADDITIONAL INFORMATION DATED: NOVEMBER 28, 1997
RELATING TO PROSPECTUS DATED: NOVEMBER 28, 1997
<PAGE> 39
TABLE OF CONTENTS
Page
----
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 . . . . . . . . . . . . . . . . . . . . . . 12
AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . . 13
Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . 14
Investment Advisory and Other Services . . . . . . . . . . . . . . . 14
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 16
THE DISTRIBUTION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 18
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . 18
NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 19
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . 20
Reinvestment of Dividends and Distributions . . . . . . . . . . . . . 20
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Qualification as a Regulated Investment Company . . . . . . . . . . . 20
Excise Tax on Regulated Investment Companies . . . . . . . . . . . . 22
Fund Distributions . . . . . . . . . . . . . . . . . . . . . . . . . 22
Sale or Redemption of Fund Shares . . . . . . . . . . . . . . . . . . 23
Foreign Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 24
Effect of Future Legislation; Local Tax Considerations . . . . . . . 24
DESCRIPTION OF FUND SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 25
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
i
<PAGE> 40
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . 25
Principal Holders of Securities . . . . . . . . . . . . . . . . . . . 25
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
ii
<PAGE> 41
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 28, 1997, which relates to the Trust's Class A
shares, a class of the AIM Limited Maturity Treasury Fund (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 Class A shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box
4739, Houston, Texas 77210-4739, or by calling (800) 347-4246. Investors must
receive and should read the Prospectus before they invest in the 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 this Statement of Additional Information,
material incorporated by reference and other information regarding the Fund.
Additional information about the Fund may also be obtained on the Web at
http://www.aimfunds.com.
GENERAL INFORMATION ABOUT THE TRUST
THE TRUST AND ITS SHARES
The Trust was previously incorporated as a Maryland corporation on
November 4, 1988. 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 series 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> 42
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 of Trustees. The Fund offers two separate classes of
shares: Class A shares and the 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 Class A
shares for the thirty day period ended July 31, 1997, was 5.36%. This
distribution rate was calculated by dividing dividends declared over the thirty
days ended July 31, 1997, 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
2
<PAGE> 43
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. 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 Class A shares for
the one and five year periods ended July 31, 1997, and the period beginning
December 15, 1987 (date operations commenced) through July 31, 1997.
<TABLE>
<CAPTION>
AVERAGE
ANNUAL RETURN CUMULATIVE RETURN
------------- -----------------
<S> <C> <C>
One year ended 07/31/97 5.49% 5.49%
Five year ended 07/31/97 4.73% 26.02%
12/15/87 through 07/31/97 6.52% 83.70%
</TABLE>
The 30-day yield for the Class A shares as of July 31, 1997, was 5.39%
During the one-year period ended July 31, 1997, a hypothetical $1,000
investment in the Class A shares at the beginning of such period would have
been worth $1,055. During the five-year period ended July 31, 1997, a
hypothetical $1,000 investment in the Class A shares at the beginning of such
period would have been worth $1,260. For the period from December 15, 1987
(date operations commenced) through July 31, 1997, a hypothetical $1,000
investment in the Class A shares would have been worth $1,837. Each of these
figures assume the maximum sales charge was paid and all distributions were
reinvested.
3
<PAGE> 44
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 broker-dealers may be useful to AIM with
clients, including the other mutual funds advised by AIM (collectively with the
Fund, the "AIM Funds"). 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. Since AIM must evaluate information received as a result of
such services, the advisory fee paid by the Fund is not reduced because AIM
receives such services.
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 certain 5% holders, provided that the Fund complies with
certain conditions and procedures.
AIM and its affiliates manage several other investment accounts, 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 such investment accounts. 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 these accounts 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.
4
<PAGE> 45
Under the 1940 Act, certain 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 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 AIM Fund or 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.
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 by
broker-dealers 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.
Such portfolio transactions may be executed directly by selling dealers or by
other broker-dealers with which selling dealers have clearing arrangements.
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, 1997, 1996, and 1995, were 129.74%,
117.09%, and 120.01%, 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
5
<PAGE> 46
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 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; or
6
<PAGE> 47
(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).
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> 48
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 at least the last five years are set forth below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE REGISTRANT AT LEAST THE PAST 5 YEARS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (78) Trustee and Chairman Chairman of the Board of Directors,
11 Greenway Plaza, Suite 100 A I M Management Group Inc., A I M Advisors,
Houston, TX 77046 Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc., A I M Institutional Fund Services, Inc.
and Fund Management Company; and Vice Chairman
and Director, AMVESCAP PLC.
- -------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (53) Trustee Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief
McLean, VA 22102 Executive Officer, COMSAT Corporation; and
Chairman, Board of Governors of INTELSAT
(international communications company).
- -------------------------------------------------------------------------------------------------------------
OWEN DALY II (73) Trustee Director, Cortland Trust Inc. (investment
Six Blythewood Road company). Formerly, Director, CF & I Steel
Baltimore, MD 21210 Corp., Monumental Life Insurance Company and
Monumental General Insurance Company; and
Chairman of the Board of Equitable
Bancorporation.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
* A trustee who is an "interested person" of the Trust and AIM as
defined in the 1940 Act.
8
<PAGE> 49
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE REGISTRANT AT LEAST THE PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
JACK M. FIELDS (45) Trustee Formerly, Member of the U.S. House of
8810 Will Clayton Parkway Representatives.
Jetero Plaza, Suite E
Humble, TX 77338
- ------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (60) Trustee Partner, Kramer, Levin, Naftalis & Frankel
919 Third Avenue (law firm); and Director, ERD Waste, Inc.
New York, NY 10022 (waste management company), Aegis Consumer
Finance (auto leasing company) and Lazard
Funds, Inc. (investment companies). Formerly,
Partner, Reid & Priest (law firm); and, prior
thereto, Partner, Spengler Carlson Gubar
Brodsky & Frischling (law firm).
- ------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (50) Trustee and Director, President and Chief Executive
11 Greenway Plaza, Suite 100 President Officer, A I M Management Group Inc.; Director
Houston, TX 77046 and President, A I M Advisors, Inc.; Director
and Senior Vice President, A I M Capital
Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management
Company; Director, AMVESCAP PLC; and Chairman
of the Board of Directors of AIM Funds Group
Canada Inc.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
** 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> 50
<TABLE>
- ------------------------------------------------------------------------------------------------------------
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE REGISTRANT AT LEAST THE PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
JOHN F. KROEGER (73) Trustee Director, Flag Investors International Fund,
37 Pippins Way Inc., Flag Investors Emerging Growth Fund,
Morristown, NJ 07960 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 (54) Trustee Attorney in private practice in Houston,
6363 Woodway, Suite 825 Texas.
Houston, TX 77057
- ------------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (74) Trustee Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management
Tequesta, FL 33469 Services, Inc. (provider of centralized
management services to telephone companies);
Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone
companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of
Pennsylvania and Diamond State Telephone
Company.
- ------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (58) Trustee Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited
2800 Post Oak Blvd. Partnership (real estate development).
Houston, TX 77056
- ------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 51
<TABLE>
- ------------------------------------------------------------------------------------------------------------
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE REGISTRANT AT LEAST THE PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
***JOHN J. ARTHUR (53) Senior Vice Director, Senior Vice President and Treasurer,
11 Greenway Plaza, Suite 100 President and A I M Advisors, Inc.; and Vice President and
Houston, TX 77046 Treasurer Treasurer, A I M Management Group Inc.,
A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc., A I M Institutional Fund Services, Inc.
and Fund Management Company.
- ------------------------------------------------------------------------------------------------------------
GARY T. CRUM (50) Senior Vice Director and President, A I M Capital
11 Greenway Plaza, Suite 100 President Management, Inc.; Director and Senior Vice
Houston, TX 77046 President, A I M Management Group Inc. and
A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP PLC.
- ------------------------------------------------------------------------------------------------------------
***CAROL F. RELIHAN (42) Senior Vice Director, Senior Vice President, General
11 Greenway Plaza, Suite 100 President and Counsel and Secretary, A I M Advisors, Inc.;
Houston, TX 77046 Secretary Vice President, General Counsel and Secretary,
A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management
Company; General Counsel and Vice President,
A I M Fund Services, Inc. and A I M
Institutional Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and
A I M Distributors, Inc.
- ------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (38) Vice President and Vice President and Fund Controller,
11 Greenway Plaza, Suite 100 Assistant Treasurer A I M Advisors, Inc.; and Assistant Vice
Houston, TX 77046 President and Assistant Treasurer, Fund
Management Company.
- ------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (54) Vice President Vice President and Chief Compliance Officer,
11 Greenway Plaza, Suite 100 A I M Advisors, Inc., A I M Capital
Houston, TX 77046 Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management
Company.
- ------------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (37) Vice President Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 100 Management, Inc. and Vice President,
Houston, TX 77046 A I M Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
__________________________________
*** Mr. Arthur and Ms. Relihan are married to each other.
11
<PAGE> 52
The standing committees of the Board of Trustees are the Audit
Committee, the Investments Committee, and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Fields,
Frischling, Kroeger (Chairman), Pennock, Robinson and Sklar. 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), Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. The
Investments Committee is responsible for reviewing portfolio compliance,
brokerage allocation, portfolio investment pricing issues, interim dividend and
distribution issues, and considering such matters as may from time to time be
set forth in a charter adopted by the Board of Trustees and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Fields, Kroeger, Pennock (Chairman), Robinson and Sklar. The
Nominating and Compensation Committee is responsible for considering and
nominating individuals to stand for election as 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 1,236 38,621 68,000
- ---------------------------------------------------------------------------------------------
Owen Daly II 1,235 82,607 68,000
- ---------------------------------------------------------------------------------------------
Jack M. Fields(4) 530 0 0
- ---------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 53
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Carl Frischling(5) 1,236 56,683 68,000
- ---------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- ---------------------------------------------------------------------------------------------
John F. Kroeger 1,235 83,654 66,000
- ---------------------------------------------------------------------------------------------
Lewis F. Pennock 1,235 33,702 67,000
- ---------------------------------------------------------------------------------------------
Ian W. Robinson 1,236 64,973 68,000
- ---------------------------------------------------------------------------------------------
Louis S. Sklar 1,219 47,593 66,500
- ---------------------------------------------------------------------------------------------
</TABLE>
______________________
(1) The total amount of compensation deferred by all Trustees of the Fund
during the fiscal year ended July 31, 1997, including interest earned
thereon, was $5,699.
(2) During the fiscal year ended July 31, 1997, the total estimated amount
of expenses allocated to the Fund in respect of such retirement benefits
was $2,735. Data reflects compensation for the calendar year ended
December 31, 1996.
(3) Each Trustee serves as a director or trustee of a total of 11 registered
investment companies advised by AIM (comprised of 47 portfolios). Data
reflect total compensation earned during the calendar year ended
December 31, 1996.
(4) Mr. Fields was not serving as a Trustee during the calendar year ended
December 31, 1996.
(5) See page 14 regarding fees earned by Mr. Frischling's law firm.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each 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 the retainer amount
reflected below and various years of service. The estimated credited
13
<PAGE> 54
years of service for Messrs. Crockett, Daly, Fields, Frischling, Kroeger,
Pennock, Robinson and Sklar are 10, 10, 0, 20, 19, 15, 10, and 7 years,
respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
-----------------------------------------------------------
Number of Years Annual Retainer Paid By All AIM Funds
of Service With
the AIM Funds $80,000
-----------------------------------------------------------
<S> <C>
10 $60,000
-----------------------------------------------------------
9 $54,000
-----------------------------------------------------------
8 $48,000
-----------------------------------------------------------
7 $42,000
-----------------------------------------------------------
6 $36,000
-----------------------------------------------------------
5 $30,000
-----------------------------------------------------------
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring 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 five
(5) or ten (10) years (depending on the Agreement) 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, 1997 the Fund paid $5,153 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 100, Houston, Texas 77046-1173. AIM
Management is a holding company that has been engaged in the financial services
business since 1976. AIM Management is an indirect wholly owned subsidiary of
AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YK, United Kingdom. AMVESCAP
14
<PAGE> 55
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail fund business in the United
States, Europe and the Pacific Region. Certain of the directors and officers
of AIM are also executive officers of the Fund and their affiliations are shown
under "Trustees and Officers". AIM 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 subsidiaries advises or
manages 55 investment company portfolios.
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.
The Advisory Agreement became effective on February 28, 1997 and will
continue in effect until February 28, 1999 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 years ended July 31, 1997, 1996 and 1995, AIM received
advisory fees from the Fund of $837,760, $933,207, and $809,449, 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
15
<PAGE> 56
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 February 28, 1999, 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 February 28, 1997.
For the fiscal years ended July 31, 1997, 1996 and 1995, the Fund
reimbursed AIM for certain accounting, shareholder servicing and administrative
services in the amounts of $66,785, $60,857, and $82,199, 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 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 years ended July 31, 1997 and 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 Class A shares in the
amounts of $171,697, $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 Class A shares. The Plan
provides that the Class A shares 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 Class A shares. 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 Class A shares. 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 initially
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 Class A shares and its shareholders.
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<PAGE> 57
The Plan, unless terminated earlier in accordance with its terms, shall
continue in effect until June 30, 1998, 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 the Class A shares, by a vote of a majority of
the holders of the outstanding voting securities of the Class A shares. Any
change in the Plan that would increase materially the distribution expenses
paid by the Class A shares 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, 1997, AIM Distributors received fees
in the amount of $549,759, which constituted 0.15% of the average daily net
assets of the Class A shares. An estimate by category of actual fees paid by
the Class A shares during the fiscal year ended July 31, 1997, were allocated
as follows:
<TABLE>
<CAPTION>
1996
----
<S> <C>
Advertising $11,876
Printing and mailing prospectuses, semi-annual reports 990
and annual reports (other than to current shareholders) 2,969
Seminars 0
Compensation to Underwriters to partially offset other
marketing expenses
Compensation to Sales Personnel 0
Compensation to Dealers including finder's fees 533,924
Annual Report Total 549,759
</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 Class A shares to such dealers' customers, and
to provide continuing personal shareholder services to customers who may, from
time to time, directly or beneficially own Class A shares. 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 Class A shares; 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 Class A shares; assisting in the establishment and maintenance
of customer accounts and records and in the processing of purchase and
redemption transactions; investing dividends and any capital gains
distributions automatically in the Class A shares; and providing such other
information and services as the Class A shares 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 the Class A
shares 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
17
<PAGE> 58
hold Class A shares; and such other administrative services as the Class A
shares 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
Class A shares, in making dealer incentive and shareholder servicing payments
under the Plan. These payments are an obligation of the Class A shares 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
the Class A shares 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
February 28, 1997. 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 Class A shares
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 Class A
shares), and any promotional or sales literature used by AIM Distributors or
furnished by AIM Distributors to dealers in connection with the public offering
of the Class A shares, including expenses of advertising in connection with
such public offerings. AIM Distributors has not undertaken to sell any
specified number of Class A shares.
The Distribution Agreement will continue in effect until February 28,
1999 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 years ended July 31, 1997, 1996 and 1995, the total sales
charges paid in connection with the sale of the Class A shares of the Fund
were $340,764, $540,727, and $377,682, respectively, of which AIM Distributors
retained $105,675, $193,686, and $89,885, respectively.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which Class A shares 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 the Class A shares is
used to compensate AIM Distributors and participating dealers for their
expenses incurred in connection with the distribution of
18
<PAGE> 59
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 Class A shares or with AIM and its affiliates, are
familiar with the Class A shares (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 Class A shares through AIM Distributors without payment of a sales
charge. The persons who may purchase Class A shares 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 Class A shares
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 Class A shares 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 Class A shares next determined after such order is
received. Such arrangement is subject to timely receipt by AFS, transfer agent
for the Class A shares, 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 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.
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<PAGE> 60
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.
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) for taxable years beginning on or prior to August 5, 1997, 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
20
<PAGE> 61
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. For taxable years beginning after August 5, 1997,
the Short-Short Gain Test has been repealed by the Taxpayer Relief Act of 1997.
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.
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).
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<PAGE> 62
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 requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the
Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which
the Fund has not invested more than 5% of the value of the Fund's total assets
in securities of such issuer and as to which the Fund does not hold more than
10% of the outstanding voting securities of such issuer), and no more than 25%
of the value of its total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which the Fund controls and
which are engaged in the same or similar trades or businesses.
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.
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<PAGE> 63
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.
Pursuant to the Taxpayer Relief Act of 1997, the Internal Revenue Service has
announced that it will issue temporary regulations that will permit the fund to
designate to its shareholders the portion of each capital gain dividend paid in
taxable years ending on or after May 7, 1997, that constitutes a 20% rate
capital gain distribution, an unrecaptured Section 1250 gain distribution, or a
28% rate capital gain distribution. The temporary regulations will also permit
the fund to designate to its shareholders the portion of any net capital gain
retained by the Fund in taxable years ending on or after May 7, 1997, that
belongs to each of these three long-term capital gain categories.
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 in accordance with the guidance that has been provided by the
Internal Revenue Service.
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
23
<PAGE> 64
redemption of shares of the Fund will be considered capital gain or loss and
will be long-term capital gain or loss if the shares were held for longer than
one year. Except to the extent otherwise provided in future treasury
regulations, any long-term capital gain recognized by a noncorporate
shareholder will be subject to tax at a maximum rate of 20% if the shares sold
or redeemed were held for more than 18 months. 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 that in some
cases may be 19.6% lower than the maximum rate applicable to ordinary income.
Capital losses in any year are deductible only to the extent of capital gains
plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (i) incurs a sales load in acquiring shares of the
Fund, (ii) disposes of such shares less than 91 days after they are acquired
and (iii) subsequently acquires shares of the same or another fund at a reduced
sales load pursuant to a right to reinvest at such reduced sales load acquired
in connection with the acquisition of the shares disposed of, then the sales
load on the shares disposed of (to the extent of the reduction in the sales
load on the shares subsequently acquired) shall not be taken into account in
determining gain or loss on the shares disposed of but shall be treated as
incurred on the acquisition of the shares subsequently acquired.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign 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
24
<PAGE> 65
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.
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, Houston, Texas 77002, currently serves as the auditors of
the Fund.
LEGAL MATTERS
Legal matters for the Trust are 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 Class A shares. 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 3, 1997, the trustees and officers of the Trust as a
group owned less than 1% of the outstanding shares of any class of the Trust.
25
<PAGE> 66
CLASS A SHARES:
To the best of the Trust's knowledge, the names and addresses of the
holders of 5% or more of the outstanding Class A shares, as of November 3, 1997
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>
Merrill Lynch Pierce Fenner & Smith 13.52%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Trust For The Milipore Corporation 6.04%
Invested Employee Plan
80 Ashby Rd.
Bedford, MA 01730
</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 3, 1997 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 85.10%**
Attn: Trust Securities (T-8)
P. O. Box 1600
San Antonio, TX 78296
Associated Bank 5.05%
Attn: Trust Operations
P. O. Box 19006
Green Bay, WI 54307-9006
</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.
26
<PAGE> 67
FINANCIAL STATEMENTS
FS
<PAGE> 68
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, 1997, 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 three-year period then ended, the eleven
months ended July 31, 1994 and each of the years in the
two-year period ended August 31, 1993. These financial
statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of July 31, 1997, 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, 1997, 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 three-year period then ended, the eleven months ended July
31, 1994 and each of the years in the two-year period ended
August 31, 1993, in conformity with generally accepted
accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
August 22, 1997
Houston, Texas
FS-1
<PAGE> 69
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
MATURITY (000S) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. TREASURY NOTES - 99.03%
6.125% 08/31/98 $36,300 $ 36,511,629
- -------------------------------------------------------------------------------------------------------
6.00% 09/30/98 36,200 36,368,692
- -------------------------------------------------------------------------------------------------------
5.875% 10/31/98 36,200 36,305,704
- -------------------------------------------------------------------------------------------------------
5.625% 11/30/98 35,880 35,878,924
- -------------------------------------------------------------------------------------------------------
5.75% 12/31/98 36,200 36,266,970
- -------------------------------------------------------------------------------------------------------
5.875% 01/31/99 36,200 36,320,184
- -------------------------------------------------------------------------------------------------------
5.875% 02/28/99 36,200 36,319,460
- -------------------------------------------------------------------------------------------------------
6.25% 03/31/99 36,300 36,635,775
- -------------------------------------------------------------------------------------------------------
6.375% 04/30/99 36,300 36,713,457
- -------------------------------------------------------------------------------------------------------
6.25% 05/31/99 36,300 36,646,302
- -------------------------------------------------------------------------------------------------------
6.00% 06/30/99 35,000 35,195,650
- -------------------------------------------------------------------------------------------------------
5.875% 07/31/99 35,150 35,259,668
- -------------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 434,422,415
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.03% 434,422,415
- -------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.97% 4,254,808
- -------------------------------------------------------------------------------------------------------
NET ASSETS - 100.00% $438,677,223
=======================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-2
<PAGE> 70
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$431,928,484) $ 434,422,415
- --------------------------------------------------------
Cash 20,611
- --------------------------------------------------------
Receivables for:
Fund shares sold 819,782
- --------------------------------------------------------
Interest 5,523,917
- --------------------------------------------------------
Investment in deferred compensation plan 19,535
- --------------------------------------------------------
Other assets 83,788
- --------------------------------------------------------
Total assets 440,890,048
- --------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 1,248,586
- --------------------------------------------------------
Dividends 674,022
- --------------------------------------------------------
Deferred compensation 19,535
- --------------------------------------------------------
Accrued advisory fees 71,077
- --------------------------------------------------------
Accrued distribution fees 47,502
- --------------------------------------------------------
Accrued transfer agent fees 38,977
- --------------------------------------------------------
Accrued operating expenses 113,126
- --------------------------------------------------------
Total liabilities 2,212,825
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 438,677,223
========================================================
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
NET ASSETS $48,865,566 $389,811,657 $438,677,223
==================================================================
Shares outstanding,
$0.01 par value per
share 4,853,653 38,718,670 43,572,323
==================================================================
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 10.07
==================================================================
OFFERING PRICE PER SHARE:
(Net asset value of $10.07 divided by 99.00%) $ 10.17
==================================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $24,654,293
- -------------------------------------------------------
EXPENSES:
Advisory fees 837,760
- -------------------------------------------------------
Administrative service fees 66,785
- -------------------------------------------------------
Custodian fees 35,063
- -------------------------------------------------------
Transfer agent fees 342,339
- -------------------------------------------------------
Trustees' fees and expenses 10,907
- -------------------------------------------------------
Distribution fees (See Note 2) 549,759
- -------------------------------------------------------
Other 290,933
- -------------------------------------------------------
Total expenses 2,133,546
- -------------------------------------------------------
Less: Expenses paid indirectly (5,163)
- -------------------------------------------------------
Net expenses 2,128,383
- -------------------------------------------------------
Net investment income 22,525,910
- -------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Realized gain (loss) on sales of
investment securities (328,964)
- -------------------------------------------------------
Unrealized appreciation of investment
securities 4,775,213
- -------------------------------------------------------
Net gain on investment securities 4,446,249
- -------------------------------------------------------
Net increase in net assets resulting from
operations $26,972,159
=======================================================
</TABLE>
See Notes to Financial Statements.
FS-3
<PAGE> 71
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 22,525,910 $ 25,817,371
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (328,964) 3,022,827
- --------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities 4,775,213 (6,292,910)
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 26,972,159 22,547,288
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Institutional Shares (2,912,651) (8,084,170)
- --------------------------------------------------------------------------------------------
AIM Shares (19,613,259) (17,733,201)
- --------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Institutional Shares (95,511,728) 14,818,211
- --------------------------------------------------------------------------------------------
AIM Shares 27,226,897 86,957,303
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (63,838,582) 98,505,431
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 502,515,805 404,010,374
- --------------------------------------------------------------------------------------------
End of period $438,677,223 $ 502,515,805
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $443,515,589 $ 511,800,420
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (7,332,297) (7,003,333)
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities 2,493,931 (2,281,282)
- --------------------------------------------------------------------------------------------
$438,677,223 $ 502,515,805
============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997
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
FS-4
<PAGE> 72
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 $7,172,445, which expires, if not previously utilized,
through the year 2005.
E. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated between
the classes.
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.
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, 1997, the Fund
reimbursed AIM $66,785 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 holders of the AIM Shares. During the year ended July
31, 1997, AFS was paid $171,697 for such services. During the year ended July
31, 1997, the Fund paid A I M Institutional Fund Services, Inc. ("AIFS") $4,714
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 daily 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, 1997, the Fund paid AIM Distributors $549,759 as
compensation under the Plan.
AIM Distributors received commissions of $105,675 during the year ended July
31, 1997 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, 1997, the Fund paid legal fees of $5,153 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-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the year ended
July 31, 1997 the Fund's expenses were reduced by $471. In addition, the Fund
received reductions in transfer agency fees from AFS (an affiliate of AIM) of
$4,692 under an expense offset arrangement. The effect of the above arrangements
resulted in a reduction of the Fund's total expenses of $5,163 during the year
ended July 31, 1997.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 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.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of (i) $325,000,000 or (ii) the limits set
by its prospectus for borrowings. During the year ended July 31, 1997, the Fund
did not borrow under the line of credit agreement. The funds which are parties
to the line of credit are charged a commitment fee of 0.05% on the unused
balance of the committed line. The commitment fee is allocated among such funds
based on their respective average net assets for the period.
NOTE 5-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, 1997 was
$548,531,112 and $615,465,271, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis as, of July 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 2,424,721
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities --
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 2,424,721
=========================================================
</TABLE>
Cost of investments for tax purposes is $431,997,694.
FS-5
<PAGE> 73
NOTE 6-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 7-SHARE INFORMATION
Changes in shares outstanding during the years ended July 31, 1997 and 1996 were
as follows:
<TABLE>
<CAPTION>
1997 1996
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
AIM shares 22,795,689 $ 228,371,816 25,131,827 $ 252,267,687
- ---------------------------------------------------------------------------------------------------------------------
Institutional shares 2,663,678 26,662,958 5,925,940 59,531,203
- ---------------------------------------------------------------------------------------------------------------------
Issued as a reinvestment of dividends:
AIM shares 1,600,608 16,029,270 1,451,553 14,553,507
- ---------------------------------------------------------------------------------------------------------------------
Institutional shares 16,172 161,587 113,885 1,142,722
- ---------------------------------------------------------------------------------------------------------------------
Reacquired:
AIM shares (21,687,977) (217,174,189) (17,942,356) (179,863,891)
- ---------------------------------------------------------------------------------------------------------------------
Institutional shares (12,215,116) (122,336,273) (4,566,815) (45,855,714)
- ---------------------------------------------------------------------------------------------------------------------
(6,826,946) $ (68,284,831) 10,114,034 $ 101,775,514
=====================================================================================================================
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for an AIM Share outstanding during
each of the years in the three-year period ended July 31, 1997, the eleven
months ended July 31, 1994 and each of the years in the two-year period ended
August 31, 1993.
<TABLE>
<CAPTION>
JULY 31, AUGUST 31,
-------------------------------------------- -------------------
1997 1996 1995 1994 1993 1992
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01
- ------------------------------------------------------------ ---------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.54 0.55 0.54 0.35 0.42 0.58
- ------------------------------------------------------------ ---------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 0.10 (0.06) 0.07 (0.20) 0.05 0.29
- ------------------------------------------------------------ ---------- -------- -------- -------- -------- --------
Total from investment operations 0.64 0.49 0.61 0.15 0.47 0.87
- ------------------------------------------------------------ ---------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.54) (0.55) (0.54) (0.35) (0.42) (0.58)
- ------------------------------------------------------------ ---------- -------- -------- -------- -------- --------
Distributions from net realized capital gains -- -- -- (0.08) (0.02) (0.09)
- ------------------------------------------------------------ ---------- -------- -------- -------- -------- --------
Total distributions (0.54) (0.55) (0.54) (0.43) (0.44) (0.67)
- ------------------------------------------------------------ ---------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21
============================================================ ========== ======== ======== ======== ======== ========
Total return(a) 6.55% 4.98% 6.36% 1.52% 4.65% 8.93%
============================================================ ========== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 389,812 $359,048 $274,480 $329,942 $348,937 $260,454
============================================================ ========== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.54%(b)(c) 0.54% 0.51% 0.47%(d) 0.46% 0.48%
============================================================ ========== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 5.35%(b) 5.45% 5.44% 3.75%(d) 4.07% 5.60%
============================================================ ========== ======== ======== ======== ======== ========
Portfolio turnover rate 130% 117% 120% 120% 123% 120%
============================================================ ========== ======== ======== ======== ======== ========
</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 $366,506,207.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(d) Annualized.
FS-6
<PAGE> 74
AIM INVESTMENT
SECURITIES FUNDS
Prospectus
- --------------------------------------------------------------------------------
AIM The AIM Limited Maturity Treasury Fund (the
LIMITED "Fund"), a portfolio of AIM Investment Securities Funds
MATURITY (the "Trust"), is an open-end, series, management
TREASURY investment company designed for institutions seeking
FUND liquidity with minimum fluctuation in principal value,
and, consistent with this investment objective, the
INSTITUTIONAL highest total return achievable. To achieve its
CLASS objective, the Fund will invest in an actively managed
portfolio of U.S. Treasury notes and other direct
NOVEMBER 28, 1997 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 28,
1997, 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. 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 relates solely to the
Institutional Class 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 100
Houston, Texas 77046-1173
(800) 659-1005
<PAGE> 75
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 AIM Limited Maturity Treasury Fund (the "Fund"). The Fund
consists of two classes: Class A shares and the Institutional Class. This
Prospectus relates solely to the Institutional Class.
Class A shares are offered to investors pursuant to a separate prospectus. To
obtain information about the Class A shares, 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 Class A shares will
be allocated to such class; such fee, however, will not be allocated to the
Institutional Class. Therefore, assuming that the allocations of other
class-related expenses to the Institutional Class and the Class A shares are the
same, the yield of the Institutional Class will be higher than the yield of the
Class A shares 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 CLASS
The Institutional Class is 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
Class 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 Class 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
The Institutional Class is 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 Class 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 Class 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> 76
have such dividends automatically reinvested in additional shares of the
Institutional Class. 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 subsidiaries, manages or advises 55
investment company portfolios. 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. It is currently anticipated that, effective on or about December 29, 1997,
A I M Fund Services, Inc., a wholly owned subsidiary of AIM and a registered
transfer agent, will become the transfer agent to the Fund. See "Management of
the Trust."
DISTRIBUTOR
Fund Management Company ("FMC") acts as the exclusive distributor of the
Institutional Class. 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.
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, La Familia AIM de
Fondos and La Familia AIM de Fondos and Design are registered service marks and
aimfunds.com and Invest With Discipline are service marks of A I M Management
Group Inc.
3
<PAGE> 77
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 Class will bear
directly or indirectly. The fees and expenses set forth in this table are based
on the average net assets of the Institutional Class of the Fund for the fiscal
year ended July 31, 1997.
<TABLE>
<S> <C> <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........................................... 0.20%
12b-1 fees................................................ None
Other expenses............................................ 0.11%
----
Total fund operating expenses............................. 0.31%
====
</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.................................................... $10
5 years.................................................... $17
10 years.................................................... $39
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED TO BE REPRESENTATIVE OF THE SHARES
OF THE INSTITUTIONAL 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 INSTITUTIONAL 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
AMOUNT FOR TOTAL FUND OPERATING EXPENSES REMAINS THE SAME FOR EACH YEAR.
4
<PAGE> 78
FINANCIAL HIGHLIGHTS
Shown below are the financial highlights during each of the fiscal years ended
July 31, 1997, 1996 and 1995, the eleven months ended July 31, 1994 and each of
the years in the six-year period ended August 31, 1993. 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,
----------------------------------------------- -------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................. $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78
Income from investment
operations:
Net investment income..... 0.56 0.58 0.57 0.37 0.44 0.60 0.73 0.79
Net gains (losses) on
securities (both
realized and
unrealized)............. 0.10 (0.06) 0.07 (0.20) 0.05 0.29 0.22 0.01
-------- -------- -------- -------- -------- -------- ------- -------
Total from investment
operations............ 0.66 0.52 0.64 0.17 0.49 0.89 0.95 0.80
-------- -------- -------- -------- -------- -------- ------- -------
Less distributions:
Dividends from net
investment income....... (0.56) (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..... (0.56) (0.58) (0.57) (0.45) (0.46) (0.69) (0.73) (0.79)
-------- -------- -------- -------- -------- -------- ------- -------
Net asset value, end of
period.................... $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79
======== ======== ======== ======== ======== ======== ======= =======
Total return (a)........... 6.79% 5.27% 6.61% 1.72% 4.88% 9.14% 10.08% 8.52%
======== ======== ======== ======== ======== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted).......... $ 48,866 $143,468 $129,530 $134,971 $130,690 $ 89,352 $25,528 $10,378
======== ======== ======== ======== ======== ======== ======= =======
Ratio of expenses to
average net assets...... 0.31%(b)(c) 0.27% 0.28% 0.25%(d) 0.24% 0.28% 0.41%(e) 0.31%(f)
======== ======== ======== ======== ======== ======== ======= =======
Ratio of net investment
income to average net
assets.................. 5.56%(b) 5.72% 5.70% 3.98%(d) 4.30% 5.76% 7.36%(e) 8.12%(f)
======== ======== ======== ======== ======== ======== ======= =======
Portfolio turnover rate... 130% 117% 120% 120% 123% 120% 215% 192%
======== ======== ======== ======== ======== ======== ======= =======
Borrowings for the period:
Amount of debt outstanding
at end of period (000s
omitted)................ -- -- -- -- -- -- --
Average amount of debt
outstanding during the
period (000s omitted)
(h)..................... -- -- -- -- -- -- -- $ 834
Average number of shares
outstanding during the
period (000s omitted)
(h)..................... 5,230 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
---- ----
<S> <C> <C>
Net asset value, beginning
of period................. $ 9.80 $ 9.92
Income from investment
operations:
Net investment income..... 0.85 0.73
Net gains (losses) on
securities (both
realized and
unrealized)............. (0.02) (0.12)
------- -------
Total from investment
operations............ 0.83 0.61
------- -------
Less distributions:
Dividends from net
investment income....... (0.85) (0.73)
Distributions from net
realized capital
gains................... -- --
------- -------
Total distributions..... (0.85) (0.73)
------- -------
Net asset value, end of
period.................... $ 9.78 $ 9.80
======= =======
Total return (a)........... 8.87% 6.34%
======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted).......... $16,065 $35,310
======= =======
Ratio of expenses to
average net assets...... 0.31%(g) 0.31%(g)
======= =======
Ratio of net investment
income to average net
assets.................. 8.69%(g) 7.46%(g)
======= =======
Portfolio turnover rate... 220% 141%
======= =======
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)
(h)..................... $ 3,562 $ 3,754
Average number of shares
outstanding during the
period (000s omitted)
(h)..................... 1,817 2,118
Average amount of debt per
share during the
period.................. $ 1.96 $ 1.69
</TABLE>
- ---------------
(a) For periods less than one year, total return is not annualized.
(b) Ratios are based on average net assets of $52,373,873.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(d) Annualized.
(e) After expense reimbursements.
(f) After waiver of advisory fees and expense reimbursements.
(g) After waiver of advisory fees.
(h) Averages computed on a daily basis.
5
<PAGE> 79
SUITABILITY FOR INVESTORS
The Institutional Class is 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 Class 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 Class 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
6
<PAGE> 80
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.
7
<PAGE> 81
PURCHASE OF SHARES
The Institutional Class is 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 submitted to and received by AIFS 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 AIFS 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
Class is $1,000,000. No minimum amount is required for subsequent investments in
the Institutional Class nor are minimum balances required. Prior to the initial
purchase of shares, an Account Application must be completed and sent to AIFS at
P.O. Box 4333, Houston, Texas 77210-4333. 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. Following the initial purchase of shares, subsequent purchases of
shares of the Institutional Class may be made via AIM LINK--Registered
Trademark-- Remote, a personal computer application software product.
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 Class may also be made via AIM
LINK--Registered Trademark-- Remote. 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
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<PAGE> 82
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 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.
Shareholders may request a redemption by telephone. Neither the Transfer Agent
nor FMC will be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the 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 for
verification of telephone transactions may include recordings of telephone
transactions (maintained for six months), and mailings of confirmation promptly
after the transaction.
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' 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 100, 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.
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<PAGE> 83
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 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 Class of the Fund can be
obtained by calling the Fund at (800) 659-1005.
The performance of the Institutional Class 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.
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<PAGE> 84
The yield of the Institutional Class is a way of showing the rate of income
the Institutional Class earns on its investments as a percentage of the
Institutional Class' price. In order to calculate yield, the Fund takes the
interest income earned from its portfolio of investments attributable to the
Institutional Class for a 30-day period (net of expenses), divides such interest
by the number of shares of the Institutional Class and expresses the result as
an annualized percentage rate based on the net asset value per share of the
Institutional Class 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 Class may not equal the
income paid to an investor's account or the income reported in the financial
statements for the Institutional Class.
The Fund may also quote the distribution rate for the Institutional Class,
which is calculated by dividing dividends declared during a specified period by
the net asset value per share of the Institutional Class at the end of the
period and annualizing the results.
The total return of the Institutional Class shows the overall change in value
of the Institutional Class, including changes in share price assuming all of the
Institutional Class' dividends and capital gain distributions are reinvested. A
cumulative total return reflects the performance of the Institutional Class 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 Class had been
constant over the entire period. Because average annual returns tend to smooth
out variations in the return of the Institutional Class, investors should
recognize that such returns are not the same as actual year-by-year results. To
illustrate the components of overall performance, the Institutional Class 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. Information concerning the Board of Trustees may be found in the
Statement of Additional Information. Certain trustees and officers of the Trust
are affiliated with AIM and AIM Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the Fund's investment advisor pursuant to a Master Investment Advisory
Agreement, dated February 28, 1997 (the "Advisory Agreement"). AIM was organized
in 1976 and, together with its subsidiaries, manages or advises 55 investment
company portfolios (including the Fund). AIM is a wholly owned subsidiary of AIM
Management, a holding company engaged in the financial services business. AIM
Manage-
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ment is an indirect wholly owned subsidiary of AMVESCAP PLC, a publicly-traded
holding company that, through its subsidiaries, engages in the business of
investment management on an international basis.
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 February 28, 1997, 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, 1997, 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 0.31%.
For the fiscal year ended July 31, 1997 the Fund paid 0.02% 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 approximately 125 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 15 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 ten years of experience as an investment
professional. Paula A. Permenter has been responsible for the Fund since 1996.
Ms. Permenter has been associated with AIM since 1996 and has nine 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 February 28, 1997,
relating to the shares of the Institutional Class (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
Class. The address of FMC is 11 Greenway Plaza, Suite 100, 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 Class 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 Class 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 Class sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of
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<PAGE> 86
shares of the Institutional Class or the amount received as proceeds from such
sales. Sales of shares of the Institutional Class 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
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. Pursuant to an Agreement and Plan of Reorganization, the Fund
was reorganized on October 15, 1993 as a portfolio of the Delaware business
trust.
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 the Class A shares 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
Class A shares, 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 Class A
shares.
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 100,
Houston, Texas 77046-1173, acts as transfer agent and dividend disbursing agent
for the Institutional Class. It is currently anticipated that, effective on or
about December 29, 1997, A I M Fund Services, Inc., a wholly owned subsidiary of
AIM and a registered transfer agent, will become the transfer
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<PAGE> 87
agent to the Fund. 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 passes upon legal matters.
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be directed
to the Fund at 11 Greenway Plaza, Suite 100, 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.
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<TABLE>
====================================================== ======================================================
<S> <C> <C>
AIM INVESTMENT SECURITIES FUNDS PROSPECTUS
AIM LIMITED MATURITY TREASURY FUND
INSTITUTIONAL CLASS
11 Greenway Plaza, Suite 100 November 28, 1997
Houston, Texas 77046-1173
(800) 659-1005
AIM
INVESTMENT ADVISOR INVESTMENT
A I M ADVISORS, INC. SECURITIES FUNDS
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173 ---------------------
(713) 626-1919
AIM LIMITED MATURITY
DISTRIBUTOR TREASURY FUND
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100 ---------------------
Houston, Texas 77046-1173
(800) 659-1005 INSTITUTIONAL CLASS
AUDITORS
KPMG PEAT MARWICK LLP
700 Louisiana
Houston, Texas 77002
CUSTODIAN TABLE OF CONTENTS
THE BANK OF NEW YORK
90 Washington Street, 11th Floor PAGE
New York, New York 10286 ----
TRANSFER AGENT Summary........................................ 2
A I M INSTITUTIONAL FUND SERVICES, INC. Table of Fees and Expenses..................... 4
11 Greenway Plaza, Suite 100 Financial Highlights........................... 5
Houston, Texas 77046-1173 Suitability For Investors...................... 6
Investment Program............................. 6
Purchase of Shares............................. 8
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION Redemption of Shares........................... 8
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS Dividends and Distributions.................... 9
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THE Taxes.......................................... 10
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR Net Asset Value................................ 10
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN Performance Information........................ 10
AUTHORIZED BY THE FUND OR THE DISTRIBUTOR. THIS Reports to Shareholders........................ 11
PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY Management of the Trust........................ 11
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY Portfolio Transactions and Brokerage
NOT LAWFULLY BE MADE. Allocation................................... 13
General Information............................ 13
====================================================== ======================================================
</TABLE>
<PAGE> 89
STATEMENT OF
ADDITIONAL INFORMATION
AIM INVESTMENT SECURITIES FUNDS
AIM LIMITED MATURITY TREASURY FUND
INSTITUTIONAL CLASS
11 GREENWAY PLAZA
SUITE 100
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 100, HOUSTON, TEXAS 77046-1173
OR BY CALLING (800) 659-1005
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED NOVEMBER 28, 1997
RELATING TO THE PROSPECTUS DATED NOVEMBER 28, 1997
<PAGE> 90
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........................... 8
Reports................................................ 8
Principal Holders of Securities........................ 8
Purchases and Redemptions................................... 9
Net Asset Value Determination.......................... 9
The Distribution Agreement............................. 10
Suspension of Redemption Rights........................ 10
Investment Program and Restrictions......................... 10
Investment Program..................................... 10
Investment Restrictions................................ 11
Performance Information..................................... 12
Yield Calculations..................................... 12
Total Return Calculations.............................. 12
Historical Portfolio Results........................... 13
Portfolio Transactions...................................... 13
Taxes....................................................... 14
Qualification as a Regulated Investment Company........ 14
Excise Tax on Regulated Investment Companies........... 16
Fund Distributions..................................... 16
Sale or Redemption of Fund Shares...................... 17
Foreign Shareholders................................... 17
Effect of Future Legislation; Local Tax
Considerations........................................ 17
Financial Statements........................................ FS-1
</TABLE>
i
<PAGE> 91
INTRODUCTION
AIM Investment Securities Funds (the "Trust") is a series mutual fund
currently offering one portfolio: the AIM Limited Maturity Treasury Fund (the
"Fund"). Currently, the Fund has two classes of shares, consisting of the
Institutional Class and the Class A shares. This Statement of Additional
Information relates solely to the Institutional Class 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
Class (the "Prospectus"), dated November 28, 1997. 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 100, 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 Class. 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. The SEC maintains a Website
at http://www.sec.gov that contains this Statement of Additional Information,
material incorporated by reference and other information regarding the Fund.
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
1
<PAGE> 92
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 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
at least the last five years are set forth below.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
POSITIONS HELD PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE WITH REGISTRANT AT LEAST THE PAST 5 YEARS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (78) Trustee and Chairman of the Board of Directors, A I M
11 Greenway Plaza, Suite 100 Chairman Management Group Inc., A I M Advisors, Inc.,
Houston, Texas 77046 A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc.,
A I M Institutional Fund Services, Inc. and
Fund Management Company; and Vice Chairman and
Director, AMVESCAP PLC.
- ---------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (53) Trustee Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief
McLean, VA 22102 Executive Officer, COMSAT Corporation; and
Chairman, Board of Governors of INTELSAT
(international communications company).
- ---------------------------------------------------------------------------------------------------------
OWEN DALY II (73) Trustee Director, Cortland Trust Inc. (investment
Six Blythewood Road company). Formerly, Director, CF & I Steel
Baltimore, MD 21210 Corp., Monumental Life Insurance Company and
Monumental General Insurance Company; and
Chairman of the Board of Equitable
Bancorporation.
- ---------------------------------------------------------------------------------------------------------
JACK M. FIELDS (45) Trustee Formerly, Member of the U.S. House of
8810 Will Clayton Parkway Representatives.
Jetero Plaza, Suite E
Humble, TX 77338
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
* A trustee who is an "interested person" of the Trust and AIM as defined in the
1940 Act.
2
<PAGE> 93
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
POSITIONS HELD PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE WITH REGISTRANT AT LEAST THE PAST 5 YEARS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
*CARL FRISCHLING (60) Trustee Partner, Kramer, Levin, Naftalis & Frankel
919 Third Avenue (law firm); Director, ERD Waste, Inc. (waste
New York, NY 10022 management company), Aegis Consumer Finance
(auto leasing company), and Lazard Funds, Inc.
(investment companies). Formerly, Partner,
Reid & Priest (law firm); and, prior thereto,
Partner, Spengler Carlson Gubar Brodsky &
Frischling (law firm).
- ---------------------------------------------------------------------------------------------------------
**ROBERT H. GRAHAM (50) Trustee and Director, President and Chief Executive
11 Greenway Plaza, Suite 100 President Officer, A I M Management Group Inc.; Director
Houston, TX 77046 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; Director, AMVESCAP PLC;
and Chairman of the Board of Directors, AIM
Funds Group Canada Inc.
- ---------------------------------------------------------------------------------------------------------
JOHN F. KROEGER (73) Trustee Director, Flag Investors International Fund,
37 Pippins Way Inc., Flag Investors Emerging Growth Fund,
Morristown, NJ 07960 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 (54) Trustee Attorney in private practice in Houston,
6363 Woodway, Suite 825 Texas.
Houston, TX 77057
- ---------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (74) Trustee Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management
Tequesta, FL 33469 Services, Inc. (provider of centralized
management services to telephone companies);
Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone
companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of
Pennsylvania and Diamond State Telephone
Company.
- ---------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (58) Trustee Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited
2800 Post Oak Blvd. Partnership (real estate development).
Houston, TX 77056
- ---------------------------------------------------------------------------------------------------------
***JOHN J. ARTHUR (53) Senior Vice Director, Senior Vice President and Treasurer,
11 Greenway Plaza, Suite 100 President and A I M Advisors, Inc.; and Vice President and
Houston, TX 77046 Treasurer Treasurer, A I M Management Group Inc., A I M
Capital Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc., A I M
Institutional Fund Services, Inc. and Fund
Management Company.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
* 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.
*** Mr. Arthur and Ms. Relihan are married to each other.
3
<PAGE> 94
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
POSITIONS HELD PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE WITH REGISTRANT AT LEAST THE PAST 5 YEARS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
GARY T. CRUM (50) Senior Vice Director and President, A I M Capital
11 Greenway Plaza, Suite 100 President Management, Inc.; Director and Senior Vice
Houston, TX 77046 President, A I M Management Group Inc., A I M
Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
- ---------------------------------------------------------------------------------------------------------
***CAROL F. RELIHAN (42) Senior Vice Director, Senior Vice President, Secretary and
11 Greenway Plaza, Suite 100 President and General Counsel, A I M Advisors, Inc.; Vice
Houston, TX 77046 Secretary President, General Counsel and Secretary,
A I M Management Group Inc.; Director, Vice
President and General Counsel Fund Management
Company; General Counsel and Vice President,
A I M Fund Services, Inc., and A I M
Institutional Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and
A I M Distributors, Inc.
- ---------------------------------------------------------------------------------------------------------
DANA R. SUTTON (38) Vice President Vice President and Fund Controller, A I M
11 Greenway Plaza, Suite 100 and Assistant Advisors, Inc.; and Assistant Vice President
Houston, TX 77046 Treasurer and Assistant Treasurer, Fund Management
Company.
- ---------------------------------------------------------------------------------------------------------
MELVILLE B. COX (54) Vice President Vice President and Chief Compliance Officer,
11 Greenway Plaza, Suite 100 A I M Advisors, Inc., A I M Capital
Houston, TX 77046 Management, Inc., A I M Fund Services, Inc.,
A I M Institutional Fund Services, Inc., A I M
Distributors, Inc. and Fund Management
Company.
- ---------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (37) Vice President Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 100 Management, Inc.; and Vice President, A I M
Houston, TX 77046 Advisors, Inc.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The standing committees of the Board of Trustees are the Audit Committee, the
Investments Committee and the Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Fields,
Frischling, Kroeger (Chairman), Pennock, Robinson and Sklar. 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), Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. The
Investments Committee is responsible for reviewing portfolio compliance,
brokerage allocation, portfolio investment pricing issues, interim dividend and
distribution issues, 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, Fields, Kroeger, Pennock (Chairman), Robinson 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
- --Registered Trademark--, AIM Institutional Funds and all other investment
companies managed or advised by AIM (the "AIM Funds"). Each such trustee re-
- ---------------
*** Mr. Arthur and Ms. Relihan are married to each other.
4
<PAGE> 95
ceives 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..................................... 1,236 38,621 68,000
Owen Daly II.......................................... 1,235 82,607 68,000
Jack M. Fields(4)..................................... 530 0 0
Carl Frischling(5).................................... 1,236 56,683 68,000
Robert H. Graham...................................... 0 0 0
John F. Kroeger....................................... 1,235 83,654 66,000
Lewis F. Pennock...................................... 1,235 33,702 67,000
Ian W. Robinson....................................... 1,236 64,973 68,000
Louis S. Sklar........................................ 1,219 47,593 66,500
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Trustees of the Fund during
the fiscal year ended July 31, 1997, including interest earned thereon, was
$5,699.
(2) During the fiscal year ended July 31, 1997, the total estimated amount of
expenses allocated to the Fund in respect of such retirement benefits was
$2,735. Data reflects compensation estimated for the calendar year ended
December 31, 1996.
(3) Each Trustee serves as a director or trustee of a total of 11 registered
investment companies advised by AIM (comprised of 47 portfolios). Data
reflect total compensation earned during the calendar year ended December
31, 1996.
(4) Mr. Fields was not serving as a Trustee during the calendar year ended
December 31, 1996.
(5) See page 6 regarding fees earned by Mr. Frischling's law firm.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each 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 the retainer amount reflected below
and various years of service classifications. The estimated credited years of
service for
5
<PAGE> 96
Messrs. Crockett, Daly, Fields, Frischling, Kroeger, Pennock, Robinson and Sklar
are 10, 10, 0, 20, 19, 15, 10, and 7 years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
ANNUAL
RETAINER
NUMBER OF PAID BY
YEARS OF ALL AIM
SERVICE WITH FUNDS
THE AIM --------
FUNDS $80,000
----- --------
<S> <C>
10........................................... $60,000
9........................................... $54,000
8........................................... $48,000
7........................................... $42,000
6........................................... $36,000
5........................................... $30,000
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "deferring 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 five (5) or ten
(10) years (depending on the Agreement) 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, 1997 the Fund paid $5,153 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 100, Houston, Texas
77046-1173, serves as the investment advisor to the Fund pursuant to a Master
Investment Advisory Agreement with the Trust, dated February 28, 1997 (the
"Advisory Agreement"). AIM was organized in 1976, and together with its
subsidiaries, advises or manages 55 investment company portfolios.
AIM is a wholly owned subsidiary of A I M Management Group Inc. ("AIM
Management"), 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. AIM
Management is a holding company that has been engaged in the financial services
business since 1976. AIM Management is an indirect wholly owned subsidiary of
AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail fund business in the United
States, Europe and the Pacific Region. Certain of the directors and officers of
AIM are also executive officers of the Fund and their affiliations are shown
under "Trustees and Officers." 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 an-
6
<PAGE> 97
nual 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 February 28, 1997 and will continue
in effect until February 28, 1999, 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.
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 February 28, 1997, 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, 1997, 1996 and 1995, AIM received
advisory fees of $837,760, $933,207, and $809,449, respectively, pursuant to the
Advisory Agreement. During the fiscal years ended July 31, 1997, 1996 and 1995,
AIM was reimbursed $66,785, $60,857, and $82,199, respectively, pursuant to the
Administrative Services Agreement.
7
<PAGE> 98
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
100, Houston, Texas 77046-1173, serves as transfer agent and dividend disbursing
agent for the Institutional Class. The Fund pays AIFS such compensation as may
be agreed upon from time to time. During the fiscal years ended July 31, 1997,
1996 and 1995, AIFS received from the Fund transfer agency and shareholder
services fees with respect to the Institutional Class in the amount of $4,714,
$10,350 and $3,349, respectively. It is currently anticipated that, effective on
or about December 29, 1997, A I M Fund Services, Inc., a wholly owned subsidiary
of AIM and a registered transfer agent, will become the transfer agent to the
Fund.
REPORTS
The Trust furnishes holders of the Institutional Class 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,
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 3, 1997, the trustees and
officers of the Trust owned less than 1% of the outstanding shares of any class
of the Trust.
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 3, 1997, 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 85.10%**
Attn: Trust Securities (T-8)
P.O. Box 1600
San Antonio, TX 78296
Associated Bank 5.05%
Attn: Trust Operations
P.O. Box 19006
Green Bay, WI 54307-9006
</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.
8
<PAGE> 99
CLASS A 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 Class A shares, as of November 3,
1997, 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>
Merrill Lynch Pierce Fenner & Smith 13.52%
FBO the Sole Benefit of Customers
Mutual Fund Operations
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Trust For the Milipore Corporation 6.04%
Invested Employee Plan
80 Ashby Rd.
Bedford, MA 01730
</TABLE>
- ---------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
PURCHASES AND REDEMPTIONS
NET ASSET VALUE DETERMINATION
A complete description of the manner by which shares of the Institutional
Class may be purchased appears in the Prospectus under the caption "Purchase of
Shares."
Shares of the Institutional Class 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
9
<PAGE> 100
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
February 28, 1997 (the "Distribution Agreement"), pursuant to which FMC has
agreed to act as the exclusive distributor of shares of the Institutional Class.
The address of FMC is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The Distribution Agreement provides that FMC has the exclusive right to
distribute shares of the Institutional Class 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 Class and the costs of preparing and distributing any other
supplemental sales literature. FMC has not undertaken to sell any specified
number of shares of the Institutional Class. 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 February 28, 1997 and will
continue in effect until February 28, 1999, 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 Trustees 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 customary 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
10
<PAGE> 101
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;
(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; or
(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).
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 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
11
<PAGE> 102
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 Class
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 Class 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 Class 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
Institutional Class may differ from the rate of distributions the Institutional
Class paid over the same period or the rate of income reported in the financial
statements of the Institutional Class.
The Fund may also quote the distribution rate for the Institutional Class,
which expresses the historical amount of income dividends of the Institutional
Class to its shareholders as a percentage of the net asset value per share of
the Institutional Class. The distribution rate for the Institutional Class for
the thirty day period ended July 31, 1997 was 5.64%. This distribution rate was
calculated by dividing dividends declared over the thirty days ended July 31,
1997 by the net asset value per share of the Institutional Class at the end of
that period and annualizing the result.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the Institutional
Class' return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the net asset value per share of the
Institutional Class 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 Class.
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.
12
<PAGE> 103
HISTORICAL PORTFOLIO RESULTS
The following chart shows the total returns for the Institutional Class for
the twelve months and five year periods ended July 31, 1997, and the period
beginning July 13, 1987 (the date operations commenced) through July 31, 1997.
<TABLE>
<CAPTION>
AVERAGE
ANNUAL CUMULATIVE
RETURN RETURN
------- ----------
<S> <C> <C>
Twelve months ended 7/31/97.............................. 6.79% %
Five years ended 7/31/97................................. 5.19% 28.78%
Ten years ended 7/31/97.................................. 6.82% 93.38%
</TABLE>
The 30 day yield of the Institutional Class as of July 31, 1997 was 5.64%.
A hypothetical investment of $1,000 in the Institutional Class made at the
beginning of the twelve-month period ended July 31, 1997 would have been worth
$1,067.90. During the five-year period ended July 31, 1997, a hypothetical
$1,000 investment in the Institutional Class at the beginning of such period
would have been worth $1,287.80. A hypothetical investment of $1,000 made at the
beginning of the ten-year period ended July 31, 1997, would have been worth
$$1,933.76, assuming in each case that all distributions were reinvested.
The performance of the Institutional Class 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 Class
may also advertise mutual fund performance rankings which have been assigned to
the Institutional Class by such monitoring services.
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 broker-dealers may be useful to AIM with clients, including the
other mutual funds advised by AIM (collectively with the Fund, the "AIM Funds").
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. Since AIM
must evaluate information received as a result of such services, the advisory
fees paid by the Fund are not reduced because AIM receives such services. In
addition, AIM may direct portfolio trades.
AIM and its affiliates manage several other investment accounts, 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 such investment accounts. 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 these
accounts 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, certain 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
13
<PAGE> 104
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 AIM Fund or 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. 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, 1997, 1996 and 1995, were 129.74%,
117.09%, and 120.01%, 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 certain 5% holders provided the Fund complies with
certain conditions and procedures.
At the present time, the Fund does not intend to engage in any transactions
with such 5% holders other than repurchase agreement transactions.
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) for taxable years beginning on or prior to August 5, 1997, 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
14
<PAGE> 105
will be treated as gross income from the sale or other disposition of securities
for this purpose. For taxable years beginning after August 5, 1997, the
Short-Short Gain Test has been repealed by the Taxpayer Relief Act of 1997.
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.
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 requirements described above, the Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses.
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.
15
<PAGE> 106
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) 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. Pursuant to the Taxpayer Relief
Act of 1997, the Internal Revenue Service has announced that it will issue
temporary regulations that will permit the fund to designate to its shareholders
the portion of each capital gain dividend paid in taxable years ending on or
after May 7, 1997, that constitutes a 20% rate capital gain distribution, or a
28% rate capital gain distribution. The temporary regulations will also permit
the fund to designate to its shareholders the portion of any net capital gain
retained by the Fund in taxable years ending on or after May 7, 1997, that
belongs to each of these three long-term capital gain categories.
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.
16
<PAGE> 107
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. Except to the extent otherwise provided in future Treasury
regulations, any long-term capital gain recognized by a noncorporate shareholder
will be subject to tax at a maximum rate of 20% if the shares sold or redeemed
were held for more than 18 months. 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 that in some cases may be 19.6% lower than the
maximum rate applicable to ordinary income. Capital losses in any year are
deductible only to the extent of capital gains plus, in the case of a
noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (i) incurs a sales load in acquiring shares of the Fund, (ii)
disposes of such shares less than 91 days after they are acquired and (iii)
subsequently acquires shares of the same or another fund at a reduced sales load
pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign 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
17
<PAGE> 108
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.
18
<PAGE> 109
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, 1997, 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 three-year period then ended, the eleven
months ended July 31, 1994 and each of the years in the
two-year period ended August 31, 1993. These financial
statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of July 31, 1997, 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, 1997, 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
three-year period then ended, the eleven months ended July 31,
1994 and each of the years in the two-year period ended August
31, 1993, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
August 22, 1997
Houston, Texas
FS-1
<PAGE> 110
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
MATURITY (000s) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. TREASURY NOTES - 99.03%
6.125% 08/31/98 $36,300 $ 36,511,629
- -------------------------------------------------------------------------------------
6.00% 09/30/98 36,200 36,368,692
- -------------------------------------------------------------------------------------
5.875% 10/31/98 36,200 36,305,704
- -------------------------------------------------------------------------------------
5.625% 11/30/98 35,880 35,878,924
- -------------------------------------------------------------------------------------
5.75% 12/31/98 36,200 36,266,970
- -------------------------------------------------------------------------------------
5.875% 01/31/99 36,200 36,320,184
- -------------------------------------------------------------------------------------
5.875% 02/28/99 36,200 36,319,460
- -------------------------------------------------------------------------------------
6.25% 03/31/99 36,300 36,635,775
- -------------------------------------------------------------------------------------
6.375% 04/30/99 36,300 36,713,457
- -------------------------------------------------------------------------------------
6.25% 05/31/99 36,300 36,646,302
- -------------------------------------------------------------------------------------
6.00% 06/30/99 35,000 35,195,650
- -------------------------------------------------------------------------------------
5.875% 07/31/99 35,150 35,259,668
- -------------------------------------------------------------------------------------
Total U.S. Treasury Securities 434,422,415
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.03% 434,422,415
- -------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.97% 4,254,808
- -------------------------------------------------------------------------------------
NET ASSETS - 100.00% $438,677,223
=====================================================================================
</TABLE>
See Notes to Financial Statements.
FS-2
<PAGE> 111
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $431,928,484) $ 434,422,415
- ----------------------------------------------------------------------------
Cash 20,611
- ----------------------------------------------------------------------------
Receivables for:
Fund shares sold 819,782
- ----------------------------------------------------------------------------
Interest 5,523,917
- ----------------------------------------------------------------------------
Investment in deferred compensation plan 19,535
- ----------------------------------------------------------------------------
Other assets 83,788
- ----------------------------------------------------------------------------
Total assets 440,890,048
- ----------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 1,248,586
- ----------------------------------------------------------------------------
Dividends 674,022
- ----------------------------------------------------------------------------
Deferred compensation 19,535
- ----------------------------------------------------------------------------
Accrued advisory fees 71,077
- ----------------------------------------------------------------------------
Accrued distribution fees 47,502
- ----------------------------------------------------------------------------
Accrued transfer agent fees 38,977
- ----------------------------------------------------------------------------
Accrued operating expenses 113,126
- ----------------------------------------------------------------------------
Total liabilities 2,212,825
- ----------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 438,677,223
============================================================================
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
NET ASSETS $48,865,566 $389,811,657 $438,677,223
==========================================================================================
Shares outstanding, $0.01 par value per share 4,853,653 38,718,670 43,572,323
==========================================================================================
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 10.07
==========================================================================================
OFFERING PRICE PER SHARE:
(Net asset value of $10.07 divided by 99.00%)* $ 10.17
==========================================================================================
</TABLE>
* There is no sales charge or 12b-1 fee on sales of Institutional Shares.
See Notes to Financial Statements.
FS-3
<PAGE> 112
STATEMENT OF OPERATIONS
For The Year Ended July 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $24,654,293
- -------------------------------------------------------------------------
EXPENSES:
Advisory fees 837,760
- -------------------------------------------------------------------------
Administrative service fees 66,785
- -------------------------------------------------------------------------
Custodian fees 35,063
- -------------------------------------------------------------------------
Transfer agent fees 342,339
- -------------------------------------------------------------------------
Trustees' fees and expenses 10,907
- -------------------------------------------------------------------------
Distribution fees (See Note 2) 549,759
- -------------------------------------------------------------------------
Other 290,933
- -------------------------------------------------------------------------
Total expenses 2,133,546
- -------------------------------------------------------------------------
Less: Expenses paid indirectly (5,163)
- -------------------------------------------------------------------------
Net expenses 2,128,383
- -------------------------------------------------------------------------
Net investment income 22,525,910
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES:
Realized gain (loss) on sales of investment securities (328,964)
- -------------------------------------------------------------------------
Unrealized appreciation of investment securities 4,775,213
- -------------------------------------------------------------------------
Net gain on investment securities 4,446,249
- -------------------------------------------------------------------------
Net increase in net assets resulting from operations $26,972,159
=========================================================================
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE> 113
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended July 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 22,525,910 $ 25,817,371
- ---------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities (328,964) 3,022,827
- ---------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities 4,775,213 (6,292,910)
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 26,972,159 22,547,288
- ---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME:
Institutional Shares (2,912,651) (8,084,170)
- ---------------------------------------------------------------------------------------
AIM Shares (19,613,259) (17,733,201)
- ---------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Institutional Shares (95,511,728) 14,818,211
- ---------------------------------------------------------------------------------------
AIM Shares 27,226,897 86,957,303
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets (63,838,582) 98,505,431
- ---------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 502,515,805 404,010,374
- ---------------------------------------------------------------------------------------
End of period $438,677,223 $ 502,515,805
=======================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $443,515,589 $ 511,800,420
- ---------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of
investment securities (7,332,297) (7,003,333)
- ---------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities 2,493,931 (2,281,282)
- ---------------------------------------------------------------------------------------
$438,677,223 $ 502,515,805
=======================================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 114
NOTES TO FINANCIAL STATEMENTS
July 31, 1997
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 $7,172,445, which expires, if not previously utilized,
through the year 2005.
FS-6
<PAGE> 115
E. Expenses--Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated
between the classes.
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.
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, 1997, the Fund
reimbursed AIM $66,785 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 holders of the AIM Shares. During the year ended July
31, 1997, AFS was paid $171,697 for such services. During the year ended July
31, 1997, the Fund paid A I M Institutional Fund Services, Inc. ("AIFS") $4,714
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 daily 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, 1997, the Fund paid AIM Distributors $549,759 as
compensation under the Plan.
AIM Distributors received commissions of $105,675 during the year ended July
31, 1997 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, 1997, the Fund paid legal fees of $5,153 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-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the year ended
July 31, 1997 the Fund's expenses were reduced by $471. In addition, the Fund
received reductions in transfer agency fees from AFS (an affiliate of AIM) of
$4,692 under an expense offset arrangement. The effect of the above arrangements
resulted in a reduction of the Fund's total expenses of $5,163 during the year
ended July 31, 1997.
FS-7
<PAGE> 116
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 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.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of (i) $325,000,000 or (ii) the limits set
by its prospectus for borrowings. During the year ended July 31, 1997, the Fund
did not borrow under the line of credit agreement. The funds which are parties
to the line of credit are charged a commitment fee of 0.05% on the unused
balance of the committed line. The commitment fee is allocated among such funds
based on their respective average net assets for the period.
NOTE 5-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, 1997 was
$548,531,112 and $615,465,271, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis as, of July 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 2,424,721
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities --
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 2,424,721
==========================================================================
</TABLE>
Cost of investments for tax purposes is $431,997,694.
NOTE 6-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.
FS-8
<PAGE> 117
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended July 31, 1997 and 1996 were
as follows:
<TABLE>
<CAPTION>
1997 1996
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
AIM shares 22,795,689 $ 228,371,816 25,131,827 $ 252,267,687
- ----------------------------------------------------------------------------------------
Institutional shares 2,663,678 26,662,958 5,925,940 59,531,203
- ----------------------------------------------------------------------------------------
Issued as a reinvestment of
dividends:
AIM shares 1,600,608 16,029,270 1,451,553 14,553,507
- ----------------------------------------------------------------------------------------
Institutional shares 16,172 161,587 113,885 1,142,722
- ----------------------------------------------------------------------------------------
Reacquired:
AIM shares (21,687,977) (217,174,189) (17,942,356) (179,863,891)
- ----------------------------------------------------------------------------------------
Institutional shares (12,215,116) (122,336,273) (4,566,815) (45,855,714)
- ----------------------------------------------------------------------------------------
(6,826,946) $ (68,284,831) 10,114,034 $ 101,775,514
========================================================================================
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for an Institutional Share outstanding
during each of the years in the three-year period ended July 31, 1997, the
eleven months ended July 31, 1994 and each of the years in the two-year period
ended August 31, 1993.
<TABLE>
<CAPTION>
JULY 31, AUGUST 31,
----------------------------------------------- --------------------
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01
- ------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.56 0.58 0.57 0.37 0.44 0.60
- ------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) 0.10 (0.06) 0.07 (0.20) 0.05 0.29
- ------------------------------------ -------- -------- -------- -------- -------- --------
Total from investment operations 0.66 0.52 0.64 0.17 0.49 0.89
- ------------------------------------ -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.56) (0.58) (0.57) (0.37) (0.44) (0.60)
- ------------------------------------ -------- -------- -------- -------- -------- --------
Distributions from net realized
capital gains -- -- -- (0.08) (0.02) (0.09)
- ------------------------------------ -------- -------- -------- -------- -------- --------
Total distributions (0.56) (0.58) (0.57) (0.45) (0.46) (0.69)
- ------------------------------------ -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21
==================================== ======== ======== ======== ======== ======== ========
Total return(a) 6.79% 5.27% 6.61% 1.72% 4.88% 9.14%
==================================== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $ 48,866 $143,468 $129,530 $134,971 $130,690 $ 89,352
==================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets 0.31%(b)(c) 0.27% 0.28% 0.25%(d) 0.24% 0.28%
==================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 5.56%(b) 5.72% 5.70% 3.98%(d) 4.30% 5.76%
==================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 130% 117% 120% 120% 123% 120%
==================================== ======== ======== ======== ======== ======== ========
</TABLE>
(a) For periods less than one year, total return is not annualized.
(b) Ratios are based on average net assets of $52,373,873.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(d) Annualized.
FS-9
<PAGE> 118
PART C
OTHER INFORMATION
Item 24. (a) Financial Statements:
(1) Class A Shares of the AIM Limited Maturity Treasury
Fund
In Part A: Financial Highlights
In Part B: (1) Independent Auditors' Report
(2) Schedule of Investments as of July 31, 1997
(3) Statement of Assets and Liabilities as of
July 31, 1997
(4) Statement of Operations for the year ended
July 31, 1997
(5) Statements of Changes in Net
Assets for the years ended
July 31, 1997 and 1996
(6) Footnotes to Financial Statements
(2) Institutional Class of the AIM Limited Maturity Treasury Fund
In Part A: Financial Highlights
In Part B: (1) Independent Auditors' Report
(2) Schedule of Investments as of July 31,
1997
(3) Statement of Assets and Liabilities as of
July 31, 1997
(4) Statement of Operations for the year
ended July 31, 1997
(5) Statements of Changes in Net Assets for
the years ended
July 31, 1997 and 1996
(6) Footnotes to Financial Statements
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C> <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 was filed
electronically as an Exhibit to Post-Effective Amendment No. 7 on November 21, 1996 and is
hereby incorporated by reference.
(d) - Third Amendment to Agreement and Declaration of Trust of Registrant is filed herewith
electronically.
</TABLE>
C-1
<PAGE> 119
<TABLE>
<S> <C> <C> <C>
(e) - Fourth 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 were filed electronically as an Exhibit to Post-Effective
Amendment No. 7 on November 21, 1996.
(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 was filed electronically as an Exhibit to Post-
Effective Amendment No. 7 on November 21, 1996.
(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 was filed electronically as an Exhibit
to Post-Effective Amendment No. 7 on November 21, 1996.
(d) - Amended and Restated By-laws of Registrant 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.
(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.
(d) - Master Investment Advisory Agreement, dated February 28, 1997, between Registrant and A I M
Advisors, Inc. is filed herewith electronically.
(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.
</TABLE>
C-2
<PAGE> 120
<TABLE>
<S> <C> <C> <C>
(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.
(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.
(5) Master Distribution Agreement dated February 28, 1997, between Registrant and
A I M Distributors, Inc. is filed herewith electronically.
(6) 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 was filed electronically as an Exhibit to Post-Effective Amendment No. 7 on November
21, 1996.
(7) Master Distribution Agreement, dated February 28, 1997, between Registrant and Fund
Management Company 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, was filed electronically as an Exhibit to
</TABLE>
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<PAGE> 121
<TABLE>
<S> <C> <C> <C>
Post-Effective Amendment No. 7 on November 21, 1996 and is hereby incorporated by
reference.
(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, was filed electronically as an Exhibit to Post-Effective
Amendment No. 7 on November 21, 1996 and is hereby incorporated by reference.
(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 was filed
electronically as an Exhibit to Post-Effective Amendment No.7 on November 21, 1996 and is
hereby incorporated by reference.
(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 was filed electronically as an Exhibit to Post-Effective Amendment No. 7 on November
21, 1996 and is hereby incorporated by reference.
(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 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. 7 on November 21, 1996 and is hereby incorporated by
reference.
(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 was filed electronically as an Exhibit to Post-Effective
Amendment No. 7 on November 21, 1996 and is hereby incorporated by reference.
(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.
</TABLE>
C-4
<PAGE> 122
<TABLE>
<S> <C> <C> <C>
(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.
(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.
(4) Master Administrative Services Agreement, dated February 28, 1997, between Registrant
and A I M Advisors, Inc. is filed herewith electronically.
(5)(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.
(5)(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.
(5)(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.
(5)(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.
(5)(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.
(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.
</TABLE>
C-5
<PAGE> 123
<TABLE>
<S> <C> <C> <C>
(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) Amendment No. 3 to Remote Access and Related Services Agreement, dated February 1,
1997 between Registrant and First Data Investor Services Group is filed herewith
electronically.
(2) 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.
(3) Transfer Agency and Service Agreement, dated November 1, 1994, 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.
(4) Transfer Agency and Service Agreement, dated July 1, 1995, 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.
(4)(i) Amendment No. 1 to Transfer Agency and Service Agreement, dated July 1, 1996,
between Registrant and A I M Institutional Fund Services, Inc. is filed herewith
electronically.
(4)(ii) Amendment No. 2 to Transfer Agency and Service Agreement, dated July 1, 1997,
between Registrant and A I M Institutional Fund Services, Inc. is filed herewith
electronically.
(10) - None.
(11) (a) - Consent of Ballard Spahr Andrews & Ingersoll is filed herewith electronically.
(b) - Consent of Dechert Price & Rhoads is filed herewith electronically.
(c) - Consent of KPMG Peat Marwick LLP is filed herewith electronically.
(d) - (1) Opinion of Dechert Price & Rhoads was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on November 30,
1994
</TABLE>
C-6
<PAGE> 124
<TABLE>
<S> <C> <C> <C>
and was filed electronically as an Exhibit to Post-Effective Amendment No. 7 on November
21, 1996 and is hereby incorporated by reference.
(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 Amendments 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) - (1) 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.
(2) Amended and Restated Master Distribution Plan, dated June 30, 1997, is filed herewith
electronically.
(b) - Form of Shareholder Service Agreement to be used in connection with Registrant's Master
12b-1 Plan is filed herewith electronically.
(c) - Form of Bank Shareholder Service Agreement to be used in connection with Registrant's
Master 12b-1 Plan is filed herewith electronically.
(d) - Form of Agency Pricing Agreement (for the Retail Classes) to be used in connection with
Registrant's Master 12b-1 Plan is filed herewith electronically.
(e) - Form of Service Agreement for Bank Trust Departments and for Brokers for Bank Trust
Departments 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 was filed electronically as an
Exhibit to Post-Effective Amendment No. 7 on November 21, 1996, and is hereby incorporated
by reference.
(18) (a) - Multiple Class (Rule 18f-3) Plan was filed electronically as an Exhibit to Post-Effective
Amendment No. 7 on November 21, 1996.
(b) - Amended and Restated Multiple Class Plan is filed herewith electronically.
(c) - Second Amended and Restated Multiple Class Plan is filed herewith electronically.
(27) - Financial Data Schedule is filed herewith electronically.
</TABLE>
C-7
<PAGE> 125
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 3, 1997
-------------- ------------------------
<S> <C>
AIM Limited Maturity Treasury Fund
Class A Shares 9,090
Institutional Class 12
</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 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
C-8
<PAGE> 126
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 $25,000,000 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 Class A shares 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 the Class A shares, also acts as a principal underwriter to
the following investment companies:
AIM Advisor Funds, Inc.
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 Class, 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.
(b) The following table sets forth information with respect to each
director and officer of:
(1) A I M Distributors, Inc.
C-9
<PAGE> 127
<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 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
Mary K. Coleman Vice President None
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
Tony D. Green Vice President None
William H. Kleh Vice President None
Kamala C. Sachidanandan Vice President None
</TABLE>
- -------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-10
<PAGE> 128
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- --------------------
<S> <C> <C>
Frank V. Serebrin Vice President None
B. J. Thompson Vice President None
Robert D. Van Sant Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
Luke P. Beausoleil Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Glenda A. Dayton Assistant Vice President None
Kathleen M. Douglas Assistant Vice President None
Terri N. Fiedler Assistant Vice President None
Kathryn Jordan Assistant Vice President None
Wayne W. LaPlante Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
David B. O'Neil Assistant Vice President None
Terri L. Ransdell Assistant Vice President None
Patricia M. Shyman Assistant Vice President None
Christopher T. Simutis Assistant Vice President None
Gary K. Wendler Assistant Vice President None
Norman W. Woodson Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
David E. Hessel Assistant Vice President, Assistant None
Treasurer and Controller
</TABLE>
- -----------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-11
<PAGE> 129
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- --------------------
<S> <C> <C>
Jeffrey L. Horne Assistant Vice President None
Melissa E. Hudson Assistant Vice President None
Jodie L. Johnson Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Nicholas D. White Assistant Vice President None
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
(2) Fund Management Company
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
John J. Arthur Vice President and Treasurer Senior Vice President and
Treasurer
Carol F. Relihan Director, Vice President and Senior Vice President
General Counsel and Secretary
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
</TABLE>
- -------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-12
<PAGE> 130
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- --------------------
<S> <C> <C>
Dana R. Sutton Assistant Vice President Vice President
and Assistant Treasurer and Assistant Treasurer
Stephen I. Winer Vice President, Assistant General Assistant Secretary
Counsel and Assistant Secretary
Nancy A. Beck Vice President None
Jeffrey L. Horne Assistant Vice President None
Robert W. Morris, Jr. Assistant Vice President None
Ann M. Srubar Assistant Vice President None
Nicholas D. White Assistant Vice President None
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>
- -------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
(c) Not Applicable
Item 30. Location of Accounts and Records
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, 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 AIM Limited Maturity Treasury
Fund - Class A shares), P.O. Box 4739, Houston, Texas 77210-4739; and
A I M Institutional Fund Services, Inc., (on behalf of its AIM Limited
Maturity Treasury Fund - Institutional Class) 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173.
C-13
<PAGE> 131
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.
C-14
<PAGE> 132
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, 1997.
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 11/21/97
----------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Trustee & President 11/21/97
-------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Trustee 11/21/97
--------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Trustee 11/21/97
----------------------------------
(Owen Daly II)
/s/ JACK FIELDS Trustee 11/21/97
-----------------------------------
(Jack Fields)
/s/ CARL FRISCHLING Trustee 11/21/97
-----------------------------
(Carl Frischling)
/s/ JOHN F. KROEGER Trustee 11/21/97
----------------------------
(John F. Kroeger)
/s/ LEWIS F. PENNOCK Trustee 11/21/97
---------------------------
(Lewis F. Pennock)
/s/ IAN W. ROBINSON Trustee 11/21/97
-----------------------------
(Ian W. Robinson)
/s/ LOUIS S. SKLAR Trustee 11/21/97
-------------------------------
(Louis S. Sklar)
/s/ JOHN J. ARTHUR Senior Vice President & 11/21/97
------------------------------ Treasurer (Principal Financial
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE> 133
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- --------- -----------
<S> <C>
1(d) Third Amendment to Agreement and Declaration of Trust of Registrant
1(e) Form of Fourth Amendment to Agreement and Declaration of Trust of
Registrant
(2)(d) Amended and Restated By-Laws of the Registrant
(5)(d) Master Investment Advisory Agreement, dated February 28, 1997,
between Registrant and A I M Advisors, Inc.
6(a)(5) Master Distribution Agreement, dated February 28, 1997, between
Registrant (on behalf of its Limited Maturity Treasury Portfolio -
AIM Limited Maturity Treasury Shares-Class A shares) and A I M
Distributors, Inc.
6(a)(7) Master Distribution Agreement, dated February 28, 1997, 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
9(a)(4) Master Administrative Services Agreement, dated February 28, 1997,
between Registrant and A I M Advisors, Inc.
9(b)(1)(vi) Amendment No. 3, dated February 1, 1997, to Remote Access and
Related Services Agreement between Registrant and First Data
Investor Services Group
9(b)(4)(i) Amendment No. 1, dated July 1, 1996, to Transfer Agency and
Service Agreement between Registrant and A I M Institutional Fund
Services, Inc.
9(b)(4)(ii) Amendment No. 2, dated July 1, 1997, to Transfer Agency and
Service Agreement between Registrant and A I M Institutional Fund
Services, Inc.
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)(2) Opinion of Dechert Price & Rhoads
</TABLE>
<PAGE> 134
<TABLE>
<S> <C>
15(a)(2) Amended and Restated Master Distribution Plan, dated June 30, 1997
15(b) Form of Shareholder Service Agreement to be used in connection
with Registrant's Master 12b-1 Plan
15(c) Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master 12b-1 Plan
15(d) Form of Agency Pricing Agreement (for the Retail Classes) to be
used in connection with Registrant's Master 12b-1 Plan
15(e) Forms of Service Agreements for Bank Trust Departments and for
Brokers for Bank Trust Departments to be used in connection with
Registrant's Master 12b-1 Plan
18(b) Amended and Restated Multiple Class (Rule 18f-3) Plan
18(c) Second Amended and Restated Multiple Class (Rule 18f-3) Plan
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 1(d)
THIRD AMENDMENT
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM INVESTMENT SECURITIES FUNDS
THIS THIRD AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF
AIM INVESTMENT SECURITIES FUNDS (the "Amendment") is entered into the 12th day
of June, 1997, among Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Jack
Fields, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F. Pennock,
Ian W. Robinson and 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, 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, at a meeting duly called and held on the 12th day of
June, 1997, the Trustees have resolved to amend the Agreement as hereinafter
set forth.
NOW, THEREFORE, the Trustees hereby amend the Agreement as
herein set forth below:
1. Capitalized terms not specifically defined in this
Amendment shall have the meanings ascribed to them in the Agreement.
2. New Section 9.9 is hereby added to read in full as
follows:
"Section 9.9. Shareholders' Right to Inspect Shareholder
List. One or more persons who together and for at least six months have been
Shareholders of at least five percent (5%) of the outstanding Shares of any
Class may present to any officer or resident agent of the Trust a written
request for a list of its Shareholders. Within twenty (20) days after such
request is made, the Trust shall prepare and have available on file at its
principal office a list verified under oath by one of its officers or its
transfer agent or registrar which sets forth the name and address of each
Shareholder and the number of Shares of each Class which the Shareholder holds.
The rights provided for herein shall not extend to any person who is a
beneficial owner but not also a record owner of Shares of the Trust."
3. With the exception of the amendment in the preceding
paragraph 2 of this Amendment, the Agreement shall in all other respects remain
in full force and effect.
4. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same Amendment.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned, being all of the Trustees
of the Trust, have executed this Third Amendment to Agreement and Declaration
of Trust of AIM Investment Securities Funds as of the day first above written.
/s/ CHARLES T. BAUER /s/ BRUCE L. CROCKETT
- -------------------------------- -------------------------------
Charles T. Bauer, Trustee Bruce L. Crockett, Trustee
/s/ OWEN DALY II /s/ JACK FIELDS
- -------------------------------- -------------------------------
Owen Daly II, Trustee Jack Fields, Trustee
/s/ CARL FRISCHLING /s/ ROBERT H. GRAHAM
- -------------------------------- -------------------------------
Carl Frischling, Trustee Robert H. Graham, Trustee
/s/ JOHN F. KROEGER /s/ LEWIS F. PENNOCK
- -------------------------------- -------------------------------
John F. Kroeger, Trustee Lewis F. Pennock, Trustee
/s/ IAN W. ROBINSON /s/ LOUIS S. SKLAR
- -------------------------------- -------------------------------
Ian W. Robinson, Trustee Louis S. Sklar, Trustee
[THIS IS THE SIGNATURE PAGE FOR
THE THIRD AMENDMENT TO AGREEMENT AND
DECLARATION OF TRUST OF AIM
INVESTMENT SECURITIES FUNDS]
<PAGE> 1
EXHIBIT 1(e)
FOURTH AMENDMENT
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM INVESTMENT SECURITIES FUNDS
THIS FOURTH AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF
AIM INVESTMENT SECURITIES FUNDS (the "Amendment") is entered into the 28th day
of November, 1997, among Charles T. Bauer, Bruce L. Crockett, Owen Daly II,
Jack Fields, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson and 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, 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, in a unanimous written consent of the Board of
Trustees, dated November 28, 1997, the Trustees have approved and consented to
a resolution to amend the Agreement as hereinafter set forth.
NOW, THEREFORE, the Trustees hereby amend the Agreement as
herein set forth below:
1. Capitalized terms not specifically defined in this
Amendment 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 AIM Limited Maturity Treasury Fund. The
AIM Limited Maturity Treasury Fund shall contain two initial Classes, the
Institutional Class and the Class A Shares. The AIM Limited Maturity Treasury
Fund and its Classes as set forth in this Section 2.3 are 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. With the exception of the amendment in the preceding
paragraph 2 of this Amendment, the Agreement shall in all other respects remain
in full force and effect.
4. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same Amendment.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned, being all of the Trustees
of the Trust, have executed this Fourth Amendment to Agreement and Declaration
of Trust of AIM Investment Securities Funds as of the day first above written.
- ----------------------------- -------------------------------
Charles T. Bauer, Trustee Bruce L. Crockett, Trustee
- ----------------------------- -------------------------------
Owen Daly II, Trustee Jack Fields, Trustee
- ----------------------------- -------------------------------
Carl Frischling, Trustee Robert H. Graham, Trustee
- ----------------------------- -------------------------------
John F. Kroeger, Trustee Lewis F. Pennock, Trustee
- ----------------------------- -------------------------------
Ian W. Robinson, Trustee Louis S. Sklar, Trustee
[THIS IS THE SIGNATURE PAGE FOR
THE FOURTH AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF AIM
INVESTMENT SECURITIES FUNDS]
<PAGE> 1
EXHIBIT 2(d)
AMENDED AND RESTATED BYLAWS
OF
AIM INVESTMENT SECURITIES FUNDS,
A DELAWARE BUSINESS TRUST
ADOPTED EFFECTIVE DECEMBER 11, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Vacancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4. Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Inability to Serve Full Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 7. Meetings of the Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 8. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 9. Notice of Regular Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 10. Notice of Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 11. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 12. Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 13. Designation, Powers and Name of Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 14. Minutes of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 15. Compensation of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1. Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2. Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5. Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 6. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV
MEETINGS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . 5
Section 1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2. Nominations of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3. Election of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4. Notice of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Voting List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7. Notice of Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 8. Conduct of Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 9. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 10. Organization of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 11. Voting Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 12. Voting Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 13. Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE V
NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. Methods of Giving Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2. Written Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VI
CERTIFICATES OF SHARES . . . . . . . . . . . . . . . . . . . . . . 9
Section 1. Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2. Countersignature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3. Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5. Fixing Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 6. Registered Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1. Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2. Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VIII
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
ii
<PAGE> 4
AMENDED AND RESTATED BYLAWS
OF
AIM INVESTMENT SECURITIES FUNDS,
A DELAWARE BUSINESS TRUST
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. Registered Office. The registered office of AIM
Investment Securities Funds (the "Trust") shall be in the County of New Castle,
State of Delaware.
Section 2. Other Offices. The Trust may also have offices at
such other places both within and without the State of Delaware as the Trustees
may from time to time determine or the business of the Trust may require.
ARTICLE II
TRUSTEES
Section 1. Number. The number of Trustees shall initially be
three, and thereafter shall be such number as shall be fixed from time to time
by resolution of the Board of Trustees; provided, however, that the number of
Trustees shall in no event be less than three nor more than fifteen.
Section 2. Term. 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 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.
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Section 3. Vacancy. 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
of the Trustees, whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then
in office in anticipation of a vacancy to occur by reason of retirement,
resignation or 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 Bylaws 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. Delegation of Power. 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. Inability to Serve Full Term. 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. Powers. 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 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 may by the Trustees
in good faith shall be conclusive. In construing the provisions of these Bylaws
and the Agreement and Declaration of Trust, the presumption shall be in favor
of a grant of power to the Trustees.
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Section 7. Meetings of the Trustees. The Trustees of the Trust
may hold meetings, both regular and special, either within or without the State
of Delaware.
Section 8. Regular Meetings. Regular meetings of the Board of
Trustees shall be held each year, at such time and place as the Board of
Trustees may determine.
Section 9. Notice of Regular Meeting. 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. Notice of Special Meeting. 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. Quorum. At all meetings of the Trustees one-third
of the Trustees then in office (but in no event less than two Trustees) shall
constitute a quorum for the transaction of business and the act of a majority
of the Trustees present at any meeting at which there is a quorum shall be the
act of the Board of Trustees, except as may be otherwise specifically provided
by applicable law or by the Agreement and Declaration of Trust or these Bylaws.
If a quorum shall not be present at any meeting of the Board of Trustees, the
Trustees present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 12. Action Without Meeting. Unless otherwise
restricted by the Agreement and Declaration of Trust or these Bylaws, 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 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.
Section 13. Designation, Powers and Name of Committees. 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 Trustee as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of such committee. Each committee, to the extent provided
in the resolution, shall have and may exercise the powers of the Board of
Trustees in the management of the business and affairs of the Trust; provided,
however, that in the absence or disqualification of any member of such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not such members constitute a
quorum, may unanimously appoint another member of the Board of Trustees to act
at the meeting in the place of any such absent or disqualified member. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Trustees.
Section 14. Minutes of Committee. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Trustees
when required.
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Section 15. Compensation of Trustees. The Trustees as such
shall be entitled to reasonable compensation for their services as determined
from time to time by the Board of Trustees. 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
OFFICERS
Section 1. Executive Officers. The initial executive officers
of the Trust shall be elected by the Board of Trustees as soon as practicable
after the organization of the Trust. The executive officers may include a
Chairman of the Board, and shall include a President, one or more Vice
Presidents (the number thereof to be determined by the Board of Trustees), a
Secretary and a Treasurer. The Chairman of the Board, if any, shall be selected
from among the Trustees. The Board of Trustees may also in its discretion
appoint Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers,
and other officers, agents and employees, who shall have such authority and
perform such duties as the Board may determine. The Board of Trustees may fill
any vacancy which may occur in any office. Any two offices, except for those of
President and Vice President, may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument on behalf of the Trust in
more than one capacity, if such instrument is required by law or by these
Bylaws to be executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. Unless otherwise specifically
determined by the Board of Trustees, the officers shall serve at the pleasure
of the Board of Trustees. If the Board of Trustees in its judgment finds that
the best interests of the Trust will be served, the Board of Trustees may
remove any officer of the Trust at any time with or without cause.
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
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<PAGE> 8
the President, the powers and duties of the President not otherwise assigned by
the Board of Trustees or the President shall devolve upon the Chairman of the
Board, or in the Chairman's absence, the Vice Presidents in the order of their
election.
Section 6. Secretary. The Secretary shall (a) have custody of
the seal of the Trust; (b) attend meetings of the shareholders, the Board of
Trustees, and any committees of Trustees and keep the minutes of such meetings
of shareholders, Board of Trustees and any committees thereof; and (c) issue
all notices of the Trust. The Secretary shall have charge of the shareholder
records and such other books and papers as the Board may direct, and shall
perform such other duties as may be incidental to the office or which are
assigned by the Board of Trustees. The Secretary shall also keep or cause to be
kept a shareholder book, which may be 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.
Section 7. Treasurer. The Treasurer shall have the care and
custody of the funds and securities of the Trust and shall deposit the same in
the name of the Trust in such bank or banks or other depositories, subject to
withdrawal in such manner as these Bylaws or the Board of Trustees may
determine. The Treasurer shall, if required by the Board of Trustees, give such
bond for the faithful discharge of duties in such form as the Board of Trustees
may require.
ARTICLE IV
MEETINGS OF SHAREHOLDERS
Section 1. Purpose. All meetings of the shareholders for the
election of Trustees shall be held at such place as may be fixed from time to
time by the Trustees, or at such other place either within or without the State
of Delaware as shall be designated from time to time by the Trustees and stated
in the notice indicating that a meeting has been called for such purpose.
Meetings of shareholders may be held for any purpose determined by the Trustees
and may be held at such time and place, within or without the State of Delaware
as shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof. At all meetings of the shareholders, every shareholder of
record entitled to vote thereat shall be entitled to vote at such meeting
either in person or by written proxy signed by the shareholder or by his duly
authorized attorney in fact. A shareholder may duly authorize such attorney in
fact through written, electronic, telephonic, computerized, facsimile,
telecommunication, telex or oral communication or by any other form of
communication. Unless a proxy provides otherwise, such proxy is not valid more
than eleven months after its date. A proxy with respect to shares held in the
name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger.
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Section 2. Nominations of Trustees. Nominations of individuals
for election to the board of trustees shall be made by the Board of Trustees or
a nominating committee of the Board of Trustees, if one has been established
(the "Nominating Committee"). Any shareholder of the Trust may submit names of
individuals to be considered by the Nominating Committee or the Board of
Trustees, as applicable, provided, however, (i) that such person was a
shareholder of record at the time of submission of such names and is entitled
to vote at the meeting, and (ii) that the Nominating Committee or the Board of
Trustees, as applicable, shall make the final determination of persons to be
nominated.
Section 3. Election of Trustees. All meetings of shareholders
for the purpose of electing Trustees shall be held on such date and at such
time as shall be designated from time to time by the Trustees and stated in the
notice of the meeting, at which the shareholders shall elect by a plurality
vote any number of Trustees as the notice for such meeting shall state are to
be elected, and transact such other business as may properly be brought before
the meeting in accordance with Section 1 of this Article IV.
Section 4. Notice of Meeting. Written notice of any meeting
stating the place, date, and hour of the meeting shall be given to each
shareholder entitled to vote at such meeting not less than ten days before the
date of the meeting in accordance with Article V hereof.
Section 5. Voting List. 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 the 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.
Section 6. Special Meetings. 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 of removing one or more Trustees,
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 7. Notice of Special Meeting. Written notice of a
special meeting stating the place, date, and hour of the meeting and the
purpose of 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 8. Conduct of Special Meeting. Business transacted at
any special meeting of shareholders shall be limited to the purpose stated in
the notice.
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Section 9. Quorum. 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 vote of the holders of a majority of shares
cast shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting, at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 10. Organization of Meetings.
(a) The Chairman of the Board of Trustees shall
preside at each meeting of shareholders. In the absence of the Chairman of the
Board, the meeting shall be chaired by the President, or if the President shall
not be present, by a Vice President. In the absence of all such officers, the
meeting shall be chaired by a person elected for such purpose at the meeting.
The Secretary of the Trust, if present, shall act as Secretary of such
meetings, or if the Secretary is not present, an Assistant Secretary of the
Trust shall so act, and if no Assistant Secretary is present, then a person
designated by the Secretary of the Trust shall so act, and if the Secretary has
not designated a person, then the meeting shall elect a secretary for the
meeting.
(b) The Board of Trustees of the Trust shall be
entitled to make such rules and regulations for the conduct of meetings of
shareholders as it shall deem necessary, appropriate or convenient. Subject to
such rules and regulations of the Board of Trustees, if any, the chairman of
the meeting shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are necessary, appropriate or convenient for the proper conduct of
the meeting, including, without limitation, establishing: an agenda or order of
business for the meeting; rules and procedures for maintaining order at the
meeting and the safety of those present; limitations on participation in such
meeting to shareholders of record of the Trust and their duly authorized and
constituted proxies, and such other persons as the chairman shall permit;
restrictions on entry to the meeting after the time fixed for the commencement
thereof; limitations on the time allotted to questions or comments by
participants; and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot, unless and to the
extent the Board of Trustees or the chairman of the meeting determines that
meetings of shareholders shall not be required to be held in accordance with
the rules of parliamentary procedure.
Section 11. Voting Standard. When a quorum is present at any
meeting, the vote of the holders of a majority of the shares cast shall decide
any question brought before such meeting, unless the question is one on which
by express provision of applicable law, the Agreement and Declaration of Trust
or these Bylaws, a different vote is required in which case such express
provision shall govern and control the decision of such question.
Section 12. Voting Procedure. Each whole share shall be
entitled to one vote, and each fractional share shall be entitled to a
proportionate fractional vote. On any matter
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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 13. Action Without Meeting. 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 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 V
NOTICES
Section 1. Methods of Giving Notice. Whenever, under the
provisions of applicable law or of the Agreement and Declaration of Trust or of
these Bylaws, notice is required to be given to any Trustee or shareholder, it
shall not, unless otherwise provided herein, be construed to mean personal
notice, but such notice may be given orally in person, or by telephone
(promptly confirmed in writing) or in writing, by mail addressed to such
Trustee or shareholder, at his address as it appears on the records of the
Trust, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to Trustees or members of a committee may also be given by telex,
telegram, telecopier or via overnight courier. If sent by telex or telecopier,
notice to a Trustee or member of a committee shall be deemed to be given upon
transmittal; if sent by telegram, notice to a Trustee or member of a committee
shall be deemed to be given when the telegram, so addressed, is delivered to
the telegraph company, and if sent via overnight courier, notice to a Trustee
or member of a committee shall be deemed to be given when delivered against a
receipt therefor.
Section 2. Written Waiver. Whenever any notice is required to
be given under the provisions of applicable law or of the Agreement and
Declaration of Trust or of these Bylaws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
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ARTICLE VI
CERTIFICATES OF SHARES
Section 1. Issuance. 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. Countersignature. Where a certificate is
countersigned (1) by a transfer agent other than the Trust or its employee, or,
(2) by a registrar other than the Trust or its employee, the signature of the
Trustee may be a facsimile.
Section 3. Lost Certificates. The Board of Trustees may direct
a new certificate or certificates to be issued in place of any certificate or
certificates therefore issued by the Trust alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of the fact by the person claiming
the certificate to be lost, stolen or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Trustees may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Trust a bond in such sum as it may direct as indemnity against any
claim that may be made against the Trust with respect to the certificate
alleged to have been lost, stolen or destroyed.
Section 4. Transfer of Shares. The Trustees shall make such
rules as they consider appropriate for the transfer of shares and similar
matters. To the extent certificates are issued in accordance with Section 1 of
this Article VI, upon surrender to the Trust or the transfer agent of the Trust
of such certificate for shares duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, it shall be the duty of the
Trust to issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
Section 5. Fixing Record Date. In order that the Trustees may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution of allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of beneficial interests
or for the purpose of any other lawful action, the Board of Trustees may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Trustees, and
which record date shall not be more than ninety nor less than ten days before
the date of such meeting, nor more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Trustees for
action by shareholder consent in writing without a meeting, nor more than
ninety days prior to any other action. A determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Trustees may fix a new record date for the adjourned meeting.
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Section 6. Registered Shareholders. The Trust shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and 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 VII
GENERAL PROVISIONS
Section 1. Dividends and Distributions. The Trustees may from
time to time declare and pay dividends and make other distributions with
respect to any Portfolio, or Class thereof, which may be from income, capital
gains or capital. The amount of such dividends or distributions and the payment
of them and whether they are in cash or any other Trust Property shall be
wholly in the discretion of the Trustees.
Section 2. Redemptions. Any holder of record of shares of a
particular Portfolio, or Class thereof, shall have the right to require the
Trust to redeem his shares, or any portion thereof, subject to 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 shares are being redeemed. Subject to the foregoing, the fair
value, selection and quantity of securities or other property so paid or
delivered as all or part of the redemption price may be determined by or under
authority of the Trustees. In no case shall the Trust be liable for any delay
of any 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 VII. 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 ($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.
Section 3. Indemnification. 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 Bylaws and
other applicable law.
Section 4. Seal. The business seal shall have inscribed
thereon the name of the business trust, the year of its organization and the
word "Business Seal, Delaware". The seal
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may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. Amendments. These Bylaws may be altered or repealed
at any regular or special meeting of the Board of Trustees without prior
notice. These Bylaws may also be altered or repaired 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 5(d)
AIM INVESTMENT SECURITIES FUNDS
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997, by and between
AIM Investment Securities Funds, a Delaware business trust (the "Company") with
respect to its series of shares shown on the Appendix A attached hereto, as the
same may be amended from time to time, and A I M Advisors, Inc., a Delaware
corporation (the "Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisers Act
of 1940, as amended (the "Advisers Act"), as an investment advisor and engages
in the business of acting as an investment advisor;
WHEREAS, the Company's Agreement and Declaration of Trust authorizes
the Board of Trustees of the Company to classify or reclassify authorized but
unissued shares of the Company, and as of the date of this Agreement, the
Company's Board of Trustees has authorized the issuance of one series of shares
representing interests in one investment portfolio (such portfolio and any
other portfolio hereafter added to the Company being referred to collectively
herein as the "Funds"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement
to provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor
for the Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Company's Board of Trustees. The Advisor shall
give the Company and the Funds the benefit of its best judgment, efforts and
facilities in rendering its services as investment advisor.
2. Investment Analysis and Implementation. In carrying out its
obligations under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy
generally or the Funds, and whether concerning the individual issuers
whose securities are included in the assets of the Funds or the
activities in which such issuers
<PAGE> 2
engage, or with respect to securities which the Advisor considers
desirable for inclusion in the Funds' assets;
(c) determine which issuers and securities shall be
represented in the Funds' investment portfolios and regularly report
thereon to the Company's Board of Trustees; and
(d) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and regularly
report thereon to the Company's Board of Trustees;
and take, on behalf of the Company and the Funds, all actions which appear to
the Company and the Funds necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including but not limited to
the placing of orders for the purchase and sale of securities for the Funds.
3. Delegation of Responsibilities. Subject to the approval of the
Board of Trustees and the shareholders of the Funds, the Advisor may delegate
to a sub-advisor certain of its duties enumerated in Section 2 hereof, provided
that the Advisor shall continue to supervise the performance of any such
sub-advisor.
4. Control by Board of Trustees. Any investment program undertaken
by the Advisor pursuant to this Agreement, as well as any other activities
undertaken by the Advisor on behalf of the Funds, shall at all times be subject
to any directives of the Board of Trustees of the Company.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers
Act and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Company,
as the same may be amended from time to time under the Securities Act
of 1933 and the 1940 Act;
(c) the provisions of the Agreement and Declaration of Trust of
the Company, as the same may be amended from time to time;
(d) the provisions of the by-laws of the Company, as the same may
be amended from time to time; and
(e) any other applicable provisions of state, federal or foreign
law.
6. Broker-Dealer Relationships. The Advisor is responsible for
decisions to buy and sell securities for the Funds, broker-dealer selection,
and negotiation of brokerage commission rates. The Advisor's primary
consideration in effecting a security transaction will be to obtain execution
at the most favorable price. In selecting a broker-dealer to execute each
particular transaction, the Advisor will take the following into consideration:
the best net price available; the reliability, integrity and financial
condition of the broker-dealer; the size of and the difficulty in executing the
order; and the value of the expected contribution of the broker-dealer to the
investment performance of the Funds on a continuing basis. Accordingly, the
price to the Funds in any transaction may be less favorable than that available
from another broker-dealer if the difference is reasonably justified by other
aspects of the fund execution services offered. Subject to such policies as
the Board of
2
<PAGE> 3
Trustees may from time to time determine, the Advisor shall not be deemed to
have acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Funds to pay a broker or
dealer that provides brokerage and research services to the Advisor an amount
of commission for effecting a fund investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Advisor's overall responsibilities with
respect to a particular Fund, other Funds of the Company, and to other clients
of the Advisor as to which the Advisor exercises investment discretion. The
Advisor is further authorized to allocate the orders placed by it on behalf of
the Funds to such brokers and dealers who also provide research or statistical
material, or other services to the Funds, to the Advisor, or to any
sub-advisor. Such allocation shall be in such amounts and proportions as the
Advisor shall determine and the Advisor will report on said allocations
regularly to the Board of Trustees of the Company indicating the brokers to
whom such allocations have been made and the basis therefor. In making
decisions regarding broker-dealer relationships, the Advisor may take into
consideration the recommendations of any sub-advisor appointed to provide
investment research or advisory services in connection with the Funds, and may
take into consideration any research services provided to such sub-advisor by
broker-dealers.
7. Compensation. The Company shall pay the Advisor as compensation
for services rendered hereunder an annual fee, payable monthly, based upon the
average daily net assets of the Funds as the same is set forth in Appendix A
attached hereto. The average daily net asset value of the Funds shall be
determined in the manner set forth in the Agreement and Declaration of Trust
and registration statement of the Company, as amended from time to time.
8. Additional Services. Upon the request of the Company's Board of
Trustees, the Advisor may perform certain accounting, shareholder servicing or
other administrative services on behalf of the Funds which are not required by
this Agreement. Such services will be performed on behalf of the Funds and the
Advisor may receive from the Funds such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between the Advisor and
the Company's Board of Trustees based on a finding by the Board of Trustees
that the provision of such services by the Advisor is in the best interests of
the Company and its shareholders. Payment or assumption by the Advisor of any
Fund expense that the Advisor is not otherwise required to pay or assume under
this Agreement shall not relieve the Advisor of any of its obligations to the
Funds nor obligate the Advisor to pay or assume any similar Fund expense on any
subsequent occasions. Such services may include, but are not limited to:
(a) the services of a principal financial officer of the Company
(including applicable office space, facilities and equipment) whose
normal duties consist of maintaining the financial accounts and books
and records of the Company and the Funds, including the review and
calculation of daily net asset value and the preparation of tax
returns; and the services (including applicable office space,
facilities and equipment) of any of the personnel operating under the
direction of such principal financial officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by
the Advisor; changing account designations or changing addresses;
assisting in the purchase or redemption of shares; supervising the
operations of the
3
<PAGE> 4
custodian, transfer agent(s) or dividend disbursing agent(s) for the
Funds; or otherwise providing services to shareholders of the
Funds; and
(c) such other administrative services as may be furnished from
time to time by the Advisor to the Company or the Funds at the request
of the Company's Board of Trustees.
9. Expenses of the Funds. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing, or governmental fees, the cost
of preparing share certificates, custodian, transfer and shareholder service
agent costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses relating to
directors and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by
the Company on behalf of the Funds in connection with membership in investment
company organizations and the cost of printing copies of prospectuses and
statements of additional information distributed to the Funds' shareholders.
10. Expense Limitation. If, for any fiscal year of the Company, the
total of all ordinary business expenses of the Funds, including all investment
advisory fees, but excluding brokerage commissions and fees, taxes, interest
and extraordinary expenses, such as litigation costs, would exceed the
applicable expense limitations imposed by state securities regulations in any
state in which the Funds' 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 the Advisor shall be deducted from
the monthly investment advisory fee otherwise payable to the Advisor during
such fiscal year. If required pursuant to such state securities regulations,
the Advisor will, not later than the last day of the first month of the next
succeeding fiscal year, reimburse the Funds for any such annual operating
expenses (after reduction of all investment advisory fees in excess of such
limitation). For the purposes of this Section, the term "fiscal year" shall
exclude the portion of the current fiscal year which shall have elapsed prior
to the date hereof and shall include the portion of the then current fiscal
year which shall have elapsed at the date of termination of this Agreement.
The application of expense limitations shall be applied to each Fund of the
Company separately unless the laws or regulations of any state shall require
that the expense limitations be imposed with respect to the Company as a whole.
11. Non-Exclusivity. The services of the Advisor to the Company and
the Funds are not to be deemed to be exclusive, and the Advisor shall be free
to render investment advisory and administrative or other services to others
(including other investment companies) and to engage in other activities. It
is understood and agreed that officers or directors of the Advisor may serve as
officers or directors of the Company, and that officers or directors of the
Company may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
12. Term and Approval. This Agreement shall become effective with
respect to a Fund if approved by the shareholders of such Fund, and if so
approved, this Agreement shall thereafter continue in force and effect until
February 28, 1999, and may be continued from year to year thereafter, provided
that the continuation of the Agreement is specifically approved at least
annually:
4
<PAGE> 5
(a) (i) by the Company's Board of Trustees or (ii) by the vote of
"a majority of the outstanding voting securities" of such Fund (as
defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the trustees who are
not parties to this Agreement or "interested persons" (as defined in
the 1940 Act) of a party to this Agreement (other than as Company
trustees), by votes cast in person at a meeting specifically called
for such purpose.
13. Termination. This Agreement may be terminated as to the Company
or as to any one or more of the Funds at any time, without the payment of any
penalty, by vote of the Company's Board of Trustees or by vote of a majority of
the outstanding voting securities of the applicable Fund, or by the Advisor, on
sixty (60) days' written notice to the other party. The notice provided for
herein may be waived by the party entitled to receipt thereof. This Agreement
shall automatically terminate in the event of its assignment, the term
"assignment" for purposes of this paragraph having the meaning defined in
Section 2(a)(4) of the 1940 Act.
14. Liability of Advisor and Indemnification. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Advisor or any of its
officers, directors or employees, the Advisor shall not be subject to liability
to the Company or to the Funds or to any shareholder of the Funds for any act
or omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of any
security.
15. Liability of Shareholders. Notice is hereby given that, as
provided by applicable law, the obligations of or arising out of this Agreement
are not binding upon any of the shareholders of the Company individually but
are binding only upon the assets and property of the Company and that the
shareholders shall be entitled, to the fullest extent permitted by applicable
law, to the same limitation on personal liability as stockholders of private
corporations for profit.
16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the other party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Company shall be and that of the Advisor shall be
Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046.
17. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act or the Advisers Act shall be
resolved by reference to such term or provision of the 1940 Act or the Advisers
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued pursuant
to said Acts. In addition, where the effect of a requirement of the 1940 Act
or the Advisers Act reflected in any provision of the Agreement is revised by
rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
18. License Agreement. The Company shall have the non-exclusive
right to use the name "AIM" to designate any current or future series of shares
only so long as A I M Advisors, Inc. serves as investment manager or advisor to
the Company with respect to such series of shares.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate by their respective officers on the day and year
first written above.
AIM INVESTMENT SECURITIES FUNDS
(a Delaware business trust)
Attest:
/s/ DAVID L. KITE By: /s/ ROBERT H. GRAHAM
- --------------------------- ----------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest:
/s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
- --------------------------- ----------------------------
Assistant Secretary President
(SEAL)
6
<PAGE> 7
APPENDIX A
TO
MASTER INVESTMENT ADVISORY AGREEMENT
OF
AIM INVESTMENT SECURITIES FUNDS
The Company shall pay the Advisor, out of the assets of a Fund, as
full compensation for all services rendered and all facilities furnished
hereunder, a management fee for such Fund set forth below. Such fees shall be
calculated by applying the following annual rates to the average daily net
assets of such Fund for the calendar year computed in the manner used for the
determination of the net asset value of shares of such Fund.
LIMITED MATURITY TREASURY PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $500 million . . . . . . . . . . . . . . . . . . . 0.20%
Over $500 million . . . . . . . . . . . . . . . . . . . . 0.175%
</TABLE>
7
<PAGE> 1
EXHIBIT 6(a)(5)
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT SECURITIES FUNDS
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT is made this 28th day of February, 1997, by and between
AIM INVESTMENT SECURITIES FUNDS, a Delaware business trust (the "Company"), and
A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other good
and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:
FIRST: The Company hereby appoints the Distributor as its exclusive
agent for the sale of shares set forth in Appendix A attached hereto
(collectively, the "Funds" and each separately a "Fund"), and any applicable
classes thereof, to the public directly and through investment dealers and
financial institutions in the United States and throughout the world in
accordance with the terms of the Company's current prospectus applicable to the
Funds.
SECOND: The Company shall not sell any shares of a Fund 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 of a Fund 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 of a Fund at their net asset value in
connection with certain classes 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 Funds.
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the shares of the Funds and agrees that it will use its best
efforts to sell such shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf of
each Fund shall, suspend its efforts to effectuate such sales at any time when,
in the opinion of the Distributor or of the Company, no sales should be made
because of market or other economic considerations or abnormal circumstances of
any kind; and
(B) the Company may withdraw the offering of the shares of a Fund (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
-1-
<PAGE> 2
shares of a Fund. The Company shall have the right to specify minimum amounts
for initial and subsequent orders for the purchase of Fund shares.
FOURTH:
(A) The public offering price of shares of a Fund (the "offering
price") shall be the net asset value per share plus a sales charge, if any.
Net asset value per share shall be determined in accordance with the provisions
of the then current prospectus and statement of additional information of the
Funds. The sales charge shall be established by the Distributor, may reflect
scheduled variations in, or the elimination of, sales charges on sales of a
Fund's shares either generally to the public, or to any specified class of
investors or in connection with any specified class of transactions, in
accordance with Rule 22d-1 and as set forth in the then current prospectus and
statement of additional information of the Funds. The Distributor shall apply
any scheduled variation in, or elimination of, the selling commission uniformly
to all offerees in the class specified.
(B) The Funds shall allow directly to investment dealers and other
financial institutions through whom shares of each Fund are sold such portion
of the sales charge as may be payable to them and specified by the Distributor
up to but not exceeding the amount of the total sales charge. The difference
between any commissions so payable and the total sales charges included in the
offering price shall be paid to the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by a Fund to the Distributor or by the Fund or the Distributor to
investment dealers, financial institutions and 401(k) plan service providers
where such payments are made under a distribution plan adopted by the Company
on behalf of each Fund pursuant to Rule 12b-1 under the 1940 Act.
FIFTH: The Distributor shall act as agent of the Company on behalf of
each Fund in connection with the sale and repurchase of shares of a Fund.
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
Funds and shall enter into all of its own engagements, agreements and contracts
as principal on its own account. The Distributor shall enter into agreements
with investment dealers and financial institutions selected by the Distributor,
authorizing such investment dealers and financial institutions to offer and
sell shares of each Fund to the public upon the terms and conditions set forth
therein, which shall not be inconsistent with the provisions of this Agreement.
Each agreement shall provide that the investment dealer and financial
institution shall act as a principal, and not as an agent, of the Company on
behalf of the Funds.
SIXTH: The Funds shall bear:
(A) the expenses of qualification of shares of a Fund 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.
-2-
<PAGE> 3
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the final
proof and distributing the Funds' prospectuses and statements of additional
information (including supplements thereto) relating to 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 of each Fund), and any other promotional or
sales literature used by the Distributor or furnished by the Distributor to
dealers in connection with such public offerings, and expenses of advertising
in connection with such public offerings.
(B) The Distributor may be reimbursed for all or a portion of such
expenses, or may receive reasonable compensation for distribution related
services, to the extent permitted by a distribution plan adopted by the Company
on behalf of the Funds pursuant to Rule 12b-1 under the 1940 Act.
EIGHTH: The Distributor will accept orders for the purchase of shares
of each Fund 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 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, on behalf of the Funds, 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 shares of each Fund.
TENTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Company on behalf of the Funds 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
Funds, 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 or Fund in connection therewith by or on behalf of the
Distributor. The Distributor agrees to indemnify the Company and the Funds
against any and all claims, demands, liabilities and expenses which the Company
or the Funds 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 or the Funds in its prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Company and the Funds
against any and all claims, demands, liabilities and expenses which the Company
or the Funds 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
Funds, 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 or the Funds in connection therewith by or on behalf
of the Distributor.
-3-
<PAGE> 4
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the Funds' transfer agent(s),
or for any failure of any 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 Agreement and Declaration of Trust,
or to any applicable statute or regulation.
TWELFTH: This Agreement shall become effective as of the date hereof,
shall continue in force and effect until February 28, 1999, 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 Funds'
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.
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 each Fund, 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 set forth 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 prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, it is agreed that the addresses of both the
Company and the Distributor shall be Eleven Greenway Plaza, Suite 1919,
Houston, Texas 77046.
FIFTEENTH: Copies of the Agreement and Declaration of Trust, as
amended, establishing the Company are on file with the Secretary of State of
the State of Delaware, and notice is hereby given that, as provided by
applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Company individually, but are
binding only upon the assets and property of the Company and that the
shareholders shall be entitled, to the fullest extent permitted by applicable
law, to the same limitation on personal liability as stockholders of private
corporations for profit.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
AIM INVESTMENT SECURITIES FUNDS
By: /s/ ROBERT H. GRAHAM
-----------------------------
Name: Robert H. Graham
Title: President
Attest:
/s/ DAVID L. KITE
- ---------------------------------
Name: DAVID L. KITE
Title: ASSISTANT SECRETARY
A I M DISTRIBUTORS, INC.
By: /s/ MICHAEL J. CEMO
-----------------------------
Name: Michael J. Cemo
Title: President
Attest:
/s/ OFELIA M. MAYO
- ---------------------------------
Name: OFELIA M. MAYO
Title: ASSISTANT SECRETARY
-5-
<PAGE> 6
APPENDIX A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM INVESTMENT SECURITIES FUNDS
Limited Maturity Treasury Portfolio -
AIM Limited Maturity Treasury Shares
-6-
<PAGE> 1
EXHIBIT 6(a)(7)
DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT SECURITIES FUNDS
(INSTITUTIONAL SHARES)
AND
FUND MANAGEMENT COMPANY
THIS AGREEMENT is made this 28th day of February, 1997, 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 directly and
through investment dealers and financial institutions 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
-1-
<PAGE> 2
(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 agreements with
investment dealers and financial institutions selected by the Distributor,
authorizing such investment dealers and financial institutions 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 agreement shall provide that the investment dealer and
financial institution 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 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.
-2-
<PAGE> 3
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 as of the date hereof,
shall continue in force and effect until February 28, 1999, 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.
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.
-3-
<PAGE> 4
(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.
FIFTEENTH: Copies of the Agreement and Declaration of Trust, as
amended, establishing the Company are on file with the Secretary of State of
the State of Delaware, and notice is hereby given that, as provided by
applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Company individually, but are
binding only upon the assets and property of the Company and that the
shareholders shall be entitled, to the fullest extent permitted by applicable
law, to the same limitation on personal liability as stockholders of private
corporations for profit.
-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/ ROBERT H. GRAHAM
------------------------------
Name: Robert H. Graham
Title: President
Attest:
/s/ DAVID L. KITE
- ------------------------------
Name: DAVID L. KITE
Title: ASSISTANT SECRETARY
FUND MANAGEMENT COMPANY
By: /s/ J. ABBOTT SPRAGUE
------------------------------
Name: J. Abbott Sprague
Title: President
Attest:
/s/ OFELIA M. MAYO
- ------------------------------
Name: OFELIA M. MAYO
Title: ASSISTANT SECRETARY
-5-
<PAGE> 1
EXHIBIT 6(b)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares of
the common stock (the "Shares") of the registered investment companies listed
on Schedule A attached hereto which may be amended from time to time by us (the
"Funds"), understands that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that
you agree to abide by all of the rules and regulations of the NASD for purposes
of this Agreement (which you confirm by your signature below). In consideration
of the mutual covenants stated below, you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares), as determined in accordance with the then effective
prospectus used in connection with the offer and sale of Shares
(the "Prospectus"), which public offering price may reflect scheduled
variations in, or the elimination of, the Sales Charge on sales of the
Funds' Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus. You agree that you will
apply any scheduled variation in, or elimination of, the Sales Charge
uniformly to all offerees in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole 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
concession as disclosed in the CDSC Fund's then current prospectus. With
respect to the Funds whose Shares are indicated on the attached Schedule as
being sold without a Sales Charge or a contingent deferred sales charge
(the "No-Load Funds"), you may charge a reasonable administrative fee. For
the purpose of this Agreement the terms "Sales Charge" and "Dealer
Commission" apply only to the Load Funds and the CDSC Funds. All commissions
and concessions are subject to change without notice by us and will comply
with any changes in regulatory requirements. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders. Redemptions
by a Fund and repurchases by us will be effected in the manner and upon the
terms described in the Prospectus. We will, upon your request, assist you
in processing such orders for redemptions or repurchases. To facilitate
prompt payment following a redemption or repurchase of Shares, the owner's
signature shall appear as registered on the Funds' records and, as
described in the Prospectus, it may be required to be guaranteed by a
commercial bank, trust company or a member of a national securities
exchange.
7/97
<PAGE> 2
6 Sales and exchanges of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer's Concession
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any commissions plus interest thereon.
9 You and we agree to abide by the Rules of Fair Practice of the NASD and all
other federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within
seven (7) business days after the date of our confirmation to you of your
original purchase order therefore, you agree to pay forthwith to us the
full amount of the concession allowed to you on the original sale and we
agree to pay such amount to the Fund when received by us. We also agree to
pay to the Fund the amount of our share of the Sales Charge on the original
sale of such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospectus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representation, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
7/97
<PAGE> 3
16 We will supply you with copies of the Prospectuses and Statements of
Additional Information of the Funds (including any amendments thereto) in
reasonable quantities upon request. You will provide all customers with a
Prospectus prior to or at the time such customer purchases Shares. You will
provide any customer who so requests a copy of the Statement of Additional
Information on file with the U.S. Securities and Exchange Commission.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X
------------------ ---------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 4
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
SELECTED DEALER AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Cash Management Fund*** No No
AIM Advisor Flex Fund Yes Yes
AIM Advisor Income Fund*** Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Asian Growth Fund Yes Yes
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM European Development Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
</TABLE>
10/97
<PAGE> 5
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Advisor Cash Fund, AIM Cash Reserve Shares, AIM Limited
Maturity Treasury Shares, AIM Tax-Exempt Cash Fund and AIM Tax-Free
Intermediate Fund.
**For all Funds sold with CDSC (includes Class B and Class C shares).
***Fund closed to investments on Octboer 3, 1997.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
10/97
<PAGE> 1
EXHIBIT 6(c)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Mutual Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies listed on Schedule A hereto which may be
amended from time to time by us (the "Funds"). As exclusive agent for the
Funds, we are offering to make available shares of common stock or of
beneficial interest, as the case may be, of the Funds (the "Shares") for
purchase by your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated on the attached Schedule A as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus. With respect to the Funds,
the Shares of which are indicated on the attached Schedule A as being sold
with a contingent deferred sales charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
7/97
<PAGE> 2
11 If payment is not received within ten (10) business days of our acceptance
of the order, we reserve the right to cancel the sale or, at our option, to
sell Shares to the Fund at the then prevailing net asset value. In this
event you agree to be responsible for any loss resulting to the Fund from
the failure to make payment as aforesaid.
12 Shares sold hereunder shall be available in book-entry form on the books of
the Funds' Transfer Agent unless other instructions have been given.
13 No person is authorized to make any representations concerning Shares of
any Fund except those contained in the applicable current Prospectus and
printed information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
make Shares available to your customers except under circumstances that
will result in compliance with the applicable Federal and State Securities
and Banking Laws and that you will not furnish to any person any
information contained in the then current Prospectus or cause any
advertisement to be published in any newspaper or posted in any public
place without our consent and the consent of the appropriate Fund.
14 Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sales, and you agree to indemnify us and/or the Funds for any claim,
liability, expense or loss in any way arising out of a sale of Shares in
any state or jurisdiction not identified by us as a state or jurisdiction
in which such Shares are so registered or qualified. We agree to indemnify
you for any claim, liability, expense or loss in any way arising out of a
sale of shares in any state or jurisdiction identified by us as a state or
jurisdiction in which shares are so registered or qualified.
15 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
16 All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares and,
upon notice, to change the sales charge or discount or to modify, cancel or
change the terms of this Agreement. You agree that any order to purchase
Shares of the Funds placed by you after any notice of amendment to this
Agreement has been sent to you shall constitute your agreement to any such
agreement.
17 The names of your customers shall remain your sole property and shall not
be used by us for any purpose except for servicing and information mailings
in the normal course of business to Fund Shareholders.
18 Your acceptance of this Agreement constitutes a representation that you are
a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder.
All communications to us should be sent to A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046. Any notice to you shall
be duly given if mailed or telegraphed to you at the address specified by
you below or to such other address as you shall have designated in writing
to us. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By: X
------------------ ---------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
BANK SELLING GROUP AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Cash Management Fund *** No No
AIM Advisor Flex Fund Yes Yes
AIM Advisor Income Fund *** Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Asian Growth Fund Yes Yes
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM European Development Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
</TABLE>
10/97
<PAGE> 4
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Advisor Cash Management Fund, AIM Cash Reserve Shares, AIM
Limited Maturity Treasury Shares, AIM Tax-Exempt Cash Fund and AIM Tax-Free
Intermediate Fund.
**For all Funds sold with CDSC (includes Class B and Class C shares).
***Fund closed to investments on October 3, 1997.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
10/97
<PAGE> 1
EXHIBIT 9(a)(4)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
This MASTER ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is
made this 28th day of February, 1997 by and between A I M ADVISORS, INC., a
Delaware corporation (the "Administrator"), and AIM INVESTMENT SECURITIES
FUNDS, a Delaware business trust (the "Company"), with respect to the separate
series set forth from time to time in Appendix A to this Agreement (the
"Portfolios").
W I T N E S S E T H:
WHEREAS, the Company is an open-end investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Company, on behalf of the Portfolios, has retained the
Administrator to provide investment advisory services pursuant to a Master
Investment Advisory Agreement which provides that the Administrator may perform
(or arrange for the performance of) accounting, shareholder servicing and other
administrative services as well as investment advisory services to the
Portfolios, and that the Administrator may receive reasonable compensation or
may be reimbursed for its costs in providing such additional services, upon the
request of the Board of Trustees and upon a finding by the Board of Trustees
that the provision of such services is in the best interest of the Portfolios
and their shareholders; and
WHEREAS, the Board of Trustees has found that the provision of such
administrative services is in the best interest of the Portfolios and their
shareholders, and has requested that the Administrator perform such services;
NOW, THEREFORE, the parties hereby agree as follows:
1. The Administrator hereby agrees to provide, or arrange for the
provision of, any or all of the following services by the Administrator or its
affiliates:
(a) the services of a principal financial officer of the Company
(including related office space, facilities and equipment) whose
normal duties consist of maintaining the financial accounts and books
and records of the Company and the Portfolios, including the review of
daily net asset value calculations and the preparation of tax returns;
and the services (including related office space, facilities and
equipment) of any of the personnel operating under the direction of
such principal financial officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by
the Administrator; changing account designations or changing
addresses; assisting in the purchase or redemption of shares of the
Portfolios; supervising the operations of the custodian(s), transfer
agent(s) or dividend agent(s) for the Portfolios; or otherwise
providing services to shareholders of the Portfolios; and
<PAGE> 2
(c) such other administrative services as may be furnished from time
to time by the Administrator to the Company or the Portfolios at the
request of the Company's Board of Trustees.
2. The services provided hereunder shall at all times be subject
to the direction and supervision of the Company's Board of Trustees.
3. As full compensation for the services performed and the
facilities furnished by or at the direction of the Administrator, the
Portfolios shall reimburse the Administrator for expenses incurred by them or
their affiliates in accordance with the methodologies established from time to
time by the Company's Board of Trustees. Such amounts shall be paid to the
Administrator on a quarterly basis.
4. The Administrator shall not be liable for any error of
judgment or for any loss suffered by the Company or the Portfolios in
connection with any matter to which this Agreement relates, except a loss
resulting from the Administrator's willful misfeasance, bad faith or gross
negligence in the performance of its duties or from reckless disregard of its
obligations and duties under this Agreement.
5. The Company and the Administrator each hereby represent and
warrant, but only as to themselves, that each has all requisite authority to
enter into, execute, deliver and perform its obligations under this Agreement
and that this Agreement is legal, valid and binding, and enforceable in
accordance with its terms.
6. Nothing in this Agreement shall limit or restrict the rights
of any director, officer or employee of the Administrator who may also be a
director, officer or employee of the Company to engage in any other business or
to devote his time and attention in part to the management or other aspects of
any business, whether of a similar or a dissimilar nature, nor limit or
restrict the right of the Administrator to engage in any other business or to
render services of any kind to any other corporation, firm, individual or
association.
7. This Agreement shall continue in effect until February 28,
1999 and shall continue in effect from year to year thereafter; provided that
such continuance is specifically approved at least annually:
(a) (i) by the Company's Board of Trustees or (ii) by the
vote of a majority of the outstanding voting securities of the Company
(as defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the Company's
trustees who are not parties to this Agreement or interested persons
of a party to this Agreement, by votes cast in person at a meeting
specifically called for such purpose.
This Agreement shall terminate automatically in the event of its
assignment (as defined in Section 2(a) (4) of the 1940 Act) or, with respect to
one or more Portfolios in the event of termination of the Master Investment
Advisory Agreement relating to such Portfolio(s) between the Company and the
Administrator.
2
<PAGE> 3
8. This Agreement may be amended or modified with respect to one
or more Portfolios, but only by a written instrument signed by both the Company
and the Administrator.
9. Copies of the Agreement and Declaration of Trust establishing
the Company are on file with the Secretary of State of the State of Delaware,
and notice is hereby given that, as provided by applicable law, the obligations
of or arising out of this Agreement are not binding upon any of the
shareholders of the Company individually but are binding only upon the assets
and property of the Company and that the shareholders shall be entitled, to the
fullest extent permitted by applicable law, to the same limitation on personal
liability as stockholders of private corporations for profit.
10. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (a) to the Administrator at Eleven Greenway
Plaza, Suite 1919, Houston, Texas 77046, Attention: President, with a copy to
the General Counsel, or (b) to the Company at Eleven Greenway Plaza, Suite
1919, Houston, Texas 77046, Attention: President, with a copy to the General
Counsel.
11. This Agreement contains the entire agreement between the
parties hereto and supersedes all prior agreements, understandings and
arrangements with respect to the subject matter hereof.
12. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
A I M ADVISORS, INC.
Attest: /s/ DAVID L. KITE By: /s/ ROBERT H. GRAHAM
-------------------------------- ----------------------------
Assistant Secretary President
(SEAL)
AIM INVESTMENT SECURITIES FUNDS
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
-------------------------------- ----------------------------
Assistant Secretary President
(SEAL)
3
<PAGE> 4
AIM INVESTMENT SECURITIES FUNDS
APPENDIX A TO MASTER ADMINISTRATIVE SERVICES AGREEMENT
FEBRUARY 28, 1997
Limited Maturity Treasury Portfolio
4
<PAGE> 1
EXHIBIT 9(b)(1)(vi)
AMENDMENT NUMBER 3 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of February 1, 1997 is made to the Remote
Access and Related Services Agreement dated December 23, 1994, as amended (the
"Agreement") between each registered investment company listed on the attached
Exhibit 1 hereof, (the "Fund") and The Shareholder Services Group, Inc., now
known as First Data Investor Services Group, Inc. ("FDISG").
WITNESSETH
WHEREAS, the Fund and FDISG desire to further amend the Agreement to
reflect certain changes thereto.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree that as of the date first referenced above, the
Agreement shall be amended as follows:
1. All references to "THE SHAREHOLDER SERVICES GROUP, INC." are hereby
deleted and replaced with "FIRST DATA INVESTOR SERVICES GROUP, INC." and all
references to "TSSG" are hereby deleted and replaced with "FDISG".
2. Delete the second sentence from Section 3(c) and replace with the
following:
"The Fund will pay to FDISG the amount so billed by Federal Funds Wire
within fifteen (15) business days after the Fund's receipt of the
invoice."
3. Section 4(b) of the Agreement is hereby deleted in its entirety and
replaced with the following new Section 4(b):
"FDISG agrees to provide to the Fund at its facilities located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046, 12 Greenway Plaza,
Houston, Texas 77046, 301 Congress Street, Suite 1700, Austin, Texas
78701 and 12503 East Euclid Drive, Suite 250, Englewood, CO 80111 or
at such other locations as may be mutually agreed upon in writing by
FDISG and the Fund (the "Fund Facility") remote access to the use of
information processing capabilities of the FDISG System as it may be
modified from time to time by FDISG."
4. Section 12 of the Agreement is hereby amended by adding the following
new Sections 12(c), through 12(i):
"(c) FDISG shall retain title to and ownership of the FDISG System,
including any and all data bases, computer programs, screen
formats, report formats, interactive design techniques,
derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents,
copyrights, trade secrets, and
<PAGE> 2
other related legal rights utilized in connection with the
services provided by FDISG to the Fund hereunder other than
shareholder account and transaction information which shall
remain the exclusive property of the Fund.
(d) FDISG hereby grants to the Fund and the Fund accepts a limited
license to the FDISG System for the sole and limited purpose
of having FDISG provide the services contemplated hereunder
and nothing contained in this Agreement shall be construed or
interpreted otherwise and subject to Section 15 such license
shall immediately terminate with the termination of this
Agreement.
(e) The transmission of account inquiry and transaction
information, including but not limited to maintenances,
exchanges, purchases and redemptions, shall be limited to
direct entry to the FDISG System by means of on-line mainframe
terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of
information to the FDISG System is strictly prohibited without
the prior written consent of FDISG.
(f) FDISG warrants that the FDISG System shall include, at no
additional cost to the Fund, design and performance
capabilities so that prior to, during, and after the calendar
year 2000, the FDISG System will not malfunction, produce
invalid or incorrect results, or abnormally cease to function
due to the year 2000 date change. In connection with the
foregoing, FDISG agrees to provide the Fund with periodic
quarterly updates with respect to FDISG compliance with this
provision.
(g) Other than CPU Authorization Passwords, FDISG represents and
warrants to the Fund the software products provided by FDISG
hereunder (the "Products") do not contain any "back door" or
concealed access devices, any block or protection feature
which prevents the Fund from making additional copies of such
Products as permitted by this Agreement or any "self-help"
code, "Unauthorized Code", "software locks" or any other
similar devices which, upon the occurrence of a certain date
or event, the passage of a certain amount of time, or taking
of any action (or failure to take action) by or on behalf of
FDISG, will cause such Products or any software or system with
such Products are used to be destroyed, erased, damaged, or
otherwise made inoperable. "Unauthorized Code" shall mean any
virus, Trojan horse, worm, or other software routines designed
to permit unauthorized access: to disable, or otherwise harm
software, hardware, or data; or to perform any other such
actions.
(h) Provided the Fund gives FDISG reasonable written notice,
reasonable assistance, including assistance from the Fund's
employees, agents, affiliates and to the extent possible
independent contractors (collectively, "FUND'S AGENTS"), and
sole authority to defend or settle the action, then FDISG
shall do the following ("INFRINGEMENT INDEMNIFICATION"): (a)
defend or settle, at its expense, any action brought against
the Fund or the Fund's Agents to the extent the action is
based on a claim that the Fund's use of the FDISG System
infringes a duly issued United
<PAGE> 3
States' patent or copyright or violates a third party's
proprietary trade secrets or other similar intellectual
property rights ("INFRINGEMENT"); and (b) pay damages and
costs finally awarded against the Fund or the Fund's Agents
directly attributable to such claim. FDISG shall have no
Infringement Indemnification obligation if the alleged
Infringement is based upon the Fund's use of the FDISG System
with equipment or software not furnished or approved by FDISG
or if such claim arises from FDISG's compliance with the Fund's
designs, or from the Fund's modifications of the Software.
The Infringement Indemnification states FDISG's entire
liability for Infringement and shall be the Fund's sole and
exclusive remedy for such claims.
(i) Within sixty (60) days after the execution of this Amendment,
FDISG and the Fund shall enter into an escrow agreement
relating to the source code for (i) the FDISG proprietary
software used in connection with the FDISG System (as defined
in Section 1 of the Agreement: (ii) the "Software" (as that
term is defined in Schedule G), including the Third Party
Software set forth in Sections 2.1.1 and 2.1.2 of Exhibit 1 of
Schedule G; and (iii) the "FDISG Software" as that term is
defined in Schedule H (collectively, the "Source Code")
substantially in the form attached as Exhibit 2 of this
Amendment Number 3 ("Exhibit 2"). Promptly after signing the
escrow agreement, FDISG shall forward the agreement to the
escrow agent with a copy of the Source Code to be deposited
into escrow. FDISG agrees to update the Source Code held by
the escrow agent on a quarterly basis. The Fund shall be
responsible and pay for all fees of the escrow agent. The
Source Code may be released to the Fund only if (i) FDISG
ceases to do business, makes an assignment for the benefit of
creditors, becomes insolvent (as revealed by its books and
records or otherwise), is generally unable to pay its debts as
such debts become due, or commences, or has commenced against
it a case under any chapter of state or federal bankruptcy
laws; and FDISG fails to cure any such event within sixty (60)
days after receiving notice from the Fund; and (ii) the Fund
has paid all amounts due to FDISG under this Agreement. Upon
receipt of the Source Code from the escrow agent, the Fund
shall a have license to use the Software solely as set forth
herein for the remaining current term of the Agreement subject
to Section 15, which use shall be expanded to include the
right to modify the software solely in connection with support,
maintenance and operation of the software and not for any
other purpose or person."
5. Sections 14(a) and (b) of the Agreement are hereby deleted from the
Agreement and replaced with the following new Sections 14(a) and (b):
(a) This Agreement which became effective as of December 23, 1994
is hereby extended effective February 1, 1997 and shall
continue through January 31, 2000 (the "Initial Term"). Upon
the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Fund or FDISG provides
written notice to the other of its intent not to
<PAGE> 4
renew. Such notice must be received not less than one-hundred
and eighty (180) days prior to the expiration of the Initial
Term or the then current Renewal Term.
(b) Notwithstanding the foregoing Section 14(a), in the event the
Fund provides notice of its intent to terminate as set forth in
Section 14(a), the Fund may extend the term of the Agreement
for up to an additional one-hundred and eighty (180) days (the
"Extension Period") by providing FDISG with written notice of
its intent to do so. Such notice must be received no later
than one-hundred and eighty (180) days prior to the expiration
of the Initial Term. During the Extension Period, the Fund may
terminate this Agreement at any time on thirty (30) days
written notice.
6. Section 15 is hereby amended by adding the following sentence to the
end of the paragraph:
"FDISG agrees to provide reasonable, supervised system access until
the Fund's conversion to another provider is complete".
7. Section 23(a) is hereby amended by deleting the information regarding
notices and inserting the following
To: The AIM Family of Funds
c/o A I M Fund Services, Inc.
Eleven Greenway Plaza, Suite 100
Houston, Texas 77046
Attention: John Caldwell, President
with copy to:
Fund Legal Counsel at same address
Attention: Carol F. Relihan, Senior Vice President &
General Counsel
To: First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, MA 02109
Attention: President
with copy to : General Counsel (same address)
8. Section 23 is hereby amended by adding the following new sub-section
(k):
"(k) Notwithstanding the indemnity provided by the Fund in Section
8(g), FDISG agrees to use commercially reasonable efforts to
maintain a Disaster Recovery Plan, at no cost to the Fund,
designed to minimize the impact of any unforeseen business
interruption or outage that renders the FDISG System or FDISG
Facility inoperable, a summary of which is attached hereto as
Schedule I."
<PAGE> 5
9. Schedule C is hereby deleted in its entirety and replaced with the
attached revised Schedule C.
10. Exhibit 1 and Exhibit 2 of Schedule D are hereby deleted in their
entirety.
11. Schedule F is hereby deleted in its entirety and replaced with the
attached revised Schedule F.
12. Addendum Number 2 to the Agreement is hereby deleted in its entirety
and the new revised Schedule D - Out of Pocket Expenses as referenced in
Section 3(b) is hereby added to the Agreement.
13. In addition to the foregoing, FDISG shall provide the Fund with a
software license to FDISG's proprietary IMPRESS Plus software and system in
accordance with the terms of and as more fully described in IMPRESS Plus
Software and Support Terms annexed hereto as Schedule G and incorporated
herein.
14. In addition to the foregoing, FDISG shall provide the Fund with a
software license to FDISG's proprietary Accounting Control Environment +
("ACE +") software in accordance with the terms of and as more fully described
in the ACE + Software and Support Terms annexed hereto as Schedule H and
incorporated herein.
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties
with respect to the subject matter hereof. The Modified Agreement supersedes all
prior and contemporaneous agreements between the parties in connection with the
subject matter hereof. No officer, employee, servant or other agent of either
party is authorized to make any representation, warranty, or other promises not
expressly contained herein with respect to the subject matter hereof.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective Portfolios and Classes set forth in
Exhibit 1 attached hereto as may be amended from time to time.
By: /s/ ROBERT H. GRAHAM
-------------------------------------
Title: President
----------------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ GERALD G. KOKOS
-------------------------------------
Title: Executive Vice President
----------------------------------
<PAGE> 7
EXHIBIT 1
LIST OF FUNDS
<TABLE>
<S> <C>
AIM EQUITY FUNDS, INC.
Portfolios: Classes:
AIM Blue Chip Fund Class A and B Shares
AIM Capital Development Fund Class A and B Shares
AIM Charter Fund Class A and B Shares
AIM Weingarten Fund Class A and B Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares
AIM FUNDS GROUP
Portfolios: Classes:
AIM Balanced Fund Class A and Class B Shares
AIM Global Utilities Fund Class A and Class B Shares
AIM Growth Fund Class A and Class B Shares
AIM High Yield Fund Class A and Class B Shares
AIM Income Fund Class A and Class B Shares
AIM Intermediate Government Fund Class A and Class B Shares
AIM Municipal Bond Fund Class A and Class B Shares
AIM Value Fund Class A and Class B Shares
AIM Money Market Fund Class A, Class B, and
AIM Cash Reserve Shares
AIM INTERNATIONAL FUNDS, INC.
Portfolios: Classes:
AIM International Equity Fund Class A and Class B Shares
AIM Global Aggressive Growth Fund Class A and Class B Shares
AIM Global Growth Fund Class A and Class B Shares
AIM Global Income Fund Class A and Class B Shares
AIM INVESTMENT SECURITIES FUNDS
Portfolios: Classes:
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
AIM TAX-EXEMPT FUNDS, INC.
Portfolios: Classes:
AIM Tax-Exempt Cash Fund n/a
AIM Tax-Exempt Bond Fund of Connecticut n/a
Intermediate Portfolio AIM Tax-Free Intermediate Shares
</TABLE>
<PAGE> 8
EXHIBIT 2
PREFERRED REGISTRATION
TECHNOLOGY ESCROW AGREEMENT
Account Number __________
Recitals
This Preferred Registration Technology Escrow Agreement including any
Exhibits ("Agreement") is effective this ______ day of _____ 1997, by and among
Data Securities International, Inc. ("DSI"), a Delaware corporation, First Data
Investor Services Group, Inc. ("Depositor"), and each registered investment
company listed on the attached Schedule A hereof ("Preferred Registrant").
WHEREAS, Depositor has entered into a certain Remote Access and
Related Services Agreement dated December 23, 1994, as amended by Amendment
Number 3 dated as of February 1, 1997 (the "Remote Agreement") with the
Preferred Registrant which pursuant thereto certain proprietary software, as
described in Section 12(i) of the Remote Agreement, in object-code form and
other materials of Depositor have been licensed to Preferred Registrant (the
"Software");
WHEREAS, Depositor and Preferred Registrant desire the Agreement to be
supplementary to said contract pursuant to 11 United States Code Section
365(n);
WHEREAS, availability of or access to the source code and other
proprietary data related to the Software is critical to Preferred Registrant in
the conduct of its business;
WHEREAS, Depositor has deposited or will deposit with DSI such source
code and other proprietary data to provide for retention, administration and
controlled access for Preferred Registration under conditions specified herein;
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the promises, mutual
covenants and conditions contained herein, the parties hereto agree as follows:
1. Deposit Account. Following the delivery of the executed Agreement, DSI
shall open a deposit account ("Deposit Account") for Depositor. The
opening of the Deposit Account means that DSI shall establish an account
ledger in the name of Depositor, assign a deposit account number
("Deposit Account Number"), calendar renewal notices to be sent to
Depositor as provided in Section 30, and request the initial deposit
("Initial Deposit") from Depositor. Depositor has an obligation to make
the Initial Deposit. In the event that Depositor has not made the
Initial Deposit within sixty (60) days of the execution of this
1
<PAGE> 9
Agreement, DSI shall request the initial Deposit from Depositor and
notify Preferred Registrant that such Initial Deposit has not been
received.
2. Preferred Registration Account. Following the execution and delivery of
the Agreement, DSI shall open a registration account ("Registration
Account") for Preferred Registrant. The opening of the Registration
Account means that DSI shall establish under the Deposit Account an
account ledger with a unique registration number ("Registration Number")
in the name of Preferred Registrant, calendar renewal notices to be sent
to Preferred Registrant as provided in Section 30, and request the
Initial Deposit from Depositor. DSI shall notify Preferred Registrant
upon receipt of Initial Deposit.
3. Term of Agreement. The Agreement will commence on the effective date
and continue through January 31, 2000, unless terminated earlier as
provided in the Agreement. The Agreement may be extended for one (1)
year terms.
4. Exhibit A, Notices and Communications. Notices and invoices to
Depositor, Preferred Registrant or DSI should be sent to the parties at
the addresses identified in the Exhibit A.
Documents, payment of fees, deposits of material, and any written
communication should be sent to the DSI offices as identified in the
Exhibit A.
Depositor and Preferred Registrant agree to each name their respective
designated contact ("Designated Contact") to receive notices from DSI
and to act on their behalf in the performance of their obligations as
set forth in the Agreement. Depositor and Preferred Registrant agree to
notify DSI immediately in the event of a change of their Designated
Contact in the manner stipulated in Exhibit A.
5. Exhibit B and Deposit Material. Depositor will submit proprietary data
and related material ("Deposit Material") to DSI for retention and
administration in the Deposit Account.
The Deposit Material will be submitted together with a completed
document called a "Description of Deposit Material", hereinafter
referred to as Exhibit B. Each Exhibit B should be signed by Depositor
prior to submission to DSI and will be signed by DSI upon completion of
the Deposit Material inspection.
Depositor represents and warrants that it lawfully possesses all Deposit
Material, can transfer Deposit Material to DSI and has the authority to
store Deposit Material in accordance with the terms of the Agreement.
6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit
Material, DSI will be responsible only for reasonably matching the
labeling of the materials to the item descriptions listed on the Exhibit
B and validating the count of the materials to the quantity listed on
the Exhibit B. DSI will not be responsible for any other claims made by
2
<PAGE> 10
the Depositor on the Exhibit B. Acceptance will occur when DSI concludes
that the Deposit Material Inspection is complete. Upon acceptance DSI
will sign the Exhibit B and assign it the next Exhibit B number. DSI
shall issue a copy of the Exhibit B to Depositor and Preferred
Registrant within ten (10) days of acceptance.
7. Initial Deposit. The Initial Deposit will consist of all material
initially supplied by Depositor to DSI.
8. Deposit Changes. Depositor may desire or may be obligated to update the
Deposit Account with supplemental or replacement Deposit Material of
technology releases.
Supplemental Deposit ("Supplemental") is Deposit Material which is to be
added to the Deposit Account.
Replacement Deposit ("Replacement") is Deposit Material which will
replace existing Deposit Material as identified by any one or more
Exhibit B(s) in the Deposit Account. Replaced Deposit Material will be
destroyed or returned to Depositor.
9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and
their associated Deposit Material currently in DSI's possession.
Destroyed or returned Deposit Material is not part of the Deposit;
however, DSI shall keep records of the destruction or return of Deposit
Material.
10. Replacement Option. Within ten (10) days of receipt of Replacement from
Depositor, DSI will send a letter to Preferred Registrant stating that
Depositor requests to replace existing Deposit Material, and DSI will
include a copy of the new Exhibit B(s) listing the new Deposit Material.
Preferred Registrant has twenty (20) days from the mailing of such
letter by DSI to instruct DSI to retain the existing Deposit Material
held by DSI, and if so instructed, DSI will change the Replacement to a
Supplemental. Conversion to Supplemental may cause an additional
storage unit fee as specified by DSI's Fee and Services Schedule.
If Preferred Registrant does not instruct DSI to retain the existing
Deposit Material, DSI shall permit such Deposit Material to be replaced
with the Replacement. Within ten (10) days of acceptance of the
Replacement by DSI, DSI shall issue a copy of the executed Exhibit B(s)
to Depositor and Preferred Registrant. DSI will either destroy or
return to Depositor all Deposit Material replaced by the Replacement.
11. Storage Unit. DSI will store the Deposit in defined units of space,
called storage units. The cost of the first storage unit will be
included in the annual Deposit Account fee.
12. Deposit Obligations of Confidentiality. DSI agrees to establish a locked
receptacle in which it shall place the Deposit and shall put the
receptacle under the administration of
3
<PAGE> 11
one or more of its officers, selected by DSI, whose identity shall be
available to Depositor at all times. DSI shall exercise a
professional level of care in carrying out the terms of the Agreement.
DSI acknowledges Depositor's assertion that the Deposit shall contain
proprietary data and that DSI has an obligation to preserve and
protect the confidentiality of the Deposit.
Except as provided for in the Agreement, DSI agrees that it shall not
divulge, disclose, make available to third parties, or make any use
whatsoever of the Deposit.
13. Audit Rights. DSI agrees to keep records of the activities undertaken
and materials prepared pursuant to the Agreement. DSI may issue to
Depositor and Preferred Registrant an annual report profiling the
Deposit Account. Such annual report will identify the Depositor,
Preferred Registrant, the current Designated Contacts, selected
special services, and the Exhibit B history, which includes Deposit
Material acceptance and destruction or return dates.
Upon reasonable notice, during normal business hours and during the
term of the Agreement, Depositor or Preferred Registrant will be
entitled to inspect the records of DSI pertaining to the Agreement,
and accompanied by an employee of DSI, inspect the physical status and
condition of the Deposit. The Deposit may not be changed during the
audit.
14. Renewal Period of Agreement. Upon payment of the initial fee or
renewal fee, the Agreement will be in full force and will have an
initial period of at least one (1) year unless otherwise specified.
The Agreement may be renewed for additional periods upon receipt by
DSI of the specified renewal fees prior to the last day of the period
("Expiration Date"). DSI may extend the period of the Agreement to
cover the processing of any outstanding instruction made during any
period of the Agreement.
Preferred Registrant has the right to pay renewal fees and other
related fees. In the event Preferred Registrant pays the renewal fees
and Depositor is of the opinion that any necessary condition for
renewal is not met, Depositor may so notify DSI and Preferred
Registrant in writing. The resulting dispute will be resolved
pursuant to the dispute resolution process defined in Section 25.
15. Expiration. If the Agreement is not renewed, or is otherwise
terminated, all duties and obligations of DSI to Depositor and
Preferred Registrant will terminate. If Depositor requests the return
of the Deposit, DSI shall return the Deposit to Depositor only after
any outstanding invoices and the Deposit return fee are paid. If the
fees are not received by the Expiration Date of the Agreement, DSI, at
its option, may destroy the Deposit.
16. Certification by Depositor. Depositor represents to Preferred
Registrant that:
4
<PAGE> 12
a. The Deposit delivered to DSI consists of the following: source
code deposited on computer magnetic media; all necessary and
available information, proprietary information, and technical
documentation which will enable a reasonably skilled
programmer of Preferred Registrant to create, maintain and/or
enhance the Software without the aid of Depositor or any other
person or reference to any other materials; maintenance tools
(test programs and program specifications); proprietary or
third party system utilities (compiler and assembler
descriptions); description of the system/program generation;
descriptions and locations of programs not owned by Depositor
but required for use and/or support; and names of key
developers for the technology on Depositor's staff.
b. The Deposit will be defined in the Exhibit B(s).
These representations shall be deemed to be made continuously
throughout the term of the Agreement.
17. Indemnification. Depositor and Preferred Registrant agree to defend
and indemnify DSI and hold DSI harmless from and against any and all
claims, actions and suits, whether in contract or in tort, and from
and against any and all liabilities, losses, damages, costs, charges,
penalties, counsel fees, and other expenses of any nature (including,
without limitation, settlement costs) incurred by DSI as a result of
performance of the Agreement except in the event of a judgment which
specifies that DSI acted with gross negligence or willful misconduct.
18. Filing for Release of Deposit by Preferred Registrant. Upon notice to
DSI by Preferred Registrant of the occurrence of a release condition
as defined in Section 21 and payment of the release request fee, DSI
shall notify Depositor by certified mail or commercial express mail
service with a copy of the notice from Preferred Registrant. If
Depositor provides contrary instruction within ten (1O) days of the
mailing of the notice to Depositor, DSI shall not deliver a copy of
the Deposit to Preferred Registrant.
19. Contrary Instruction. "Contrary Instruction" is the filing of an
instruction with DSI by Depositor stating that a Contrary Instruction
is in effect. Such Contrary Instruction means an officer of Depositor
warrants that a release condition has not occurred or has been cured.
DSI shall send a copy of the instruction by certified mail or
commercial express mail service to Preferred Registrant. DSI shall
notify both Depositor and Preferred Registrant that there is a dispute
to be resolved pursuant to Section 25. Upon receipt of Contrary
Instruction, DSI shall continue to store the Deposit pending Depositor
and Preferred Registrant joint instruction, resolution pursuant to
Section 25, order by a court of competent jurisdiction, or termination
by non-renewal of the Agreement.
20. Release of Deposit to Preferred Registrant. Pursuant to Section 18, if
DSI does not receive Contrary Instruction from Depositor, DSI is
authorized to release the Deposit, or if more than one Preferred
Registrant is registered to the Deposit, a copy of the Deposit,
5
<PAGE> 13
to the Preferred Registrant filing for release following receipt of
any fees due to DSI including Deposit copying and delivery fees.
21. Release Conditions of Deposit to Preferred Registrant.
Release conditions are:
a. Depositor ceases to do business, makes an assignment for the
benefit of creditors, becomes insolvent (as revealed by its
books and records or otherwise), is generally unable to pay
its debts as such debts become due, or commences, or has
commenced against it a case under any chapter of state or
federal bankruptcy laws; and Depositor fails to cure any such
event within 60 days after receiving notice from Preferred
Registrant; and
b. Preferred Registrant has paid all amounts due Depositor under
the Remote Agreement.
22. Grant of Use License. Subject to the terms and conditions of the
Agreement, Depositor hereby transfers and upon execution by DSI, DSI
hereby accepts a non-exclusive, nontransferable, royalty-free license
("Use License") for the unexpired term of the Remote Agreement subject
to Section 15 thereof which DSI will transfer to Preferred Registrant
upon controlled release of the Deposit as described in the Agreement.
The Use License will be solely for Preferred Registrant's internal
purposes in connection with support, maintenance, and operation of the
Software solely as set forth in the Remote Agreement and not for any
other purpose or person.
23. Use License Representation. Depositor represents and warrants to
Preferred Registrant and DSI that it has no knowledge of any
incumbrance or infringement of the Deposit, or that any claim has been
made that the Deposit infringes any patent, trade secret, copyright or
other proprietary right of any third party. Depositor warrants that it
has the full right, power, and ability to enter into and perform the
Agreement, to grant the foregoing Use License, and to permit the
Deposit to be placed with DSI.
24. Conditions Following Release. Following a release and subject to
payment to DSI of all outstanding fees, DSI shall transfer the Use
License to Preferred Registrant. Additionally Preferred Registrant
shall be required to maintain the confidentiality of the released
Deposit.
25. Disputes. In the event of a dispute, DSI shall so notify Depositor and
Preferred Registrant in writing. Upon agreement of the parties at the
time of a dispute, such dispute will be settled by arbitration in
accordance with the commercial rules of the American Arbitration
Association ("AAA"). Unless otherwise agreed to by Depositor and
Preferred Registrant, arbitration will take place in San Diego,
California, USA.
6
<PAGE> 14
26. Verification Rights. Depositor grants to Preferred Registrant the
option to verify the Deposit for accuracy, completeness and
sufficiency. Depositor agrees to permit DSI and at least one employee
of Preferred Registrant to be present at Depositor's facility to
verify, audit and inspect of the Deposit for the benefit of Preferred
Registrant. If DSI is present or is selected to perform the
verification, DSI will be paid according to DSI's then current
verification service hourly rates and any out of pocket expenses.
27. General. DSI may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee
giving any written notice, request, advice or instruction in
connection with or relating to the Agreement has apparent authority
and has been duly authorized to do so. DSI may provide copies of the
Agreement or account history information to any employee of Depositor
or Preferred Registrant upon their request. For purposes of
termination or replacement, Deposit Material shall be returned only to
Depositor's Designated Contact, unless otherwise instructed by
Depositor's Designated Contact.
DSI is not responsible for failure to fulfill its obligations under the
Agreement due to causes beyond DSI's control.
The Agreement is to be governed by and construed in accordance with
the laws of the State of California.
The Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes all previous
communications, representations, understandings, and agreements,
either oral or written, between the parties. The Agreement may be
amended only in a writing signed by the parties.
If any provision of the Agreement is held by any court to be invalid
or unenforceable, that provision will be severed from the Agreement
and any remaining provisions will continue in full force.
28. Title to Media. Subject to the terms of the Agreement, title to the
media, upon which the proprietary data is written or stored, is and
shall be irrevocably vested in DSI. Notwithstanding the foregoing,
Depositor will retain ownership of the proprietary data contained on
the media including all copyright, trade secret, patent or other
intellectual property ownership rights subsisting in such proprietary
data.
29. Termination of Rights. The Use License as described above will
terminate in the event that the Agreement is terminated without the
Use License transferring to Preferred Registrant.
30. Fees. Fees are due upon receipt of signed contract, receipt of Deposit
Material, or when service is requested, whichever is earliest. If
invoiced fees are not paid within sixty (60) days of the date of the
invoice, DSI may terminate the Agreement. If the payment is not
7
<PAGE> 15
timely received by DSI, DSI shall have the right to accrue and collect
interest at the rate of one and one-half percent per month (18% per
annum) from the date of the invoice for all late payments.
Renewal fees will be due in full upon the receipt of invoice unless
otherwise specified by the invoice. In the event that renewal fees are
not received thirty (30) days prior to the Expiration Date, DSI shall
so notify Depositor and Preferred Registrant. If the renewal fees are
not received by the Expiration Date, DSI may terminate the Agreement
without further notice and without liability of DSI to Depositor or
Preferred Registrant.
DSI shall not be required to process any request for service unless
the payment for such request shall be made or provided for in a manner
satisfactory to DSI.
All service fees and renewal fees will be those specified in DSI's Fee
and Services Schedule in effect at the time of renewal or request for
service, except as otherwise agreed. For any increase in DSI's
standard fees, DSI shall notify Depositor and Preferred Registrant at
least ninety (90) days prior to the renewal of the Agreement. For any
service not listed on the Fee and Services Schedule, DSI shall provide
a quote prior to rendering such service.
Fees invoiced by DSI are the responsibility of the Preferred
Registrant and as such all invoices in accordance with this Agreement
are to be sent to the Preferred Registrant.
8
<PAGE> 16
On behalf of the Investment Companies
and respective Portfolios and Classes
set forth in Schedule A attached
hereto as may be amended from
time to time.
<TABLE>
<S> <C>
By: FIRST DATA INVESTOR SERVICES
--------------------------------- GROUP, INC.
Name:
------------------------------- By:
Title: ---------------------------------
------------------------------ Name:
-------------------------------
Title:
------------------------------
DATA SECURITIES
INTERNATIONAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
</TABLE>
<PAGE> 17
SCHEDULE A
LIST OF FUNDS
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Blue Chip Fund Class A and B Shares
AIM Capital Development Fund Class A and B Shares
AIM Charter Fund Class A and B Shares
AIM Weingarten Fund Class A and B Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares
</TABLE>
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Balanced Fund Class A and Class B Shares
AIM Global Utilities Fund Class A and Class B Shares
AIM Growth Fund Class A and Class B Shares
AIM High Yield Fund Class A and Class B Shares
AIM Income Fund Class A and Class B Shares
AIM Intermediate Government Fund Class A and Class B Shares
AIM Municipal Bond Fund Class A and Class B Shares
AIM Value Fund Class A and Class B Shares
AIM Money Market Fund Class A, Class B and AIM Cash Reserve Shares
</TABLE>
AIM INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM International Equity Fund Class A and Class B Shares
AIM Global Aggressive Growth Fund Class A and Class B Shares
AIM Global Growth Fund Class A and Class B Shares
AIM Global Income Fund Class A and Class B Shares
</TABLE>
AIM INVESTMENT SECURITIES FUNDS
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
</TABLE>
AIM TAX-EXEMPT FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Tax-Exempt Cash Fund n/a
AIM Tax-Exempt Bond Fund of Connecticut n/a
Intermediate Portfolio AIM Tax-Free Intermediate Shares
</TABLE>
<PAGE> 18
EXHIBIT A
DESIGNATED CONTACT
Account Number: __________
<TABLE>
<S> <C>
NOTICES, DEPOSIT MATERIAL RETURNS AND INVOICES TO DEPOSITOR SHOULD BE ADDRESSED TO:
COMMUNICATION, INCLUDING DELINQUENCIES TO
DEPOSITOR SHOULD BE ADDRESSED TO: ------------------------------------------------
[Company Name/Address] ------------------------------------------------
- ----------------------------------------
------------------------------------------------
- ----------------------------------------
------------------------------------------------
- ----------------------------------------
Invoice Contact:
- ---------------------------------------- --------------------------------
Designated Contact:
---------------------
Telephone:
------------------------------
Facsimile:
------------------------------
State of Incorporation:
-----------------
NOTICES AND COMMUNICATION, INCLUDING INVOICES TO PREFERRED REGISTRANT SHOULD BE
DELINQUENCIES TO PREFERRED REGISTRANT ADDRESSED TO:
SHOULD BE ADDRESSED TO:
-----------------------------------------------
First Data Investor Services Group, Inc.
4400 Computer Drive -----------------------------------------------
Westborough, MA 01581
-----------------------------------------------
-----------------------------------------------
Designated Contact: Invoice Contact:
--------------------- -------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Requests from Depositor or Preferred Registrant INVOICE INQUIRIES AND FEE REMITTANCES TO DSI
Contact should be given Contact or authorized SHOULD BE ADDRESSED TO:
employee Registrant.
DSI
CONTRACTS, DEPOSIT MATERIAL AND NOTICES TO DSI Attn: Accounts Receivable
SHOULD BE ADDRESSED TO:
DSI
Attn: Contract Administration
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Date:
-----------------------------------
</TABLE>
<PAGE> 19
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number:
--------------------------------------------------------
Depositor Company Name:
--------------------------------------------------------
DEPOSIT TYPE:
Initial Supplemental Replacement
- ------ ------ ------
If Replacement: Destroy Deposit Return Deposit
------ ------
ENVIRONMENT:
Host System CPU/OS:
------------------------------------------------------------
Version:
-----------------------------------------------------------------------
Backup:
------------------------------------------------------------------------
Source System CPU/OS:
----------------------------------------------------------
Version:
-----------------------------------------------------------------------
Compiler:
----------------------------------------------------------------------
Special Instructions:
----------------------------------------------------------
DEPOSIT MATERIAL:
Exhibit B Name: Version:
----------------- ------------------------------------
<TABLE>
<CAPTION>
Item Label Description Media Quantity
<S> <C> <C>
</TABLE>
<TABLE>
<S> <C>
For Depositor, I certify that the above For DSI, I received the above described
described Deposit Material was sent to DSI: Deposit Material subject to the terms on
the reverse side of this Exhibit:
By: By:
--------------------------------------- ---------------------------------------
Print Name: Print Name:
------------------------------- -------------------------------
Date: Date of Acceptance:
------------------------------------- -----------------------
ISE: EXHIBIT B#:
--------- ---------------
</TABLE>
<PAGE> 20
SCHEDULE C
FEE SCHEDULE
I. SHAREHOLDER ACCOUNT FEES. The Fund shall pay the following fees:
("Shareholder Account Fees"):
For the period beginning on the date of this Agreement, and continuing through
January 31, 2000, the Fund shall pay FDISG an annualized fee for shareholder
accounts open during any monthly period ("Open Account Fee") as follows:
<TABLE>
<CAPTION>
Account Volume Fee
<S> <C>
1-1.5 million $3.60/shareholder account
Exceeding 1.5 million $2.25/shareholder account
</TABLE>
The Fund also shall pay FDISG an annualized fee of $1.80 per shareholder
account that is closed during any monthly period ("Closed Account Fee") (The
Open Account Fees and Closed Account Fees hereafter collectively referred to as
"Shareholder Account Fees"). The Shareholder Account Fees shall be billed by
FDISG monthly in arrears on a prorated basis of 1/12 of the annualized fee for
all such accounts.
FDISG will provide a credit to the Shareholder Account Fees of one million
dollars in the years 1998 and 1999. The credit shall be applied as a reduction
of $83,333.33 on each monthly fee bill in 1998 and 1999.
In addition, on January 1 of the years 1998, 1999, and 2000 the Shareholder
Account fees may be increased by FDISG in an amount equal to the lesser of (i)
the cumulative percentage increase in the Consumer Price Index for all Urban
Consumers (CPI-U) U.S. City Average, All Items (unadjusted - (1982-84 + 100),
published by the U.S. Department of Labor, or (ii) seven percent (7%) of the
Shareholder Account Fees charged by FDISG to the Fund for the preceding twelve
(12) month period.
In return for the Shareholder Account Fees, FDISG agrees to provide the
following to the Fund:
o Remote Access to FDISG's FSR System
o License for 512 IMPRESS Plus software installations valued at 2.5
million dollars. Includes six weeks of technical and user training
(train-the-trainer).
o License for up to 10 copies of FDISG's ACE+ (Automate Control
Environment) software as further defined in Schedule H
o Dedicated Programming Support equivalent to I Systems Manager, 4
Programmers, and 2 Business Systems Analysts
o Implementation of a Separate FSR processing cycle by September 15,
1997, as more fully described in the attached Exhibit 3 of this
Schedule C.
o Implementation of the core TA system functionality identified in
Exhibit 1 of this Schedule C.
<PAGE> 21
o Implementation of IWT functionality as identified in Exhibit 2 of this
Schedule C
o Continued use of FDISG's Price/Rate Transmission (PRAT) application.
The PRAT Application will accept prices and dividend rates from the
Fund Accounting Department of the Fund electronically and post them to
the FDISG Pricing System. The PRAT application will run interconnected
via Local Area Network hardware and software.
II. DEDICATED PROGRAMMING SUPPORT
FDISG and the Fund will jointly determine the level of dedicated system
resources required to meet the Fund's enhancement priorities. FDISG agrees to
use reasonable efforts to make dedicated programming support available for all
projects required by the Fund. The amount of the resources required and the
projects to be worked on shall be determined jointly based upon joint periodic
review of project requirements; however, the Fund will decide the priorities
which will be assigned to each project and will determine what projects the
dedicated resources are to work on. All enhancements, improvements,
modifications or new features added to the FDISG System shall be, and shall
remain, the confidential, exclusive property of, and proprietary to, FDISG. The
parties agree to use best efforts to ensure that all enhancements to FDISG's
System, whether made by the Dedicated Team or otherwise, shall be made in a
manner that will not adversely effect the operational efficiency or
functionality of the FDISG System. Request for software changes may be
initiated by those representatives of the Fund identified in Exhibit 4 of this
Schedule C. The Fund will use its best efforts to notify FDISG in writing of
requests for software changes within 72 hours of an initial verbal request.
FDISG reserves the right to stop work on a request for which written
specifications have not been received.
a. SUPPORT PROVIDED TO THE FUND PERFORMED IN GROUPS OTHER
THAN THE DEDICATED PROGRAMMING TEAM
1. Coding to correct deficiencies in the system, unless such
deficiencies are included in item (II)(b)(9) below in which
event the Fund will be charged for such services. A system
deficiency is defined as a system process which does not
operate according to the design of the computer application or
system specifications. To correct system deficiencies, FDISG
will, at its own expense, expend whatever resources are
necessary to analyze the deficiency and apply an appropriate
remedy, in the form of corrected application code as
expeditiously as possible. An alternate process, in the form
of a functional work around, may be a suitable substitute for
the actual system fix, if the level of effort to develop the
system fix is deemed to be impractical or the elapsed time to
develop and apply the fix extends beyond the reasonable time
needed. For deficiencies identified by the Fund, the use of a
functional work around as an alternate process shall be
mutually agreed upon by the parties.
FDISG will evaluate all reported referrals, to validate
deficiency status or reclassify as a system enhancement, based
on the above definition.
2. Simple Maintenance determined to be core processing.
<PAGE> 22
3. FDISG generated (i.e., internal) requests to extend system
functionality and ensure industry competitiveness.
4. Enhancements required to comply with regulatory changes;
provided, however, FDISG will make such changes to the extent
that they are technically and commercially practical and are
within the scope of the software functions, capabilities and
database. FDISG agrees to use good faith in determining
whether such changes are technically and commercially
reasonable and agrees to negotiate with the Fund in good faith
to resolve any such issues.
b. EXAMPLES OF ACTIVITY TO BE PROVIDED TO THE FUND WHICH WILL
BE PERFORMED BY THE DEDICATED PROGRAMMING TEAM:
1. Customized form output (i.e., statements, confirmation
statements, commission statements).
2. Customized reports.
3. Addition of new features (enhancements) requested by the Fund.
4. Addition of existing features not used by the Fund.
5. Addition of new funds to the fund group.
6. Customized year-end processing.
7. Conversions from other systems to FSR subsequent to initial
funds being live.
8. Clean-up/Recovery project resulting from Fund error or causes
beyond the reasonable control of either party.
9. System "fixes" - coding to correct errors attributable to
code developed and currently maintained by the dedicated
teams.
10. Customization of existing functions specific to the Fund
11. Program documentation as requested by the Fund.
Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software developed by its dedicated programming staff. Such
exclusivity would extend for a period of nine (9) months from the date
the enhancement is placed into the production libraries. Software
exclusivity would be waived if the Fund accepts either of the
following conditions:
a) If prior to implementation, FDISG or other FDISG clients agree
to share in the expense of the enhancements.
b) At any time during the 9 months following implementation,
FDISG or other FDISG clients agree to share the expense for
the enhancements.
Access and Capability. The Funds' dedicated programmers will have
access and capability to update any part of the System. However,
depending on the skill set of the programmers, as well as the scope of
the requested enhancement, it may be in the best interest of both the
Fund and FDISG to utilize non-dedicated programmers to address
<PAGE> 23
certain enhancements. In addition, because many programs are shared by
multiple clients, some enhancements may require approval from those
clients. These enhancements should be handled on an item by item
basis.
III. ADDITIONAL FEES
a. If the Fund chooses to use resources in addition to the
Dedicated Programming Team to accomplish work as outlined in
Section II.b, the following rates will apply:
<TABLE>
<CAPTION>
Annual Hourly
------ ------
<S> <C> <C>
Programmer $100,000 $135/hr
Business Systems Analyst $ 90,000 $100/hr
Acceptance Tester $ 85,000 $ 90/hr
</TABLE>
These rates apply to development and customization on all
software covered under this agreement (i.e. core TA system,
IMPRESS Plus, ACE+).
b. IMPRESS Plus Maintenance and Support Fees - The Fund will be
billed a monthly fee of $64,000 (fee based on $1500 per
workstation per year for 512 workstation license). Billing to
commence on the earlier of a) first production usage of
IMPRESS Plus software or b) August 1, 1997. Maintenance and
Support Fees include:
o All third party software maintenance charges from
software licensed in Exhibit 1 of Schedule G
o Full IMPRESS Plus applications support (bug fixes,
application assistance, etc.)
o Remote Dial-in IMPRESS Plus application support (if
needed)
o Subsequent interim and major releases for all
licensed IMPRESS Plus products
o 7x24 Help Desk Support for IMPRESS Plus applications
o Full support through First Data for third party
applications licensed in Exhibit 1 of Schedule G
o Participation in IMPRESS Plus User Group
c. IMPRESS Plus Installation Fees - Billable to the Fund at
$135/hr. (Estimate for 512 IMPRESS Plus workstations is 1100
hours). Installation includes:
o IMPRESS Plus application installation
o IMPRESS Plus third party software installation
o Network Design Assistance
o Hardware Configuration Assistance
o Workflow analysis
<PAGE> 24
o Project Management
o Post Installation Support
d. On each anniversary date of this Agreement, FDISG may adjust
the hourly and annual rates to reflect salary increases
and/or to maintain competitive rates in attracting qualified
personnel. Such annual increase will not exceed seven percent
(7%).
e. IMPRESS Plus Maintenance and Support and EMPRESS Plus
Installation Fees do not include the following:
o Hardware
o Network and Server Software not listed in Exhibit 1
of Schedule G
o Customization or application integration
o Support for IMPRESS Plus applications customized or
built by the Fund (see Section 3 of Exhibit 3 of
Schedule G)
o Installation, Integration and On-going Support of
hardware, network, and software components not
included in Schedule G
o Travel Expenses for install and support staff for
on-site visits (billed separately per Schedule D)
o Application Source Code
f. IMPRESS Plus Maintenance and Support and IMPRESS Plus
Installation Fees for Separate Test or Training System.
Maintenance and Support Fees - The Fund will be billed a
monthly fee of $2,666.66 (based on $1000 per workstation per
year with a minimum 32 workstation license). Billing to
commence on first production usage of IMPRESS Plus software in
the Training or Test environment. Maintenance and Support
includes items listed in Section III.b above.
Installation Fees - Billable to the Fund at $135/hr. (Estimate
for 32 IMPRESS Plus workstations is 200 hours). Installation
includes items listed in Section III.c above.
<PAGE> 25
g. Fees for IMPRESS Plus workstations in excess of 512:
<TABLE>
<CAPTION>
o Number of workstations ordered One-time License Fee
<S> <C>
32 $1300/workstation
64 $1000/workstation
128 waived
256 waived
</TABLE>
o Maintenance and Support - $1500 per workstation per
year; billable on first production usage of IMPRESS
Plus software; includes items listed in Section III.b
above
o Installation Fees - Billable to the Fund at $135/hr;
includes items listed in Section III.c above
The Fund agrees to pay a minimum of 18 months Maintenance and
Support for each workstation in excess of 512.
<PAGE> 26
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOI SYSTEMMATIC Specs
1 26610 DEFAULT/RECALCULATION PROBLEM Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
*Recalc does not include all
purchases applied to the LOI.*
Dealer comm credit not posted in
recalc.* No adjustment code to
adjust underwriter. * Trades
outside LOI period included in
recalc.* No ability to turn off
systematic recalc.
====================================================================================================================================
====================================================================================================================================
PRODUCE CHECKS ON NT2 ACCOUNTS Specs
2 19164 WITH DIRECT REDEMPTIONS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Checks should be produced for
direct reds on NT2 accounts.
Transactions post to history, yet
no checks are produced. Update
DRDM0750 to allow.
====================================================================================================================================
====================================================================================================================================
3 25276 WIRE ORDER PROCESSING PROBLEM Specs
Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Wire order cancel/replacements
(OPR/OPC) do not update master
controls if not double Qc'd. If not
double Qc'd both trades appear
as new purchase orders.
====================================================================================================================================
====================================================================================================================================
Specs
4 24262 CERTIFICATE REPORT MISSING DATA Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
PFSR135D-R12 does not include
the work of several days in 1996.
Unable to reconcile certificate
issues without adhocs to identify
missing data.
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 27
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NSCC REPORT PNSC802D - Specs
INCORRECT COMMISSIONS ON Received
5 26768 SPLIT REPS
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
This report overestimates the
commission paid to split reps.
NSCC regulation requires
settlement by this report,
resulting in overpayments.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NSCC REJECT REPORT PNSCSPSD- Specs
R01 - MULTI PAGE REJECT RECEIVED
6 26769 DELETIONS AND TRUNCATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
NSCC rejects for a dealer that
run for more than one page are
dropping accounts, resulting in
inconsistencies from one page to
the next. Also truncation pro-
blems with Settlement Value,
Commission Amount and Fund Owes
Dealer amount.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ONLINE EDIT PREVENTING USE OF Specs
7 26772 CDSC EXEMPT OPTION 3. Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Exempt option 3 grosses up
CDSC on SWiPs, ensuring
consistent dollar amount
swips. For funds allowing
CDSC-free SWIPs, edit pre-
venting a shareholder
redeeming an amount
greater than 12% annually
from having a SWIP with a set
dollar amount.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 28
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOIMNT DELETING Specs
BROKER CLIENT Received
8 23849 NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Systematic completion
of an LOI removes the
Broker Client Number
form the account in
error. Absence of the
BRCN causes problems
for the dealer.
Maintenance journals
are reviewed to
identify these accounts
and re-add the BRCN.
====================================================================================================================================
====================================================================================================================================
NET INDICATOR NOT Specs
CARRYING TO QC SCREEN Received
9 26155 AND NO MISMATCH WARNING
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
When entering a wire
order redemption as a
"net" amount trade, the
net indicator is not
carried forward in the
QC process, and does not
provide a mismatch
warning. The trade then
processes as "gross",
the default.
====================================================================================================================================
====================================================================================================================================
ASSIGNMENT OF CLOSED Specs
11 26770 ACCOUNTS ON QA RECORD Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
If a QA record is
manually created and
the master account is
not designated, FSR
assigns the first
account entered. If
this account is
closed, a consolidated
statement will not
print. Results in
additional phone calls
and duplicate statement
requests.
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 29
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REASSIGNMENT OF MASTER ACCOUNT Specs
12 26771 NUMBER Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
When a master account closes
AIM would like the master
account status to be reassigned
systematically to an open account
within the QA cluster. Currently
this is a time consuming manual
process.
====================================================================================================================================
====================================================================================================================================
Specs
13 26611 DIVIDEND CONTROL REPORT PROBLEMS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
The Dividend and Capital Gain
reports do not match the
summary reports.
====================================================================================================================================
====================================================================================================================================
DUPLICATE STATEMENTS BY DBR NOT Specs
14 26612 AVAILABLE Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
AFS would like the ability to
request duplicate statements by
dealer, dealer/branch,
dealer/branch/rep. Current
functionality is by fund/account.
====================================================================================================================================
====================================================================================================================================
PAC'S NOT RUNNING ON CAPITAL Specs
16 26154 DEVELOPMENT ACCOUNTS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Accounts opened via merger
subscription with converted PAC
information, when the PAC is
turned on, do not run. Deletion
and reestablishment of the PAC
data does not resolve the issue.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 30
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FUNDSERV REDEMPTION SHOWS
INCORRECT SHARE AMOUNT ON Specs
17 25763 HISTORY Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Several examples of FundSERV
reds where the less than the
full amount of shares appear
redeemed in the line of
history, but the account is
left with a zero balance. The
correct amount is paid through
the NSCC. Control balancing
problems result.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
EXHIBIT 2 OF SCHEDULE C
IWT FUNCTIONALITY
<TABLE>
<CAPTION>
- ---------------------------- ----------------------------
NEW ACCOUNT FINANCIALS
- ---------------------------- ----------------------------
<S> <C>
CASHIERING REPORT
- ---------------------------- ----------------------------
ACCOUNT OPTIONS EXCEPTION WAIVER
- ---------------------------- ----------------------------
AUTO EXCHANGE ENHANCED QC
- ---------------------------- ----------------------------
BANK ADDRESS
- ---------------------------- ----------------------------
AIP FINANCIAL QC
- ---------------------------- ----------------------------
BANK WIRE IMBALANCE REPORT
- ---------------------------- ----------------------------
BENEFICIARY INTERNAL ASSET MOVE
- ---------------------------- ----------------------------
CHECKWRITING EXCHANGE
- ---------------------------- ----------------------------
DIVIDENDS/CAPGAIN TRANSFER
- ---------------------------- ----------------------------
SWP PURCHASES
- ---------------------------- ----------------------------
TELEPHONE RED REDEMPTIONS
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
ACCOUNT SEARCH
- ---------------------------- ----------------------------
ACCOUNT SETUP
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
DEALER
- ---------------------------- ----------------------------
DEALER OFFICE REP LIST
- ---------------------------- ----------------------------
DEALER ALPHA SEARCH
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
FINANCIAL INQUIRY
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
GROUP MASTER ADD
- ---------------------------- ----------------------------
LOI/ROA
- ---------------------------- ----------------------------
ACCOUNT LINK/UNLINK
- ---------------------------- ----------------------------
IWT ACCOUNT LIST
- ---------------------------- ----------------------------
PROCESSED ITEM LIST
- ---------------------------- ----------------------------
</TABLE>
<PAGE> 32
EXHIBIT 3 OF SCHEDULE C
AIM SEPARATE CYCLE OVERVIEW
This project removes AIM from all FSR regions, files, jobstreams, control
cards, etc. and establishes them with their own. It will allow AIM to have more
control over their processing and removes any unexpected complications caused
by dependency on the activities of other management companies.
VOLUME
o 1700+ Jobstreams (JCL, Procs, and Control Cards) to evaluate
o Approximately 70% of these will qualify for processing
(create new AIM and modify FSR)
o * Files to convert
o * GDGs
o * additional Tapes/Cartridges
o * additional DASD required
o * additional Tape Mounts
* These figures are currently being researched.
AFFECTED AREAS/DEPARTMENTS
o AIM Client Services - John Corey
o Atest - Kathy McNeil, Steve Carlson
o BOSS Application - Tom Farnsworth (B)
o Capacity Planning - Ron Larue
o Corporate Actions - Joe Viens
o DASD - John Dryer, Janet Rose (B)
o Database Administration (DBA) for On-line - Steve Powers (B)
o DCX - Linda Messore, Ann Stadtherr
o ESG - Connie Ciulla, Arthur Roy
o Express Delivery - Don Morgan
o FSR - Tom Woislow, Bill VonHandorf, Bill Quigley, Bob Reilly,
Ray Bennison
o NSCC - Carl Damelio
o Print Mail - Helene Grunes (B)
o Tape Operations - Don Chappell
o SCE - Ed Oelerich, Ellen Rhode
o Tax/CBA - Ed Boyle
o Transmissions - Frank Pitzi
Because of the large volume of work to be done and the number of departments
involved we are developing a "phased in" development and implementation
approach. This will cause the least impact to both our client and our own
internal departments. It will require tight project management and dedicated
point people both from AIM and our own departments. Each phase will migrate up
through test, acceptance and production.
<PAGE> 33
PHASE 1 - START-UP FILES
The foundation of this approach is to create six basic files with an AIM
high-level qualifier on a daily basis from the FSR system which can be used by
jobs which read them but not update them (see Phase 2). They would be deleted
at the beginning of the next day's cycle and recreated by the FSR cycle. These
files are:
P03AIM.PRIV.MASTER.DATE
P03AIM.PRIV.BATCH.DATE
P03AIM.PRIV.MASTER.FUND
P03AIM.PRIV.BATCH.FUND
P03AIM.PRIV.TRANS.ACCEPT1
P03AIM.PRIV.TRANS.DIVIDEND
The first four files would be copied from FSR files to AIM files in a new
temporary AIM job which would run daily.
The last two files, trans.accept1 and trans.dividend, currently exist with
different names in FSR. Job PFSR13DD (FSR/FED WIRE) now creates
P03FSR.TEMP.XMITOUT.ACCEPT1.AIM which contains all accept records for AIM. Job
PFSR13ED (FSR/FED WIRE) now creates P03FSR.TEMP.XMITOUT.DIV.AIM which contains
all dividend records for AIM. These files are input to AIM transmission jobs
(PFSRXCGD and PFSRXCLD) and the FSR/POST BACKUPS job (PFSR71HD).
We would rename P03FSR.PRIV.TRANS.ACCEPT1 and P03FSR.PRIV.TRANS.DIVIDEND to
P03AIM.PRIV.TRANS.ACCEPT1 and P03AIM.PRIV.TRANS.DIVIDEND in jobs PFSR13DD and
PFSR13ED. We would rename the transmission jobs to PAIMxxxx modify them
replacing FSR references with AIM, set up the appropriate schedule and move
them up the regions. We would place an override in PFSR71HD which would now
reference the PO3AIM file for backup. Once tested and QA'd by us and AIM we
would replace the FSR transmission jobs with the new AIM jobs.
RESULT OF PHASE 1
We now have three production jobs running in the AIM region and we have set up
the 6 basic AIM files which will be the basis for Phase 2.
<PAGE> 34
PHASE 2 - REPORTS, TRANSMISSIONS, AND AIM-ONLY JOBS
This phase involves converting jobs which do not update any of the master files.
They may read them and create temporary files but updating will wait for phase
3. Phase 2 jobstreams will include mainly report and transmission jobs as well
as any AIM-only jobs. We will be adding new schedule entries (CA-7) for AIM and
modifying existing FSR schedules where needed paying special attention to
triggers, requirements and dependencies. We will add new Express Delivery
entries for AIM reports and delete the AIM entries from the FSR system.
The actual migration of reports and transmission files from the FSR cycle to
the AIM cycle will be on a specific schedule. As we introduce reports to the
AIM cycle they will be available in SAR from both FSR and AIM cycles for a week
to allow AIM to review them. They will then be turned off in SAR for FSR. We
will provide AIM with a report schedule each week to aid this process.
Transmission files will be tested using record counts and selective file
compares. AIM-only jobs will also parallel for a week where feasible.
An example of a Phase 2 job is PFSR143D (FSR/AUTOEX). This job reads the batch
fund file, the batch date file and the trans.accept1 file to produce reports.
All these files are available in the AIM region.
Phase 2 work to be done described in a programmer's template includes (but is
not limited to):
Copy and rename the JCL jobs.
Modify procs and/or control cards if necessary for the test/acpt/prod
regions.
Verify that JCL, procs and control cards follow our current standards.
Create high-level overrides for FSR read-only files.
Change Express Delivery for AIM output and set up the FSR RID entry to
be deleted in n days.
Schedule the new AIM jobs with the same requirements and dependencies
as the FSR jobs but using the appropriate high level qualifier. This
requires tight control on the status of all jobs.
Change the schedules of any jobs which are dependent upon the FSR job
to be dependent upon the new AIM job. Note: this will not be the case
with all AIM jobs.
Move it up the regions testing at appropriate points.
Review the output (First Data and AIM).
After a week inhibit AIM output from FSR jobs from going to SAR. Only
AIM output from AIM jobs will be available in SAR.
The key to the success of this phase is an aggressive implementation schedule
and active participation by AIM representatives in checking and validating the
output.
RESULT OF PHASE 2
We now have report-only jobs (not associated with the actual updating of
files), most of the transmission jobs and all AIM-only jobs which are not
associated with updating files in AIM production. All converted reports and
files have been signed off by AIM. These AIM activities are also being
processed in FSR. We have gone as far as possible without updating files.
<PAGE> 35
PHASE 3 - ANCILLARY FILES AND SYSTEMS
This phase includes updating ancillary files and their associated jobstreams.
Examples of this type may include Bluesky, history, cert or check files, etc.
These files are not mainstream and tend to be localized in how they are
updated. In order to qualify for Phase 3 the Management Company must be the
high order sort key field.
There are two approaches we will use depending upon the main file's on-line
considerations. The first approach involves converting the main file once along
with all associated jobs and the other involves splitting out AIM from FSR at
the start of the cycle, updating it in AIM jobs and merging it back in FSR at
the end. Either approach will involve multiple jobs per master file.
For example, The Bluesky File is only used by 3 jobs: PFSRS07D which creates
the batch file, PFSR190D which updates the file and does an AIM-only extract,
and PFSR194D which does reports. In this case, we would split the FSR Bluesky
File into AIM-only and all other. The FSR Bluesky subsystem would then be
cloned for AIM and the result would be two separate Bluesky subsystems. Online
would access the appropriate Bluesky file.
Other subsystems may be too routed in our core to fully separate out and would
be better served breaking out AIM at the beginning of its cycle, updating in
AIM-only jobs and remerging it at the end of the cycle. Any special jobs used
for splitting out files or merging them after update will have to be backed out
in Phase 4.
All activities described in Phase 2 apply here as well.
RESULT OF PHASE 3
We have now isolated and converted any subsystems not bound to core processing.
Most AIM reports and transmissions are being produced in the AIM region. We are
updating some master files and have done everything possible surrounding the
core without touching it. We are ready for Phase 4.
<PAGE> 36
PHASE 4 - THE CORE
This phase deals with updates to our core master files, our functional
processes, converting large volume files (Share A and its splits, history, lots,
global, etc.) and includes all jobstreams that have not yet been converted.
Additionally, it includes backing out any special split or merge jobs as well
as special overrides introduced in earlier phases. This will be the largest
phase. On-line will now access all AIM-only files.
Many of the activities done in the previous phases will be performed here as
well. Because so many programs interact with the core modules there is no easy
way to break this activity up. As always we will need our AIM partners to help
in the QA activities for this hefty stage.
It is possible to combine Phases 3 and 4 if it were felt to be desirable.
However, it is our intention to have all peripheral completed before attacking
the core so there will be no unnecessary distractions. Additionally, for
development contention reasons, we would like to turn these modules over as
expeditiously as possible.
All AIM-related activities, programs, control cards, overrides, splits, merges,
etc. will be removed from all FSR jobs.
RESULT OF PHASE 4
All AIM processing is now contained in its own region and runs under its own
schedule. On-line accesses AIM-only files. FSR no longer has any AIM
processing relationship with the exception of any files which are to be merged
from both regions for transmission or system reasons.
<PAGE> 37
EXHIBIT 4 of SCHEDULE C
AUTHORIZED PERSONS REQUESTING SYSTEM MODIFICATIONS
---------------------------------------------------
John Caldwell
President, A I M Fund Services, Inc.
---------------------------------------------------
Joseph Charpentier
Assistant Vice President, A I M Fund Services, Inc.
---------------------------------------------------
Tony D. Green
Senior Vice President, A I M Fund Services, Inc.
---------------------------------------------------
Jean Miller, Director of Applications
Information Technology Services
A I M Advisors, Inc.
<PAGE> 38
SCHEDULE D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Telephone and telecommunication costs, including all lease,
maintenance and line costs
o NSCC transaction charges at $.15/per financial transaction,
$.10/per same day trade confirmations
o Shipping, Certified and Overnight mail and insurance
o Year-End form production and mailings
o Terminals, communication lines, printers and other equipment
and any expenses incurred in connection with such terminals
and lines
o Duplicating services, as pre-approved by the Fund
o Courier services
o Due Diligence Mailings
o Rendering fees as billed
o Overtime, as pre-approved by the Fund
o Temporary staff, as pre-approved by the Fund
o Travel and related expenses, as pre-approved by the Fund
o System training, as pre-approved by the Fund
o Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
o Third party audit review
o All conversion costs: including System start up costs, but
excluding costs associated with conversions between FDISG
systems
o Such other miscellaneous expenses reasonably incurred by FDISG
in performing its duties and responsibilities under this
Agreement
<PAGE> 39
SCHEDULE F
PERFORMANCE STANDARDS
I STANDARDS FOR RESOLUTION OF SYSTEM DEFICIENCIES
"SYSTEM DEFICIENCY" - A system process which does not operate according to the
design of the computer application or system specifications, and is not a
result of any act or failure to act by the Fund.
1. FIRE CALL - A System Deficiency with at least one of the following
characteristics:
1. Potential or real financial exposure in excess of $100,000, or
2. Causes the Fund to be out of compliance with a major
regulatory requirement, or
3. Causes incorrect transaction processing and/or shareholder
confirmations with no reasonable manual workaround available
either at the Fund or in FDISG's systems
FDISG Response: Analysis and resolution within 36 hours or 2 nightly
processing cycles
2. CRITICAL DEFICIENCY - A System Deficiency with at least one of the
following characteristics:
o Potential or real financial exposure estimated from
$25,000-$100,000 or,
o Manual workaround requires substantial manual effort and
carries a high potential for error
FDISG Response: Impact Analysis within 3 business days of initial
notification; Determination of problem cause within 5 business days of
initial notification; Problem resolution within an average of 30
business days of initial notification
3. NON-CRITICAL DEFICIENCY - All other System Deficiencies
FDISG Response: Impact Analysis within 3 business days of initial
notification; Determination of problem cause within an average of 15
business days of initial notification; Problem resolution and target
dates to be determined on an item-by-item basis jointly by the Fund
and FDISG.
<PAGE> 40
II STANDARDS FOR ON-LINE SYSTEMS AVAILABILITY AND RESPONSE TIME
These standards shall apply on business days of the Funds.
o On-line systems availability between 7:00 a.m. and 7:00 p.m
Central Time ("CT") - 99% of hours available measured monthly.
o Average response time (7:00 a.m. to 7:00 p.m. CT) of 3 seconds
or less, measured end-to-end, in response to the system
employed by A I M Fund Services, Inc. as of September 1, 1994
- 99% measured monthly.
III STANDARDS FOR DELIVERY OF SYSTEM REPORTS
o CRITICAL REPORTS - The following report bundles in queue and
ready to begin transmission no later than 7:00 a.m. CT each
business day - a cumulative of two late bundles permitted per
month:
EFSR047H
EFSR601H
Changes to critical report bundles must be jointly approved by
an FDISG Client Service Officer and an authorized requestor of
the Fund as listed in Exhibit 4 of Schedule C.
o All other nightly report bundles in queue and ready to begin
transmission no later than 7:00 a.m. CT each business day -
95% measured monthly.
<PAGE> 41
IV STANDARDS FOR DELIVERY OF FILE TRANSMISSIONS
o CRITICAL FILES - The following jobs in queue and ready to
begin transmission no later than 4:30 CT each business day of
the Fund - a cumulative of two late files permitted per month:
<TABLE>
<CAPTION>
JOB NAME FREQUENCY APPLICATION
-------- --------- -----------
<S> <C> <C>
PFSRXCAD Daily Cap Stock File
PFSRXCYD Daily DISC Cap Stock File
PFSRXCTD Daily DISC ACH File
PFSRXCVD Daily DISC NSCC Green Sheets File
</TABLE>
o The following jobs in queue and ready to begin transmission no
later than 4:30 CT each business day of the Fund - 95%
measured monthly
<TABLE>
<CAPTION>
JOB NAME FREQUENCY APPLICATION
-------- --------- -----------
<S> <C> <C>
PFSRXCGD Daily Acceptance File
PFSRXCKD Daily Dealer File
PFSRXCHD Daily Order File
PFSRXCID Daily Share A Master File
PFSRXCJD Daily Fund File
PFSRXCMD Daily Lot History File
PFSRXCND Daily Lot Maintenance File
PFSRXCLD Periodic. Dividend Activity
</TABLE>
The standards will not apply on business days with the
following activity: Processing of Year-end Dividend and
Capital Gain Activity, Annual Trustee Fee Payment; Year-end
File Initialization.
V STANDARDS FOR THE FUND
All inbound transmissions (i.e. SIAC, various third parties) and fund prices in
receipt by FDISG by 8:00 p.m. CT
VI RIGHT TO AUDIT
The Fund shall have the option, on an annual basis, to audit the reports used
to measure the standards listed in this Schedule F. Notice of an audit will be
given 14 days in advance, and the audit will not last more than one day.
<PAGE> 42
VII PENALTIES/INCENTIVES
FDISG agrees to achieve the performance levels specified in Schedule F,
Sections II, III, and IV, and semiannually (as of each June 30th and December
31st) to adjust the monthly Account Fee Invoice to reflect any
penalties/incentives as outlined below. Penalties for a given business day will
be applied only if the Standards of the Fund in Section V are achieved.
ON-LINE SYSTEMS AVAILABILITY - MONTHLY
For each one-tenth of 1% under 99%, the monthly Account Fees will be reduced by
the same percentage. The monthly maximum percentage penalty reduction will be
3% of the monthly bill. For each one-tenth of 1% in excess of 99% up to a
maximum of 1%, the monthly Account Fees will be increased by the same
percentage.
ON-LINE SYSTEMS AVAILABILITY - DAILY
If systems availability on any given business day is less than 80%, the monthly
account Fees will be reduced by the percentage of systems availability below
80% for that day times 1/30 of the monthly Account Fees.
REPORT AVAILABILITY - CRITICAL REPORTS
Monthly Account Fees will be reduced by $250.00 for each late instance greater
than the allowable error rate, up to a maximum of $500.00 per day. For each
month within the allowable error rate, monthly Account Fees shall be increased
by $1,000.
FILE TRANSMISSIONS - CRITICAL FILES
Monthly Account Fees will be reduced by $500.00 for each late instance greater
than the allowable error rate with a maximum penalty of $10,000 per month. For
each month within the allowable error rate, monthly Account Fees shall be
increased by $1,000.
The Performance Standards and related penalties set forth in this Schedule F
shall not apply in the event of any occurrence defined in Section 8(g) of the
Agreement.
<PAGE> 43
SCHEDULE G
IMPRESS PLUS SOFTWARE AND SUPPORT TERMS
ARTICLE 1 - SYSTEM, SUPPORT AND IMPLEMENTATION
1.1 Software and Support. FDISG shall provide or has previously provided
to the Fund and the Fund shall acquire from FDISG the right to use the computer
software programs set forth in Exhibit 1 of this Schedule G (the "Software"),
for the fees indicated in Schedule C of Amendment Number 3 to the Agreement.
Software includes related user manuals and reference guides (collectively,
"DOCUMENTATION"). One copy of the Documentation shall be provided to the Fund
at no additional cost. FDISG shall provide only the machine readable object
version of the Software and not source code. Additional terms and conditions
concerning the Software are set forth in Exhibits 1 of Schedule G ("EXHIBIT 1")
and Exhibit 1.1 of Schedule G ("EXHIBIT 1.1") (collectively, the "SOFTWARE
EXHIBITS"). Subject to the terms and conditions set forth in this Schedule G,
FDISG grants to the Fund and the Fund accepts from FDISG the non-exclusive,
non-transferable license to use the Software during the term of the Agreement
("LICENSE"). Some software components ("THIRD PARTY SOFTWARE") required to be
used with the Software were developed by a third party ("THIRD PARTY VENDOR").
Third Party Software is licensed to the Fund only pursuant to: (a) shrink
wrapped or other agreements between the Third Party Vendor and the Fund and (b)
the specifically indicated terms and conditions in this Schedule G. The
Software Exhibits shall indicate which Third Party Software the Fund is
required to obtain and license from FDISG and which Third Party Software the
Fund shall be solely responsible to obtain and license. As part of the
Software, FDISG shall provide the Fund with the interfaces set forth in Exhibit
1, between the Software and Third Party Software ("INTERFACES"). FDISG shall
provide the software support services ("SOFTWARE SUPPORT") so designated in
Exhibit 3 of Schedule G ("EXHIBIT 3"). Software Support shall include a
License to error corrections, minor enhancements and interim upgrades to the
Software which are made generally available to FDISG client's of the Software
under Software Support, but shall not include a License to substantial added
functionality, new interfaces, new architecture, new platforms or other major
software development efforts, as determined solely by FDISG.
1.2 Ownership. FDISG or its licensors shall retain tide to and ownership
of the Software, copies, derivative works, inventions, discoveries, patentable
or copyrightable matter, concepts, expertise, techniques, patents, copyrights,
trade secrets and other related legal rights ("PROPRIETARY INFORMATION"). FDISG
reserves all rights in the Proprietary Information not expressly granted to the
Fund in this Schedule G. Upon FDISG's reasonable request, the Fund shall inform
FDISG in writing of the quantity and location of any Software.
1.3 Equipment, System Implementation and Access. Fund is responsible for
acquiring, installing and maintaining the data processing and related equipment
("EQUIPMENT") set forth in Exhibit 2.1 of Schedule G with respect to production
equipment and Exhibit 2.2 of Schedule G with respect to Test/Training equipment
(collectively, ("EXHIBIT 2"). Additional terms and conditions concerning the
Equipment are set forth in Exhibit 2. The Equipment identified in Exhibit 2
represents the minimum equipment configuration required to properly operate the
Software. FDISG disclaims responsibility for the performance of the Software in
the event that the Fund utilizes equipment different than that which is set
forth in Exhibit 2. FDISG and the Fund shall (a) within a reasonable time after
the Effective Date, agree upon the tasks required to implement the Software,
Third Party Software and Equipment ("SYSTEM") and the party responsible and
time frames for each task ("SCOPE OF WORK"); (b) perform their respective
assigned tasks according to the Scope of Work; and (c) if not the party
assigned to a task, cooperate with the responsible party. To the extent the
Scope of Work is incomplete, FDISG shall follow its reasonable and customary
practices. Upon prior notice by FDISG to the Fund, the Fund shall give
reasonable access to the System to FDISG, FDISG's employees. affiliates,
representatives, agents, contractors, licensors and suppliers ("FDISG'S
AGENTS") who are providing services under the Agreement or auditing adherence
to the Agreement.
1.4 Use of Software. Fund may use the Software during the term of this
Agreement only on the Equipment and only to process the Fund's data for
internal business purposes (which shall not, for purposes of this Agreement,
include use by Fund to provide services to its customers on a service bureau
basis) and solely in connection with the Fund's use of the FDISG System and
only at the locations identified in the Agreement. If the Equipment is
inoperative due to malfunction, the license grant shall, upon written notice to
FDISG, be temporarily extended to authorize the Fund to use the Software on any
other equipment approved in writing by FDISG until the Equipment is returned to
operable condition. FDISG, in its reasonable discretion, may suspend any
Software Support while the Software is being used on such other Equipment. No
right is granted for use of the Software by any third party or by the Fund to
process for any third party, or for any other purpose whatsoever, except as
expressly provided in this paragraph. Except as otherwise specifically stated
herein, the Fund shall not modify, re-engineer, decompile or reverse engineer
the Software or otherwise attempt to obtain any source code without FDISG's
prior written consent.
<PAGE> 44
1.5 Software Installation and Acceptance. FDISG shall advise the Fund that
the Software as listed in Exhibit 1 is installed and functioning on the
Equipment ("Software Installation Date") so that implementation and training
activities can proceed. The Fund shall be deemed to have accepted the Software
sixty (60) days after Software Installation Date or sixty (60) days after the
Fund's first use of any Software component to process live production data
("SOFTWARE ACCEPTANCE DATE").
1.6 Copies of Software. The Fund may not copy the software except for
backup and archival purposes only, and the Fund shall include on all copies of
the Software all copyright and other proprietary notices or legends included on
the Software. The provisions of this Paragraph do not apply to Fund data files
in machine-readable form.
1.7 No-Export. The Software shall not be shipped or used by the Fund
outside the United States. The Fund shall comply with all applicable export and
re-export restrictions and regulations of the U.S. Department of Commerce or
other U.S. agency or authority. The Software shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
1.8 Termination. Terms and conditions of this Schedule G which require
their performance after the termination of the Agreement, including but not
limited to the License and Software use restrictions, limitations of liability,
indemnification, and confidentiality obligations, shall survive and be
enforceable despite the termination of the Agreement.
ARTICLE 2 - WARRANTIES AND REPRESENTATIONS
2.1 Software Warranties and Remedies. For the term of the Agreement, FDISG
warrants ("PERFORMANCE WARRANTY") that the Software shall perform on the
Equipment substantially in accordance with the Documentation and shall enable
the Funds to meet the requirements set forth in Section 240.17a-4 of the
Securities Exchange Act of 1934, except for Directly Obtained Third Party
Software as set forth in Section 2.2 below. The timely correction of errors
and deficiencies in the Software pursuant to Software Support shall be Fund's
sole and exclusive remedy for the Performance Warranty. FDISG warrants ("RIGHTS
WARRANTY") it has the right to license the Software in accordance with the
Agreement. Provided the Fund gives FDISG timely written notice, reasonable
assistance, including assistance from the Fund's employees, agents, independent
contractors and affiliates (collectively, "FUND'S AGENTS"), and sole authority
to defend or settle the action, then FDISG shall do the following
("INFRINGEMENT INDEMNIFICATION"): (a) defend or settle, at its expense, any
action brought against the Fund or the Fund's Agents to the extent the action is
based on a claim that the Software infringes a duly issued United States'
patent or copyright or violates a third party's proprietary trade secrets or
other similar intellectual property rights ("INFRINGEMENT"); and (b) pay
damages and costs finally awarded against the Fund or the Fund's Agents
directly attributable to such claim. FDISG shall have no Infringement
Indemnification obligation if the alleged Infringement is based upon the Fund's
use of the Software with equipment or software not furnished or approved by
FDISG or if such claim arises from FDISG's compliance with the Fund's designs,
or from the Fund's modifications of the Software. The Infringement
Indemnification states FDISG's entire liability for Infringement and shall be
the Fund's sole and exclusive remedy for the Rights Warranty.
2.2 Directly Obtained Third Party Software Warranties. All warranties for
the Directly Obtained Third Party Software identified Section 2.2 of Exhibit 1,
if any, are specifically set forth in the applicable agreements supplied by the
Third Party Vendors of such products.
2.3 Exclusion of Warranties. THE WARRANTIES SET FORTH IN PARAGRAPH 2.1
ABOVE AS TO THE SOFTWARE AND IN PARAGRAPH 2.2 ABOVE AS TO THIRD PARTY SOFTWARE
ARE IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING
OUT OF OR RELATED TO THIS SCHEDULE G. FDISG SPECIFICALLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NONINFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.
2.4 Fund Responsibility. The System is an information system only,
designed to assist the Fund and the Fund's Agents in performing their
professional activities and is not intended to replace the professional skill
and judgment of the Fund's Agents. Fund shall be solely responsible for: (a)
acts or omissions of the Fund's Agents in entering data into the System,
including its accuracy and adequacy; (b) checking the correctness and accuracy
of the System output and data; and (c) any use of or reliance upon the System
output by the Fund's Agents. Except for the Infringement Indemnification and as
limited by applicable law, the Fund shall indemnify, defend and hold FDISG and
FDISG's Agents harmless from any losses, costs, damages, and liabilities,
including without limitation, reasonable attorneys' fees and court costs,
relating to any claim by any third party arising from or related to the Fund's
and the Fund's Agents' use of the System or System output.
ARTICLE 3 - MISCELLANEOUS
<PAGE> 45
3.1 Confidentiality Obligations. Each party shall keep confidential any
information relating to the other party's business which is clearly designated
or described in writing to be confidential ("CONFIDENTIAL INFORMATION"). Each
party shall keep and instruct its employees and agents to keep such information
confidential by using at least the same care and discretion as used with that
party's own confidential information. Information shall not be subject to such
confidentiality obligations if it is: (a) in the public domain, (b) known to a
party prior to the time of disclosure by the other party, (c) lawfully and
rightfully disclosed to a party by a third party on a non-confidential basis,
(d) developed by a party without reference to Confidential Information or (e)
required to be disclosed by law. If either party, its employees or agents
breaches or threatens to breach the obligations relating to use of the
Confidential Information, the other party may obtain injunctive relief, in
addition to its other remedies, inadequate monetary damages and irreparable
harm being acknowledged.
3.2 Confidential and Privileged Information. The Proprietary Information,
other FDISG software and related information, and the Agreement are
Confidential Information of FDISG and FDISG's Agents. Absent FDISG's written
permission, Fund shall not duplicate FDISG's Confidential Information. Fund
accepts full responsibility for complying with all laws, rules and regulations
concerning use and disclosure of privileged data regarding any information
placed or stored in the System or output from the System.
<PAGE> 46
EXHIBIT 1 OF SCHEDULE G
SOFTWARE
1. FDISG Software.
1.1 FDISG Software includes the following IMPRESS Plus products which are
further described in Exhibit 1.1 ("Specifications"):
IMPRESS Plus Workflow/Image Release 5.3
IMPRESS Plus Intelligent Workstations (IWT) Release 5.3 for FSR
IMPRESS Plus Customer Service System Release 5.3
1.2 Interfaces. Except as agreed in writing, FDISG shall not be required
to modify the Software or the Interfaces to accommodate changes made by the
Fund's vendor to its portion of the interface. If the Fund's vendor needs
information about the Software, then the vendor must first execute a
nondisclosure agreement in form and content reasonably acceptable to FDISG.
FDISG shall not be liable for any delay or degradation to the Software or
Equipment attributable to the Fund's use of Interfaces.
1.3 Customization. The listed products are licensed for IMPRESS Plus use
and customization only. Use of these tools to develop or customize non-IMPRESS
Plus applications is not permitted without the express written authorization of
FDISG.
2. Third Party Software.
2.1 FDISG Provided Third Party Software. The following Third Party
Software is licensed to the Fund directly by FDISG subject to the terms of the
Agreement:
2.1.1 BancTec Software. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the mandatory BancTec ("BancTec")
terms and conditions set forth in Attachment 1 of this Exhibit 1 of Schedule G
("Attachment 1"), attached and incorporated by reference. To the extent that
the terms of Attachment 1 conflict with or differ from the other terms and
conditions in the Agreement, the terms of Attachment 1 shall prevail with
respect to the following BancTec Software ("BancTec Software"):
Informix Multi-User with 512 maximum users
XDP Storage Manager Multi-User with 512 maximum users
FloWare Multi-User with 512 maximum users
Application Designer Single-User with 512 maximum users
2.1.2 Pegasystems Software. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the mandatory Pegasystems
("Pegasystems") terms and conditions set forth in Attachment 2 of this Exhibit
1 of Schedule G ("Attachment 2"), attached and incorporated by reference. To
the extent that the terms of Attachment 2 conflict with or differ from the
other terms and conditions in the Agreement, the terms of Attachment 2 shall
prevail with respect to the following Pegasystems Software ("Pegasystems
Software"):
Product Name Version Function
PegaSHARES RES 6.2 Workflow Engine
PegaENVIRONMENT ENV 4.2 Operating Shell
PegaPRISM Prism 5.1 Image Viewer
PegaStorage Manager Stor 2.1 Image Librarian
PegaREACH Real.0 Desktop Graphical Interface
2.2 Directly Obtained Third Party Software. The following Third Party,
Software is separately licensed by the Third Party Vendor directly to the Fund
subject to the respective terms and conditions of any "shrink-wrapped" or
<PAGE> 47
other agreements between the Third Party Vendor and the Fund. The Third Party
Software in the Required Column must be obtained by the Fund. The Third Party
Software in the Optional column is helpful but not required unless the
indicated features are being used. The Fund accepts the provisions of such
agreements, including the warranty provisions, if any, and agrees to comply
with the terms set forth in such agreements:
<TABLE>
<CAPTION>
Required: Optional:
<S> <C>
- - Microsoft DOS 6.2 or higher - ALCOM LanFax Redirector V2.15gl or greater
- - Microsoft Windows 95 or NT 4.0 (required if using fax)
- - Microsoft Office 95 or better - HiJaak PRO 2.0 or greater for Windows
- - Microsoft NT Server 3.5 (required if using fax)
- - Microsoft NTSQL Database 4.x and client - Word for Windows 6.Oc or greater (required if
Licenses using fax)
- - Microsoft TCP/IP Stack - Quarterdeck QEMM 7.X or greater (required if
- - Novell NetWare 3.11 or greater using fax)
- - SNA Server 3.0 or higher - CGS Computer Associates, Inc. Scanlib software
- - UNIX for selected Image Server platform (required for Ricoh scanners)
- - UNIX ESQL/C Compiler for selected - Powersoft PowerViewer (required for adhoc
UNIX platform reports)
- - MDI Gateway for DB2 by - 3270 Windows emulation package
MicroDecisionware Inc., A Sybase client (usually Rumba for Windows by WaUData)
- - Sybase Open Client NetLibrary for the
selected TCP/IP stack
</TABLE>
<PAGE> 48
ATTACHMENT 1 OF EXHIBIT 1 OF SCHEDULE G
TERMS AND CONDITIONS
BANCTEC
1. Each BancTec Software Package listed in Exhibit 1 of Schedule G
("Program") which is identified as "Multi-User Program" is licensed for
installation on a single network server computer which is supplied by BancTec,
FDISG, or a third party, and which is electronically linked with one or more
workstations having access to the Program. If Section 2.1.1 of Exhibit 1 of
Schedule G ("Exhibit 1") designates a maximum number of users authorized to
simultaneously access the Multi-User Program, no access will be permitted in
excess of such maximum number. In all other cases, Multi-User Program is
authorized to be accessed by all workstations which are configured to
communicate with that network server computer.
2. Each Program listed in Exhibit 1 identified as "Single-User Software"
is licensed for installation and use on a single computer.
3. Each Program listed in Exhibit 1 identified as an "Unlimited User
Program" is licensed for use by Client after ordering a copy of the Program.
Once ordered, the Fund may make unlimited copies of such Programs at no
additional charge.
4. Each Program listed in Exhibit 1 identified as a "Device Program" is
licensed for use solely to facilitate the operation of the corresponding
equipment device. If a Device Program is used for more than one device, the
license must be upgraded in accordance with Exhibit 1.
5. Each Program listed in Exhibit 1 identified as a "Development-User
Program" is licensed for installation and use on a single computer for
development and testing purposes. The license for Development-User Programs
also includes a license for production use on a single computer.
6. Each Program listed in Exhibit 1 identified as a "Production-User
Program" consists of necessary runtime modules and associated link libraries
for inclusion with custom software applications. Production-User Programs are
not licensed for use in the development of custom software applications and may
be either Multi-User or Single-User Programs.
7. Only a nontransferable, nonexclusive, perpetual license to use the
Programs and related BancTec documentation for its own internal use (including,
without limitation, providing processing services to third parties in a service
bureau or facilities management environment) is granted to the Fund.
8. BancTec or its vendors retain all title to the Programs, and all
copies thereof, and no title to the Programs, or any intellectual property in
the Programs, is being transferred; provided, however, nothing contained herein
shall give BancTec or its vendors any right, title or interest in the Software.
9. The Programs shall not be copied, except as specifically authorized
under an Exhibit to this Agreement and except for backup or archival purposes.
All such copies shall contain all copyright and other proprietary notices or
legends of BancTec or its vendors contained in the Programs delivered under
this Agreement.
10. The Programs shall not be modified, reverse assembled or decompiled by
the Fund. No attempt shall be made by the Fund to derive source code from the
Programs.
11. The Programs will not be shipped or used by FDISG or the Fund to
Africa or the Middle East. All applicable export and re-export restrictions and
regulations of the U.S. Department of Commerce or other U.S. agency or
<PAGE> 49
authority shall be complied with. The Programs shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
12. Each Program is copyrighted and contains proprietary and confidential
trade secret information of BancTec and its vendors. Each sublicensee of the
Programs shall protect the confidentiality of the Programs with at least the
same standard of care used to protect the Fund's own similar confidential
information.
13. BancTec and its vendors are each a direct and intended beneficiary of
the sublicenses granted for the Programs and may enforce such sublicenses
directly against sublicenses of the Programs.
14. Neither BancTec nor its vendors shall be liable to the Fund for any
general, special, direct, indirect, consequential, incidental, or other damages
arising out of the sublicense of the Programs.
15. The license granted to the Fund of the Programs may be terminated,
either immediately or after a notice period not exceeding thirty (30) days,
upon violation by the Fund of any of the terms or conditions of the Agreement,
including but not limited to Attachment 1.
16. Upon termination of the license grant to the Fund to use the Program
or the Agreement, the Fund shall return all copies of the Programs to FDISG.
<PAGE> 50
ATTACHMENT 2 OF EXHIBIT 1 OF SCHEDULE G
PEGASYSTEMS TERMS AND CONDITIONS
In addition to the terms of the Agreement, the following terms shall apply with
respect to the Pegasystems Software:
1. The Fund is prohibited from assigning, timesharing, renting, or
hypothecating any of the Pegasystems Software, without prior written approval
of Pegasystems.
2. The Fund is prohibited from passing or transferring any right, title,
or interest to the Pegasystems Software to any third party.
3. The Fund is prohibit from publicizing or disseminating any results of
any benchmark or other testing of the Pegasystems Software.
4. To the fullest extent permitted by applicable law, (i) Pegasystems
shall have no liability to the Fund for damages and claims, whether direct,
indirect, incidental, consequential, or punitive, and all attorneys' fees and
costs, arising from the Fund's use of the Pegasystems Software, and (ii) the
Fund shall have no rights to assert claims for damages against Pegasystems,
including claims against Pegasystems as a third party beneficiary of this
agreement.
5. Pegasystems, Inc. is a third party beneficiary of this agreement to
the extent permitted by applicable law.
<PAGE> 51
IMPRESSive Technology, IMPRESSive Results
EXHIBIT 1.1 OF SCHEDULE G
SPECIFICATIONS
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
I. PRODUCT OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . Page 1
II. PRODUCT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . Page 3
III. TECHNICAL OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . Page 5
IV. HIGH LEVEL OVERVIEW OF IMPRESS Plus FUNCTIONALITY . . . . . . . Page 6
A. Workflow Management
B. Image Processing
C. Intelligent Workstation Processing
D. Customer Service System
</TABLE>
This item is the property of First Data Investor Services Group (First Data) of
Boston, Massachusetts, and contains confidential and trade secret information.
This item may not be transferred from the custody or control of First Data
except as authorized by, and then only by way of loan for limited purposes. It
must be returned to First Data upon request and, in all events, upon completion
of the purpose of the loan. Neither this item nor the information it contains
may be used or disclosed to persons not having a need for such use or
disclosure consistent with the purpose of the loan, without the prior written
consent of First Data.
Copyright First Data Investor Services Group
1994, 1995, 1996
ALL RIGHTS RESERVED
This media contains unpublished, confidential, and proprietary information of
First Data Investor Services Group. No disclosure or use of any portion of
these materials may be made without the express written consent of First Data
Investor Services Group.
<PAGE> 52
IMPRESSive Technology, IMPRESSive Results
I. PRODUCT OVERVIEW
IMPRESS Plus is First Data's workstation product. Designed to be a
cost-effective customer service and workflow management solution, it
takes an integrated approach to transfer agent service and processing
applications. IMPRESS Plus uses an open, three-tiered, client/server
architecture that provides both the flexibility and scalability to
address client's customization and growth needs.
IMPRESS Plus's valuable benefits include:
o Extensive management tools and employee empowerment via
intelligent workstation technologies.
o A lower cost of processing delivery through workflow routing
and document imaging.
o Efficient customer service through reduced research time,
automated inquiry tracking and correspondence tracking.
o State-of-the-art three-tiered client/server architecture
backed by relational databases and open systems.
o Client configurable screens, dialogue scripts, and workflow
rules for those components which use the Pegaysystems
technology.
o Automated correspondence generation.
IMPRESS Plus consists of these major components:
1.) A SOPHISTICATED MANAGEMENT WORKFLOW TOOL that contributes to
streamlining the flow of information on an enterprise-wide
basis. Automated workflow processes are systematically created
and the user's process is automatically documented at the same
time. Product users can continuously examine and redesign
their current processes, managing them interactively, focusing
on improving organizational productivity and quality.
2.) AN IMAGE PROCESSING SYSTEM that has the ability to scan
incoming documents, store them digitally and automatically
route them to the appropriate processing department thereby
eliminating paper from the workflow. This system also allows
for long term storage of documents and document retrieval.
Users can modify workflow and business rules on site.
3.) AN INTELLIGENT WORKSTATION APPLICATION (IWT) that improves
data entry speed and service quality by using graphical user
interface tools that seamlessly connect the user's desktop to
First Data's transfer agent processing systems, office
automation tools, correspondence/service tracking and
policy/procedure access systems.
4.) A CUSTOMER SERVICE SYSTEM that automates and enhances the
correspondence and customer servicing areas in mutual fund
operations. Customer Service staff can log all activity, such
as phone calls, letters, transactions, etc., while interacting
with customers. The system enables the service representative
to perform transactions over the phone, create "electronic
forms" consisting of instructions for other processors, and
dynamically sends work items to other staff electronically.
The Customer Service System is designed to enhance the quality
and efficiency of the service provided to customers through
the use of state-of-the-art client/server technology.
<PAGE> 53
IMPRESSive Technology, IMPRESSive Results
II. PRODUCT BENEFITS
o Allows clients to process transactiona and customer
correspondence quickly and efficiently.
o Allows clients to be at the leading edge of technology to
maintain competitiveness and to effectively deliver quality
service.
o IMPRESS Plus enables the organization to:
- enhance service responsiveness and quality
- streamline workflow and improve document control by
eliminating paper
- increase employee productivity and participation
- have access to real-time production statistics
- enhance organization cohesion and effectiveness
- reduce manual tasks
- increase accuracy by using intelligent rules-based
applications
- reduce processing costs
- Tie Customer Service Reps to sales
o The IMPRESS Plus workflow tools allow business/operational
workflows to be set up. Automated workflow processes are
created and the user's process is automatically documented at
the same time. Product users can continuously examine and
redesign their business processes and manage them
interactively, focusing on improving organizational
productivity and quality.
o IMPRESS Plus is a scaleable and flexible solution that allows
the user to choose an enterprise-wide or a departmental
solution. It allows the client to determine an implementation
strategy that meets their strategic plans and goals.
o The IMPRESS Plus product platform allows the user to build
upon and utilize future First Data services such as
information delivery of shareholder/investor data, sales and
marketing data and customer service processing.
o IMPRESS Plus is modular to support increasing volumes,
increasing numbers of users and future advances in component
technologies. This allows for functional as well as
enterprise-wide solution.
o The IMPRESS Plus product's UNIX and NT-based platform allows
for the flexibility and growth needed to market position and
grow in the '90s to meet the demands of the mutual fund
industry.
o IMPRESS Plus is developed to run in an open systems
environment, so that the application has the ability to
incorporate diverse hardware choices, such as servers,
scanners and printers.
Additional benefits that can be provided through customization of
certain products include:
o Ability for AIM Funds operations associates to customize
interfaces, rules, scripts, etc. based on predefined "levels"
of operators. Levels may range from entire organization right
down to the individual CSR.
o Creation of an Integrated Service Backbone within the AIM
organization designed to allow consistent processing of
service items, documents, correspondence, etc. regardless of
where they originated. (Internet, scan mail, fax, phone,
etc.)
o Optional ability to link VRU to the desktop via CTI and
related technologies for more efficiency and quality in
servicing.
<PAGE> 54
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
o Ability for AIM Funds operations associates to change workflow rules,
scripts, menus, screens, etc. associated with the front end servicing
applications as they see fit to effectively run their business efficiently
and with highest regard to quality.
o Ability for AIM Funds to introduce intelligent, 'point of contact'
scripting for service associates in the front end selling process.
Through the customized rules capability, AIM Funds can set up random
sales, campaigns, or promotions. In addition, IMPRESS Plus can be told
when to prompt CSR's that selected promotions apply to the customer at
hand based on data points in the customer's profile, recent activity, or
the like.
<PAGE> 55
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
III. TECHNICAL OVERVIEW
First Data's combined Customer Service, Workflow, Image and
Intelligent Workstation (IWT) technologies enable users to display the
digitized image of a shareholder form on the workstation along with
other service, data entry and office automation applications. This
allows a user to enter information directly from the image without
having to look away from the screen or handle paper. IMPRESS Plus
will have access to First Data's transfer agent processing system,
office automation tools, and correspondence tracking and
policy/procedure access systems. First Data has developed the
workflow and image capabilities of the system to meet the needs of the
financial industry.
The Customer Service and Intelligent Workstation applications improve
data entry speed and quality by using graphical user interface tools
and LAN/WAN topologies to seamlessly connect the users desktop to the
mainframe servers. These tools and technologies will significantly
off-load transactions and query processing from the mainframe by
putting these capabilities on the desktops and empowering the
end-user.
IMPRESS Plus is designed to run in an open systems environment. It has
the ability to incorporate various workstation platforms due to a
common set of access routines and open communication architecture.
IMPRESS Plus supports high-performance networking architectures
including Novell's SPX/IPX as well as the UNIX TCP/IP standard. SNA
connectivity is supported for LU6.2, 3270, and 5250 communications.
The application supports Microsoft Windows 3.11, Windows 95, and NT
client workstations, multiple UNIX server back-end platforms, and the
latest client/server database technologies offered by the INFORMIX and
Microsoft database systems.
IMPRESS Plus contains a state-of-the-art integration API (application
programming interface) that allows other applications, including
customer-specific applications, to be seamlessly integrated into
IMPRESS Plus.
The Customer Service and IWT applications have been designed with an
object-based architecture that allows one common application to
support First Data's multiple back-end transfer agent systems. They
are designed around First Data's newly defined and implemented
corporate data model. This model represents the future data source
for First Data's common transfer agent application. This object-based
architecture allows for a high level of client customization and
integration.
<PAGE> 56
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
IV. HIGH LEVEL OVERVIEW OF IMPRESS PLUS FUNCTIONALITY
WORKFLOW MANAGEMENT FUNCTIONALITY OVERVIEW
WORKFLOW DYNAMIC WORKFLOW DESIGN AND MONITORING
MANAGEMENT
IMPRESS Plus provides a set of client/server based tools that
allow designers and authorized system users to build workflow
rules to be implemented on the work floor. These rules can be
built and implemented, then changed as required by trained
administrators.
GENERIC WORKFLOW AVAILABLE FOR ALL TRANSACTIONS
IMPRESS Plus offers a generic wordflow that can be used for
any transaction type that is designated in an operation.
Liquidations, correspondence, new accounts, etc. are just some
examples of transactions that can be processed through this
generic workflow. Should the workflow need to be customized or
altered, it can be.
WORK FLOW MONITORING
IMPRESS Plus provides the following work flow monitoring
activities in a real time mode:
o Allow users with the proper security access to
monitor the status of workflow activities or entire
work flow maps
o Monitor work-in-process items via a graphical display
which produces bar graphs in a variety of
presentation formats
o Monitor multiple statistics simultaneously on a
graphical display.
PRIORITIZATION OF WORK
IMPRESS Plus allows the setting of a default priority of items
during workflow design, and, in addition, dynamically during
work in process. During work in process, an item's priority
is based on its transaction type, its default or subsequently
manually altered priority setting, as well as its age in the
activity queue.
<PAGE> 57
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
WORKFLOW MANUAL ROUTING OF ITEMS
MANAGEMENT
(CONTINUED) IMPRESS Plus allows items to be manually routed to
workflow map destinations, or, in some cases, to
specific end users by those users with authorization
to do so.
AUTOMATIC ROUTING OF WORK
IMPRESS Plus routes work items to the next
destination on a pre-defined set of workflow rules.
These rules can be overridden by the user when
necessary.
ITEM COPY ROUTING
IMPRESS Plus allows users to make "copies" of items
within the workflow and route them to other workflow
activities. This is commonly used when an individual
processing the work determines that an item must be
forwarded to another processing department or review
the steps because it is actually two or more
transactions.
ENHANCED QUALITY CONTROL
IMPRESS Plus allows for random or pre-determined QC,
statistical QC, or other more intelligent or
selective QC means.
ENHANCED QUALITY ASSURANCE
IMPRESS Plus allows for random or pre-determined QA,
statistical QA, or other more intelligent or
selective QA means.
<PAGE> 58
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
IMAGE FUNCTIONALITY OVERVIEW
IMAGE DOCUMENT SCAN, STORE, ROUTE, AND RETRIEVE
PROCESSING
IMPRESS Plus captures, through scanning, electronic
images OF documents, stores these electronic images
on magnetic disk, and subsequently allows for
retrieval of the electronic images. IMPRESS Plus
allows images to be accessed for image quality review
and provides for the rescanning of images determined
to be of unacceptable quality. Following the
completion of scanning and any image quality review,
items are automatically routed to subsequent
activities, based on a predefined set of workflow
rules.
ELECTRONIC DOCUMENT IMAGE PRESENTATION AND
MANIPULATION
IMPRESS Plus allows images to be viewed on image-
enabled workstations. Multi-page documents can be
scrolled through, and selected portions of an image
can be magnified.
IMAGE CROSS-REFERENCE TO PHYSICAL DOCUMENT LOCATION
TRACKING
AND RETRIEVAL IMPRESS Plus is designed so that the image database
stores the location of the physical document for each
document image. This location - known as a storage
box - is entered into the system while scanning
documents.
INDEXING OF IMAGES
IMPRESS Plus automatically assigns a unique indexing
number to each document that is created through
scanning. The unique indexing number consists of a
system-generated number that can subsequently be used
to cross-reference an item to a mainframe transfer
agent system. In addition, IMPRESS Plus allows for
the alternate indexing of documents by other user-
entered fields such as fund/account.
SOURCE KEY GENERATION AND DISPLAY
Each transaction type processed within IMPRESS Plus
receives a unique identifier that can be used to link
an item to the First Data transfer agent system.
This key may also be used for document retrieval.
IMAGE SCANNING, INDEXING, AND STORAGE OF DOCUMENTS
TRACKING PROCESSED PRIOR TO IMAGE WORKFLOW
AND RETRIEVAL
(CONTINUED) Through the IMPRESS Plus merge facility, users can
scan documents processed prior to the installation of
IMPRESS Plus. The merge facility allows you to
associate documents with existing, already scanned
and indexed documents, making them available for
future inquiry using IMPRESS Plus.
IMAGE ARCHIVAL AND SUBSEQUENT RETRIEVAL FROM OPTICAL
STORAGE
IMPRESS Plus provides storage and backup functions
for data objects, is designed to handle media
management, and communicates with the database
management system. IMPRESS Plus supports archival of
items to magnetic or selected WORM (Write Once
<PAGE> 59
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
Read Many) optical media. Archival from magnetic to
optical media criteria are set during installation
time.
PRINTING OF IMAGES
IMPRESS Plus allows you to print copies of document
images at LAN-based printers equipped with the
appropriate print server components.
REAL-TIME ADMINISTRATION TOOLS
IMPRESS Plus offers an administration function that
allows authorized users to add and maintain user
profiles, funds, transaction types, locations, and
other client site-specific data. This tool also
allows authorized users to change courier status,
determine the status of work that may have been
affected by an environmental mishap, and perform
other administrative tasks.
DOCUMENT/ACTIVITY HISTORY AND AUTOMATIC UPDATE
IMPRESS Plus automatically records and stores
document/activity history statistics on audit trail
logs during workflow activities, and produces
standard reports for such items as:
o Workflow activity type
o Date/time/user of each activity
o Beginning/ending date/time of each activity
o Last update user/date/time
ADMINISTRATIVE IMPRESS Plus allows much of this activity history to
FUNCTIONS be viewed on-line in various portions of the
(CONTINUED) application.
PRODUCTIVITY REPORTING AND QUALITY/TIMELINESS
REPORTING
IMPRESS Plus logs document/activity history
statistics to produce standard productivity reports
that can be run at the client's request.
ADHOC REPORTING
IMPRESS Plus provides a suite of standard reports
that can be customized. A client can also create
their own additional reports.
QUALITY CONTROL PROCESSING
IMPRESS Plus currently allows for processing
activities to be reviewed for quality by routing them
to a Quality Control queue. Authorized users can
then QC work items. Future IMPRESS Plus releases
will include various rule-based options for selective
quality control. IMPRESS Plus prevents users from
quality control checking their own work.
ACCESS SECURITY
IMPRESS Plus image processing provides security
access in the form of user logons and user profiles.
Users must have a user ID to access the system and
are further constrained by their user profile. The
client assigns user IDs for staff to access the
system and specifies the parameters of each user
profile. These profiles limit users to performing
<PAGE> 60
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
only those specific activities for which they have
been given permission (e.g. processing, scan, etc.).
It is recommended that the logon IDs match the user's
logon ID from the First Data transfer agent system.
VALUE-ADDED SHAREHOLDER ACCOUNTING SYSTEM ACCESS
FUNCTIONALITY
IMPRESS Plus allows workstation access to First
Data's transfer agent recordkeeping system. 3270
terminal emulation is accomplished through a
Windows-based software application. Keyboard mapping
is limited to the technical capabilities of the
emulation software and/or hardware.
DYNAMIC DATA EXCHANGE (DDE) FUNCTIONALITY
IMPRESS Plus will allow for Dynamic Data Exchange at
selected points in application modules when necessary
to transfer data between processes. An example would
be the passing of a source key stored on a transfer
agent system history line to the imaging inquiry
screen for a customer service operator.
ON-LINE HELP FOR USERS
IMPRESS Plus offers a comprehensive on-line help
system that follows Microsoft Windows help system
conventions. It is designed to serve both new users
learning how to use the system and more experienced
users who may occasionally need assistance or
additional information.
SYSTEM ADMINISTRATION PROCEDURES
IMPRESS Plus System Administration is made easier for
designated IMPRESS Plus technical support staff due
to the IMPRESS Plus Systems Administration and
Procedures manual and related documentation.
<PAGE> 61
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
INTELLIGENT WORKSTATION PROCESSING
(IWT) FUNCTIONALITY OVERVIEW
INTELLIGENT IWT is designed with a graphic interface ("GUI")
WORKSTATION which will provide an intelligent real-time interface
PROCESSING to the First Data transfer agent system for the
(IWT) following transaction activity:
NEW ACCOUNT SETUP
The IWT new account setup application is designed to
provide a MS/Windows graphic interface ("GUI") to
allow an intelligent real-time interface to the First
Data transfer agent system. New account setup
functionality includes:
o new account setup entry
o dealer/rep list
o TIN list for shareholder list
o systematic city and state population based on
entry of a 5 digit zip code
o dividend/cap gain addresses
o beneficiary addresses
o statement addresses
o ABA lookup and validation
o fund list
o wire and ACH bank addresses
Financial Transactions
The IWT financial transaction entry application is
designed to provide a MS/Windows graphic interface
("GUI") to allow an intelligent real-time interface
to the First Data transfer agent system. Financial
transaction entry functionality includes:
o telephone redemptions
o telephone exchange
o exchange processing
o transfer processing
o redemption processing
o subscription processing
Group
o linking and linking of accts by ROA, confirm,
L01, plan
<PAGE> 62
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
CUSTOMER SERVICE & ENHANCED INQUIRY SYSTEMS
FUNCTIONALITY OVERVIEW
CUSTOMER The Customer Service System is a client/server based,
SERVICE graphical user interface (GUI) system designed to
SYSTEM provide an intelligent real-time application to
enable clients to improve the quality of the service
provided to both shareholders and broker dealers.
This system provides functionality in the following
areas:
CONTACT TRACKING AND MANAGEMENT
A key feature of the Customer Service System will be
the ability to track and report on all interaction
with an end customer, be it a shareholder or
broker/dealer. Designed for ease of use by a
customer service representative, this system will
allow for the logging of telephone calls and
correspondence, the creation and updating of service
items, the processing and resolution of customer
issues to insure customer satisfaction at the end of
any contact. In addition, via reason codes and aging
information, management is empowered with the use of
statistical and trending reports regarding contact
made with their customer base .
CORRESPONDENCE GENERATION AND TRACKING
The Customer Service System is closely integrated to
word processing to allow for the automatic generation
of outgoing correspondence related to service items.
A service representative can choose from customized
pre-defined letters to generate high quality customer
correspondence.
TELEPHONE TRADING
Authorized customer service system users will be able
to perform transactions while on the telephone with
customers by invoking simplified graphical data entry
screens. In addition, customer service
representatives can create electronic forms
consisting of processing instructions for other
departments and dynamically send route these work
items via the workflow manager.
CUSTOMER ENHANCED INQUIRY
SERVICE
SYSTEM The Enhanced Inquiry windows provide enriched and
(Continued) user-friendly replacements for legacy transfer agent
inquiry screens. Examples of the inquiry functions
are search for customer information by name, account
number and social security number, account
information, financial transaction history, service
history, and correspondence history.
<PAGE> 63
EXHIBIT 2.1 OF SCHEDULE G
EQUIPMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
IMPRESS IMAGE PRODUCTION HARDWARE AND SYSTEMS SOFTWARE
- ---------------------------------------------------------------------------------------------------------
PRODUCT Description QTY
<S> <C> <C> <C> <C>
486/66 DX, 200 MB HG, 16 MB RAM, Network Intface
Card, VGA Monitor, Windows 3.1, Novell LWP 5.0,
Print Servers Parallel Cable for printer 10
- ---------------------------------------------------------------------------------------------------------
HP IV+ / 5 Laser Printer with 6 MB Ram, Jet Direct for
Printers other printing can be installed 10
- ---------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 16 MB RAM, Network
Interface Card, Cornerstone DP120 Mono, Image
Accel2 PCI, Adaptec 1542cp SCSI Card, SCSI Cable,
Scan Server Terminator. 5
- ---------------------------------------------------------------------------------------------------------
Ricoh IS-520 SCSI with Ink Jet Endorser. SCSI
Mid Speed Scanner Version 5
- ---------------------------------------------------------------------------------------------------------
Sun SPARCstation 5 Model 170, 17" Color Display,
48MB RAM, 2X2.1 GB Int disks, 4mm Tape, 3.5"
Floppy Drive, CD-ROM, Solaris 2.5.1, Solarais
Answerbooks, 1 @ X1053A, Solaris 2.5.1 SDK Kit,
Kodak Scan Server Solaris 2.5.1 Motif ToolKit, SUN Professional C 4.0 3
- ---------------------------------------------------------------------------------------------------------
High Speed Scanner Kodak 923D Scanners 3
- ---------------------------------------------------------------------------------------------------------
Sun ULTRAserver 6000, 12 250MHZ CPU's, 17" Color
Display, 1.2GB RAM, 2x9 GB Int disks, DG Clariion 42
Gb Raid 5 disk array, 4mm Tape, CD-ROM, Solaris
2.5.1. Answerbooks, 35/7OGb DLT Tape Changer, 1 @
1053A, 1 @ X1052A, 2 @ X1062, Fast
Image Server Ethernet/FDDI/ATM 1
- ---------------------------------------------------------------------------------------------------------
CYGNET 1802 with (3) Philips LD6100 Optical Drives,
Jukebox Optical SCSI Cable, RS-232 Null Modem Cable 1
- ---------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 32 MB RAM, Network
Interface Adapter, 15" SVGA Monitor, Resolution of at
least 1024 x 768, Windows 3.1, Hiijack Pro for
Fax Controller PC Windows, Microsoft Word 6.X 1
- ---------------------------------------------------------------------------------------------------------
Tower Style P90 or greater, 2 GB HG, 32 MB RAM,
Network interface adapter, 14" VGA Monitor, (4)
Gamalink CP4/LSI Fax Cards (4) Lines per card,
FAX Server** QEMM 8.X, Allcom LANFAX 2.15gl/2.2gl 1
- ---------------------------------------------------------------------------------------------------------
Existing File Server with at least 500 MB of disk space
Novell File Servers available 2 or 3
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
**The fax server will require analog modem lines a max of 16 lines would
- ---------------------------------------------------------------------------------------------------------
be required for the hardware listed above.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN, Optical) (10 KVA) 1
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN) (1.4 KVA) 3
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (FAX HW) (1 KVA) 2
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 64
EXHIBIT 2.1 OF SCHEDULE G
EQUIPMENT
<TABLE>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28.8 K Modem, lines, and cables (SUN for remote
Remote Link suppor) 1
- ---------------------------------------------------------------------------------------------------------
Equipment to maintain a routed or switched network
environment with no more that 25-30 clients per
Network Hardware network segment.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Pentium 90 or greater with 24-32MB ram. Display
should optimally support Image resolutions of
1600X1280 but other resolutions can be supported for
Workstations casual use. (1280X1024) 400
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Software required on all workstations
- ---------------------------------------------------------------------------------------------------------
Windows 95, Windows NT
- ---------------------------------------------------------------------------------------------------------
Microsoft Word 6.X or Greater
- ---------------------------------------------------------------------------------------------------------
Microsoft TCP/IP Stack
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 65
EXHIBIT 2.2 OF SCHEDULE G
EQUIPMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
IMPRESS Test/Training Hardware and Systems Software
- -------------------------------------------------------------------------------------------------------
PRODUCT DESCRIPTION QTY
<S> <C> <C> <C> <C>
486/66 DX, 200 MB HG, 16 MB RAM, Network Intface
Card, VGA Monitor, Windows 3.1, Novell LWP 5.0,
Print Server Parallel Cable for printer 1
- -------------------------------------------------------------------------------------------------------
HP IV+/5 Laser Printer with 6 MB Ram, Jet Direct for
Printer other printing can be installed 1
- -------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 16 MB RAM, Network
Interface Card, Cornerstone DP 120 Mono, Image
Accel2 PCI, Adaptec 1542cp SCSI Card, SCSI Cable
Scan Server Terminator 1
- -------------------------------------------------------------------------------------------------------
Ricoh IS-420 SCSI with Ink Jet Endorser, SCSI
Low Speed Scanner Version 1
- -------------------------------------------------------------------------------------------------------
Sun ULTRAserver 1, 250MHZ CPU, 17" Color Display,
128MB RAM, 2X2.1 GB Int disks, SUN 4GB External
Disk Pack, (2) 4mm Tape Drives, CD-ROM, Solaris
Image Server 2.5.1, Answerbooks, 1 @ 1053A, 1 @ X1052A. 1
- -------------------------------------------------------------------------------------------------------
Phillips LD6100 Optical Drive Differential, SCSI Cable
Standalone Optical SCSI Differential Terminator. 1
- -------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 32 MB RAM, Network
Interface Adapter, 15" SVGA Monitor, Resolution of at
least 1024 X 768, Windows 3.1, Hijack Pro for
Fax Controller PC Windows, Microsoft Word 6.X 1
- -------------------------------------------------------------------------------------------------------
Tower Style P90 or greater, 1 GB HG, 32 MB RAM,
Network interface adapter, 14" VGA Monitor, (1)
Gamalink CP4/LSI Fax Cards (4) Lines per card,
FAX Server** QEMM 8.X, Allcom LANFAX 2.15gl/2.2gl 1
- -------------------------------------------------------------------------------------------------------
Existing File Server with at least 500 MB of disk space
Novell File Servers available 1
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
** THE FAX SERVER WILL REQUIRE ANALOG MODEM LINES A MAX OF 4 LINES WOULD BE
REQUIRED FOR THE HARDWARE LISTED ABOVE.
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (FAX) (1 KVA) 1
- -------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN, Optical) (3 KVA) 1
- -------------------------------------------------------------------------------------------------------
28.8 K Modem, lines, and cables (SUN for remote
Remote Link suppor) 1
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Pentium 90 or greater with 24-32 MBram. Display
should optimally support image resolutions of
1600X1280 but other resolutions can be supported for
Workstations casual use. (128X1024) 10
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Software required on all workstations
- -------------------------------------------------------------------------------------------------------
Windows 95, Windows NT
- -------------------------------------------------------------------------------------------------------
Microsoft Word 6.X or Greater
- -------------------------------------------------------------------------------------------------------
Microsoft TCP/IP Stack
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 66
EXHIBIT 3 OF SCHEDULE G
MAINTENANCE AND SUPPORT TERMS
These terms are based on an IMPRESS User network environment of up to 512 Users
and the associated server(s), as described in Exhibits 1 and 2 of this Schedule
G.
1. Software Support.FDISG shall provide the following Software support
services ("Software Support"):
1.1. FDISG shall provide the Fund with full System Administration Guide(s)
for FDISG Software.
1.2. FDISG will have a Response Center (help desk) to provide 24 hours a
day, 7 days a week to designated client contacts.
1.3. FDISG shall use reasonable efforts to resolve all Software failures
through; (a) remote support to the Fund's information systems staff ("Fund's
Staff"); (b) coordination of Third Party Vendor support (on-site or remotely);
(c) coordination of other subcontractors' actions; or (d) direct on-site
support by FDISG personnel.
1.4. FDISG shall investigate errors in the Software reported by the Fund
which prevent substantial compliance with the then current Documentation and to
initiate the corrective action, if any, which FDISG considers reasonable and
appropriate, including but not limited to temporary fixes, patches and
corrective releases to FDISG's clients generally. Notwithstanding the
foregoing, if reported errors result from or arise out of. (i) malfunctions of
equipment other than the Equipment, (ii) improper Fund operator procedure or
misuse of the system by the Fund, (iii) modifications or changes made to the
system without FDISG's prior written approval, (iv) causes beyond the
reasonable control of either party, or (v) user developed features such as
those users may develop with form generators, ad hoc report writers and user
customized screens, then FDISG shall have no responsibility for investigating
the error or making the correction, except as the parties may otherwise agree
to in writing. The Fund shall pay FDISG's then current time and materials
charges plus reasonable travel and out-of-pocket expenses incurred in
investigating and attempting to correct any such errors.
1.5. FDISG shall from time to time provide bug fixes, error corrections,
maintenance, minor enhancements, upgrades and updates to the Software which are
generally made available by FDISG to its similar customers as part of Software
Support ("Updates"). The cost of the Updates is included in the fees and other
charges identified in Schedule C of the Agreement, if the updates are supplied
to the Fund using FDISG's standard update facility. FDISG installation
assistance for the new Updates may be required and, is billable to the Fund as
an Additional Service. During the term of the Agreement, FDISG will use
reasonable efforts to provide the Fund with not less than thirty (30) days
prior written notice of FDISG's intent issue a new update of Software. The
Fund shall implement an Update within ninety (90) days of receipt. Any support
by FDISG of any prior release of the Software after such ninety (90) day period
shall be at FDISG's sole discretion and as an Additional Service.
1.6. Software Support, the License, and the Software shall not include any
modification to the Software which contains any substantial added functionality
(including any significant new interface features), as determined solely by
FDISG or any new architecture or any significant modification of the Software
which contains any substantial added or different functionality, whether or not
such new functionality is coupled with any change in software architecture or
hardware platform ("New Products"). New Products shall be provided and
licensed to the Fund as an Additional Service.
1.7. FDISG may decline to support the Software if (i) the Software or
Equipment was added to or changed without FDISG's prior approval; (ii) the Fund
does not perform the Software Support; or (iii) FDISG determines that such
support would adversely affect the Scope of Work.
1.8 Software Support for the FDISG Software shall conform to the standards
set forth in Section I of Schedule F.
2. The Fund's Maintenance and Support Responsibilities. The Fund's facility
will have all of the required security, space, electrical power source,
communications lines, heating, ventilation and cooling, and other physical
<PAGE> 67
requirements reasonably necessary for the installation and proper operation of
the Equipment. The Fund's users will first direct all questions and problem to
the Fund's Staff for proper call tracking and problem resolution. The Fund's
Staff will coordinate all facility issues at the site and will serve as primary
contact for FDISG when planning installs, upgrades and other equipment changes.
The Fund's Staff shall:
2.1. Identify designated client contacts, one for Operations and one
technical systems administrator, to function as single points of contact for
discussion, review and resolution of problems with FDISG.
2.2. Perform initial problem determination and symptom documentation.
2.3. Be responsible for all system hardware and network hardware components
and shrink-wrap software from a maintenance, support and problem resolution
standpoint.
2.4. Provide (a) data back-up and recovery, (b) preventive maintenance,
and (c) perform server administration tasks as described in the Systems
Administration Guide(s) and Third Party Software documentation.
2.5. Maintain all network and trouble-log documentation required by FDISG
or by third-party vendors. FDISG shall be allowed to review such documentation
if necessary to resolve support issues.
2.6. Be available during normal business hours and reachable for support 24
hours a day, 7 days a week, as required. The Fund shall maintain the
appropriate staff level to adequately perform the maintenance support functions
specified. This staff should have experience in network administration,
troubleshooting, Microsoft Windows, workstation memory management, and UNIX and
NT systems administration.
2.7. Consult with FDISG before performing any work that may affect the
Software or performance of the System, including installation, upgrading, or
unplanned maintenance affecting Equipment
2.8. The fund is responsible for maintenance and support of customized code
unless contracted with FDISG.
3. Support of Customized Code. (Code changed by Fund or FDISG on a customized
basis)
3.1 Software Revisions. At times, FDISG will provide software updates to
components (third party or FDISG software) to either enhance the product or
address quality deficiencies. FDISG is responsible for notifying the Fund of
these updates, and what changes have been made. The Fund is responsible for
installing the updates and modifying any code which they have customized to
accommodate these enhancements. Assistance can be provided by FDISG at stated
billable rates.
3.2 Support of Modified Code. FDISG will provide application, technical
and workflow support for modified code only on a time and materials basis.
FDISG may request the replacement of the modified code with the original code
in order to assist in the determination of the problem source.
3.3 Mainframe Resource Utilization. If customized code requires greater
FDISG mainframe CICS, DASD, or CPU resources than the base FDISG delivered
IMPRESS Plus solution, FDISG reserves the right to charge the Fund for this
usage. If there is concern that excessive resource utilization could impair
the mainframe system, FDISG reserves the right to disallow this modified code
from executing on the mainframe. The Fund is advised to consult with FDISG in
order to determine if planned customization may negatively impact mainframe
resources.
4. Roles and Responsibilities.
4.1 FDISG shall not be responsible for the support of any Directly
Obtained Third Party Software or any other third party products. The Fund is
responsible for network connectivity, Operating Systems, gateways, and other
third party products. FDISG is not responsible for hardware not listed in
Exhibit 2 of Schedule G or software not listed in Sections 1, 2.1.1, or 2.1.2
of Exhibit 1 of Schedule G, unless specifically covered in a separate
agreement.
4.2 Additional support tasks may be provided on a time and material basis.
This may include workflow analysis, customization, network design, third party
product installation and additional training.
<PAGE> 68
SCHEDULE H
ACE + SOFTWARE AND SUPPORT TERMS
ARTICLE 1 - SYSTEM, SUPPORT AND IMPLEMENTATION
1.1 Software and Support. FDISG shall provide or has previously provided
to the Fund and the Fund shall acquire from FDISG the right to use the computer
software programs set forth in Exhibit 1 of this Schedule H (the "SOFTWARE"),
for the fees indicated in Schedule C of Amendment Number 3 to the Agreement.
Software includes related user manuals and reference guides (collectively,
"DOCUMENTATION"). One copy of the Documentation shall be provided to the Fund
at no additional cost. FDISG shall provide only the machine readable object
version of the Software and not source code. Additional terms and conditions
concerning the Software are set forth in Exhibit 1 of Schedule H ("Exhibit 1").
Subject to the terms and conditions set forth in this Schedule H, FDISG grants
to the Fund and the Fund accepts from FDISG the non-exclusive, non-transferable
license to use the Software during the term of the Agreement ("LICENSE"). Some
software components ("THIRD PARTY SOFTWARE") required to be used with the
Software were developed by a third party ("THIRD PARTY VENDOR"). Third Party
Software is licensed to the Fund only pursuant to shrink wrapped or other
agreements between the Third Party Vendor and the Fund directly. Exhibit 1
shall indicate the Third Party Software that the Fund is responsible to obtain
and license. FDISG shall provide the Fund with all error corrections, minor
enhancements and interim upgrades to the Software which are made generally
available to FDISG client's of the Software ("SOFTWARE SUPPORT"), but shall not
provide a License to any substantial added functionality, new interfaces, new
architecture, new platforms or other major software development efforts, as
determined solely by FDISG.
1.2 Ownership. FDISG or its licensor shall retain title to and ownership
of the Software, copies, derivative works, inventions, discoveries, patentable
or copyrightable matter, concepts, expertise, techniques, patents, copyrights,
trade secrets and other related legal rights ("PROPRIETARY INFORMATION").
FDISG reserves all rights in the Proprietary Information not expressly granted
to the Fund in this Schedule H. Upon FDISG's request, the Fund shall inform
FDISG in writing of the quantity and location of any Software.
1.3 Equipment, System Implementation and Access. Fund is responsible for
acquiring, installing and maintaining the data processing and related equipment
("EQUIPMENT") also set forth in Exhibit 1 of Schedule H. Additional terms and
conditions concerning the Equipment are also set forth in Exhibit 1. The
Equipment identified in Exhibit 1 represents the minimum equipment requirements
to run the Software. FDISG disclaims responsibility for the performance of the
Software in the event that the Fund utilizes equipment different than that
which is set forth in Exhibit 1. FDISG and the Fund shall (a) within a
reasonable time after the Effective Date, agree upon the tasks required to
implement the Software, Third Party Software and Equipment ("SYSTEM") and the
party responsible and time frames for each task ("SCOPE OF WORK"); (b) perform
their respective assigned tasks according to the Scope of Work; and (c) if not
the party assigned to a task, cooperate with the responsible party. To the
extent the Scope of Work is incomplete, FDISG shall follow its reasonable and
customary practices. Upon prior notice by FDISG to the Fund, the Fund shall
give reasonable access to the System to FDISG, FDISG's employees, affiliates,
representatives, agents, contractors, licensors and suppliers ("FDISG'S
AGENTS") who are providing services under the Agreement or auditing adherence
to the Agreement.
1.4 Use of Software. Fund may use the Software during the term of this
Agreement only on the Equipment and only to process the Fund's data for
internal business purposes (which shall not, for purposes of this Agreement,
include use by Fund to provide services to its customers on a service bureau
basis) in connection with the Fund's use of the FDISG System and only at the
locations identified in the Agreement. If the Equipment is inoperative due to
malfunction, the license grant shall, upon written notice to FDISG, be
temporarily extended to authorize the Fund to use the Software on any other
equipment approved in writing by FDISG until the Equipment is returned to
operable condition. FDISG, in its reasonable discretion, may suspend any
Software Support while the Software is being used on such other Equipment. No
right is granted for use of the Software by any third party or by the Fund to
process for any third party, or for any other purpose whatsoever, except as
expressly provided in this paragraph..
1.5 Software Installation and Acceptance. FDISG shall advise the Fund
that the Software as listed in Exhibit 1 is installed and functioning on the
Equipment ("Software Installation Date") so that implementation and training
activities can proceed. The Fund shall be deemed to have accepted the Software
thirty (30) days after Software Installation Date or thirty (30) days after the
Fund's first use of Software to process live production data ("SOFTWARE
ACCEPTANCE DATE").
1.6 Copies of Software. The Fund may not copy the software except for
backup and archival purposes only, and the Fund shall include on all copies of
the Software all copyright and other proprietary notices or legends included on
the Software. The provisions of this Paragraph do not apply to Fund data files
in machine-readable form.
<PAGE> 69
1.7 No-Export. The Software shall not be shipped or used by the fund
outside the United States. The Fund shall comply with all applicable export
and re-export restrictions and regulations of the U.S. Department of Commerce
or other U.S. agency or authority. The Software shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
1.8 Termination. Terms and conditions of this Schedule H which require
their performance after the termination of the Agreement, including but not
limited to the License and Software use restrictions, limitations of liability,
indemnification, and confidentiality obligations, shall survive and be
enforceable despite the termination of the Agreement.
ARTICLE 2 - WARRANTIES AND REPRESENTATIONS
2.1 Software. For the term of the Agreement, FDISG warrants ("Performance
Warranty") that the Software shall perform on the Equipment substantially in
accordance with the Documentation, except for Third Party Software as set forth
in Paragraph 2.2 below. The timely correction of errors and deficiencies in
the Software shall be Fund's sole and exclusive remedy for the Performance
Warranty. FDISG warrants ("Rights Warranty") it has the right to license the
Software in accordance with the Agreement. Provided the Fund gives FDISG
timely written notice, reasonable assistance, including assistance from the
Fund's employees, agents, independent contractors and affiliates (collectively,
"Fund's Agents"), and sole authority to defend or settle the action, then FDISG
shall do the following ("Infringement Indemnification"): (a) defend or settle,
at its expense, any action brought against the Fund or the Fund's Agents to the
extent the action is based on a claim that the Software infringes a duly issued
United States' patent or copyright or violates a third party's proprietary
trade secrets or other similar intellectual property rights ("Infringement");
and (b) pay damages and costs finally awarded against the Fund or the Fund's
Agents directly attributable to such claim. FDISG shall have no Infringement
Indemnification obligation if the alleged Infringement is based upon the Fund's
use of the Software with equipment or software not furnished or approved by
FDISG or if such claim arises from FDISG's compliance with the Fund's designs,
or from the Fund's modifications of the Software. The Infringement
Indemnification states FDISG's entire liability for Infringement and shall be
the Fund's sole and exclusive remedy for the Rights Warranty.
2.2 Third Party Warranties. All warranties for the Third Party Software,
if any, are specifically set forth in the Software Exhibits, Exhibit 1 or in
the applicable agreements supplied by the Third Party Vendors. Subject to the
terms of the Exhibit 1 and to the extent permitted by FDISG's suppliers, FDISG
conveys to Fund all Third Party Software warranties made by the Third Party
Vendors.
2.3 Exclusion of Warranties. THE WARRANTIES SET FORTH IN PARAGRAPH 2.1
ABOVE AS TO THE SOFTWARE AND IN PARAGRAPH 2.2 ABOVE AS TO THIRD PARTY SOFTWARE
ARE IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING
OUT OF OR RELATED TO THIS SCHEDULE G. FDISG SPECIFICALLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.
2.4 Fund Responsibility. The System is an information system only,
designed to assist the Fund and the Fund's Agents in performing their
professional activities and is not intended to replace the professional skill
and judgment of the Fund's Agents. Fund shall be solely responsible for: (a)
acts or omissions of the Fund's Agents in entering data into the System,
including its accuracy and adequacy; (b) checking the correctness and accuracy
of the System output and data; and (c) any use of or reliance upon the System
output by the Fund's Agents. Except for the Infringement Indemnification and
as limited by applicable law, the Fund shall indemnify, defend and hold FDISG
and FDISG's Agents harmless from any losses, costs, damages, and liabilities,
including without limitation, reasonable attorneys' fees and court costs,
relating to any claim by any third party arising from or related to the Fund's
and the Fund's Agents' use of the System or System output.
ARTICLE 3 - MISCELLANEOUS
3.1 Confidentiality Obligations. Each party shall keep confidential any
information relating to the other party's business which is clearly designated
or described in writing to be confidential ("Confidential Information"). Each
party shall keep and instruct its employees and agents to keep such information
confidential by using at least the same care and discretion as used with that
party's own confidential information. Information shall not be subject to such
confidentiality obligations if it is: (a) in the public domain, (b) known to a
party, prior to the time of disclosure by the other party, (c) lawfully and
rightfully disclosed to a party by a third party on a non-confidential basis,
(d) developed by a party without reference to Confidential Information or (e)
required to be disclosed by law. If either party, its employees or agents
breaches or threatens to breach the obligations relating to use of the
Confidential
<PAGE> 70
Information, the other party may obtain injunctive relief, in addition to its
other remedies, inadequate monetary damages and irreparable harm being
acknowledged.
3.2 Confidential and Privileged Information. The Proprietary Information,
other FDISG software and related information, and the Agreement are
Confidential Information of FDISG and FDISG's Agents. Absent FDISG's written
permission, Fund shall not duplicate FDISG's Confidential Information. Fund
accepts full responsibility for complying with all laws, rules and regulations
concerning use and disclosure of privileged data regarding any information
placed or stored in the System or output from the System. Fund shall not
modify or reverse engineer the Software without FDISG's prior written consent.
<PAGE> 71
EXHIBIT 1 OF SCHEDULE H
SOFTWARE/HARDWARE
1. FDISG Software.
1.1 FDISG Software includes the following products:
ACE +
2. Third Party Software.
2.1 Directly Obtained Third-Party Software. The following Third Party
Software are separately licensed by the Third Party Vendor directly to the Fund
subject to the respective terms and conditions of "shrink-wrapped" or other
agreements between the Third Party Vendor and the Fund. The Third Party
Software in the Required Column must be obtained by the Fund. The Third Party
Software in the Optional column is helpful but not required unless the
indicated features are being used. The Fund accepts the provisions of such
agreements, including the warranty provisions, if any, and agrees to comply
with the terms set forth in such agreements:
<TABLE>
<CAPTION>
Required Optional
-------- --------
<S> <C>
Windows 3.1 Reachout PC Link (for external FDISG Support of ACE +)
DOS 3.3 or higher
</TABLE>
3. Hardware.
3.1 It is recommended that ACE + run on a PC Network (LAN) to fully use its
database features. The network should have at least 200 Mb of available disk
space. ACE + will also run on an individual local (hard) drive. PC
specifications are:
o 2 or more IBM PC Compatible 486/66 (486/33 minimum) Mhz (or
Pentium) with 16 Mb Ram (8 Mb minimum)
o 500 Mb Local (hard) drives (for backup only)
o External Fax/Modems (9600 baud or greater)(for PC faxing or
Reachout only)
o HP Laserjet 4 w/ Windows Drivers
3.2 PC/Mainframe Connection: ACE + data is based on mainframe ASCII files.
These files must be transmitted from the mainframe to LAN or PC. This can be
accomplished various ways. FDISG uses a mainframe to Gateway and BARR/SNA
transmission.
<PAGE> 72
SCHEDULE I
DISASTER RECOVERY SUMMARY
OVERVIEW
First Data's data center is a free standing building that is self sufficient
with back-up water supply, fuel storage, and diesel generator backup. The
building is protected with 24 hour on site guard protection as well as security
camera coverage throughout the property. Access is by picture ID only and all
doors are protected with card key access. Additionally, all systems are
protected by ACF2 Security. Security is audited on a regular basis.
Additionally, First Data maintains a reliable, tested disaster recovery system.
A tape backup system is set up on a daily rotation schedule with a full backup
of all data. The backup jobs run automatically every night and all tapes are
sent off-site on a daily basis to a physically secured facility. A business
resumption site has been established in our Providence facility. This Hot Site
is fully equipped with equipment, wiring and supplies in the case of a disaster
or business recovery.
A disaster is defined as any unforeseen business interruption or outage that
renders the data center or telecommunications network inoperable or
inaccessible for an undetermined amount of time suspending normal processing.
First Data's Disaster Recovery Plan provides us with the required procedures
and resource references to execute a full recovery of the data center and
associated critical processing.
This Plan addresses:
o Computer and communications equipment
o Programs, data and documentation
o Building and environmental concerns
o Fire detection and building evacuation
o Personnel, and
o Client Liaisons.
Due to contractual requirements, the data center must provide on-line
accessibility and processing availability within 24 hours of a declared
disaster. Total "downtime" is not to exceed 48 hours.
All outages that affect any client are considered priority one and all
available resources will be utilized to resolve outages, failures or slowdowns.
APPROACH
In a disaster situation, numerous issues and tasks must be addressed
immediately. To ensure all get equal attention, "teams" have been developed.
These teams are comprised of experienced First Data personnel responsible to
execute specific assigned functions critical to the overall recovery. Each team
will activate their procedures concurrently to affect a full system recovery at
the hot site. Some of the teams will act as support teams providing
<PAGE> 73
financial, administrative, and logistical coordination. The remaining recovery
teams will address more specific data and telecommunications issues.
o Support Teams
Financial/Administrative Support
Human Resources/Corporate Communications
Applications Team
Client Liaison Team
o Recovery Teams
Management Teams
Systems Software
Data Center Operations
Vendor
Telecommunications Team
Production Control
Facilities/Hardware
Each team will be headed by a team leader and a designated alternate. If, for
any reason, the team leader is unavailable, the alternate will assume
responsibility for the team notification and progress reporting to the team
management.
Dial backup capabilities, diverse routing of communications circuits and
triangulation present the best options for insuring continued system access in
the event of a communications failure. First Data can demonstrate each of these
capabilities at the client's request.
TESTING SUMMARY
First Data/FDT has contracted with Comdisco to provide hotsite disaster
recovery and backup services. First Data's overall goal is to establish network
connectivity for on-line and transmission capability, restore the application
and recover forward to a point in time and then re-process a batch cycle.
Using Comdisco's site at North Bergen, the First Data Technology (FDT)
operating system will be recovered while testing FDISG recoverability for all
network and application platforms.
The recovery will take place remotely with FDT, using the Business Recovery
Facilities (BRF) in Denver, and Westboro staff working out of the new BRF
in Tewksbury, MA. Comdisco will have staff at both BRFs, as well as North
Bergen, to assist whenever needed.
Tests are conducted annually. The test runs for 48 contiguous hours. Multiple
shifts will be required for FDT, FDISG, and Comdisco staff. Specific staff
requirements will be determined as the scope of the test becomes more clearly
defined.
The systems recovery portion of the test will take place at the Comdisco site in
New Jersey utilizing an IBM ES9000 with related peripherals. All the equipment
used in testing is
<PAGE> 74
compatible with the FDT hardware located in Denver. All tape mounts will be
handled by Comdisco staff in New Jersey, and the telecommunications testing
will be staffed by FDT with Comdisco assisting in New Jersey.
FDISG Test Objectives
o Test recoverability from both of Comdisco's new Business Recovery
Facilities
o Test transmission and network connectivity with clients
o Check and verify tape volumes stored offsite
o Benchmark the restore time for all (500) DASD volumes
o Ship all tapes from Denver to New Jersey
o Document (CDRS/FDISG) connectivity procedures
o Recover all applications to previous business cycle
<PAGE> 1
EXHIBIT 9(b)(4)(i)
AMENDMENT NO. 1
TRANSFER AGENCY AND SERVICE AGREEMENT
The Transfer Agency and Service Agreement (the "Agreement"), dated
July 1, 1995, by and between AIM Investment Securities Funds, a Delaware
business trust and A I M Institutional Fund Services, Inc., a Delaware
corporation, is hereby amended as follows (terms used herein but not otherwise
defined herein have the meaning ascribed them in the Agreement):
1) Section 2.01 of the Agreement is hereby deleted in its entirety and
replaced with the following: "For performance by the Transfer Agent pursuant
to this Agreement, the Fund agrees on behalf of each of the Portfolios to pay
the Transfer Agent an annual fee in the amount of .009% of average daily net
assets, payable monthly. Such fee may be changed from time to time subject to
mutual written agreements between the Fund and the Transfer Agent."
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: July 1, 1996
AIM INVESTMENT SECURITIES FUNDS
Attest: /s/ DAVID L. KITE By: /s/ ROBERT H. GRAHAM
------------------------ -----------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
A I M INSTITUTIONAL FUND SERVICES, INC.
Attest: /s/ DAVID L. KITE By: /s/ J. ABBOTT SPRAGUE
------------------------ -----------------------------
Assistant Secretary J. Abbott Sprague
President
(SEAL)
<PAGE> 1
EXHIBIT 9(b)(4)(ii)
AMENDMENT NO. 2
TRANSFER AGENCY AND SERVICE AGREEMENT
The Transfer Agency and Service Agreement (the "Agreement"), dated
July 1, 1995 and as amended on July 1, 1996, by and between AIM Investment
Securities Funds, a Delaware business trust and A I M Institutional Fund
Services, Inc., a Delaware corporation, is hereby amended as follows (terms
used herein but not otherwise defined herein have the meaning ascribed them in
the Agreement):
1) A new Section 2.03 to the Agreement is hereby added in its entirety as
follows: "In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse the Transfer Agent for out-of-pocket expenses or advances
incurred by the Transfer Agent for the reconcilement of demand deposit accounts
on behalf of each of the Portfolios. In addition, any other expenses incurred
by the Transfer Agent at the request or with the consent of the Fund, will be
reimbursed by the Fund on behalf of the applicable Shares."
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: July 1,1997
AIM INVESTMENT SECURITIES FUNDS
Attest: /s/ DAVID L. KITE By: /s/ ROBERT H. GRAHAM
------------------------- ---------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
A I M INSTITUTIONAL FUND SERVICES, INC.
Attest: /s/ OFELIA M. MAYO By: /s/ JOHN CALDWELL
------------------------- ---------------------------
Assistant Secretary John Caldwell
President
(SEAL)
<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 the Class A Shares and Institutional Class, each a class of the AIM
Limited Maturity Treasury Fund, and under the caption "Miscellaneous
Information -- Legal Matters" in the Statement of Additional Information for
the Class A Shares, all of which are included in Post-Effective Amendment No. 8
to the Registration Statement of AIM Investment Securities Funds on Form N-1A
under the Securities Act of 1933 (Reg. No. 33-39519) and Amendment No. 12 under
the Investment Company Act of 1940 (Reg. No. 811-5686).
/s/ Ballard Spahr Andrews & Ingersoll
--------------------------------------
Ballard Spahr Andrews & Ingersoll
Philadelphia, Pennsylvania
November 18, 1997
<PAGE> 1
[LETTERHEAD OF DECHERT PRICE & RHOADS]
EXHIBIT 11(b)
November 18, 1997
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 Class A Shares, a class of the AIM Limited Maturity Treasury Fund, to
be filed with the Securities and Exchange Commission in Post-Effective
Amendment No. 8 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 Class, a class of the
AIM Limited Maturity Treasury Fund, to be filed with the Securities and
Exchange Commission in Post-Effective Amendment No. 8 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 report on Limited Maturity Treasury Portfolio (now
known as AIM Limited Maturity Treasury Fund) dated August 22, 1997 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 14, 1997
<PAGE> 1
[LETTERHEAD OF DECHERT PRICE & RHOADS]
EXHIBIT 11(d)(2)
November 18, 1997
Ms. Carol F. Relihan
General Counsel
A I M Advisors, Inc.
11 Greenway Plaza
Suite 1919
Houston, Texas 77046
Re: AIM Investment Securities Funds: AIM Limited Maturity
Treasury Fund
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 AIM Limited Maturity Treasury Fund (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: Class A shares (formerly, the "Retail
Class") and the Institutional Class (formerly, the "Institutional Shares")(1).
We have previously opined that the Class A Shares and/or the Institutional
Class 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) A November 23, 1994 opinion, concluding that the
opinions expressed in the opinion of October 8, 1993 remain valid; (2) an
October 8, 1993 opinion, concluding that shares of the Retail Class and the
Institutional Shares are permissible investments for federally chartered credit
unions; (3) a December 10, 1992 opinion, concluding that the opinions expressed
in several earlier opinions (noted below) remain valid; (4) a January 11, 1989
opinion concluding that the shares of the Retail Class are a permissible
investment for a national bank; (5) 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 pre-date 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 18, 1997
Page 2
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 (6) 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 Class A Shares
and the Institutional Class. 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 all 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 on
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. Except as discussed below, 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 certain 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 prior opinions, which we hereby incorporate by reference, it is our
opinion that the shares of each class of the Fund continue to be eligible
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
- ---------------------------
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 18, 1997
Page 3
representations made by you to us in connection with the prior opinions.
I. Federal Credit Unions
Our most recent opinion, dated November 23, 1994, concluded that the
Retail Class and the Institutional Shares remained 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 October 8, 1993 opinion, 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 Class A Shares and the
Institutional Class indicates that the investment policies and investment
restrictions have not materially changed since the date of our most recent
opinion. Since that opinion, there have been amendments to the regulations
governing the investment activities of federal credit unions. These amendments
are effective beginning January 1, 1998. The changes to the regulations do
not, however, have any material impact on the ability of federal credit unions
to invest in the Class A Shares and the Institutional Class. Accordingly, it
is our opinion that the Class A Shares and the Institutional Class remain
eligible investments for a federal credit union pursuant to 12 C.F.R. Section
703.4(j) (1997), as amended.
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 prior 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.
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.
<PAGE> 4
Ms. Carol F. Relihan
November 18, 1997
Page 4
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 Class A Shares for
investment by a national bank, the Fund and the Class A Shares 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 Class A Shares 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 the 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 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.
<PAGE> 5
Ms. Carol F. Relihan
November 18, 1997
Page 5
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(a)(2)
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(RETAIL CLASSES)
SECTION 1. AIM Investment Securities Funds (the "Fund") on behalf
of the series of beneficial interest set forth in Appendix A attached hereto
(the "Portfolios") may act as a distributor of securities of such Portfolios
(the "Shares") of which the Fund is the issuer, pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "1940 Act"), according to the terms of
this Distribution Plan (the "Plan").
SECTION 2. Amounts set forth in Appendix A may be used to finance
any activity which is primarily intended to result in the sale of the Shares,
including, but not limited to, expenses of organizing and conducting sales
seminars, advertising programs, finders fees, printing of prospectuses and
statements of additional information (and supplements thereto) and reports for
other than existing shareholders, preparation and distribution of advertising
material and sales literature, overhead, supplemental payments to dealers and
other institutions as asset-based sales charges. Amounts set forth in Appendix
A may also be used to finance payments of service fees under a shareholder
service arrangement to be established by A I M Distributors, Inc.
("Distributors") as the Fund's distributor in accordance with Section 3, and
the costs of administering the Plan. To the extent that amounts paid hereunder
are not used specifically to reimburse Distributors for any such expense, such
amounts may be treated as compensation for Distributors' distribution-related
services. All amounts expended pursuant to the Plan shall be paid to
Distributors and are the legal obligation of the Fund and not of Distributors.
That portion of the amounts paid under the Plan that is not paid or advanced by
Distributors to dealers or other institutions that provide personal continuing
shareholder services as a service fee pursuant to Section 3 shall be deemed an
asset-based sales charge. No provision of this Plan shall be interpreted to
prohibit any payments by the Fund during periods when the Fund has suspended or
otherwise limited sales.
SECTION 3.
(a) Amounts expended by the Fund under the Plan
shall be used in part for the implementation by Distributors of
shareholder service arrangements with respect to the Shares.
The maximum service fee paid to any service provider shall be
twenty-five one-hundredths of one percent (0.25%), or such
lower rate for the Portfolio as is specified on Appendix A, per
annum of the average daily net assets of the Fund attributable
to the Shares owned by the customers of such service provider.
(b) Pursuant to this program, Distributors may
enter into agreements substantially in the form attached hereto
as Exhibit A ("Service Agreements") with such broker-dealers
("Dealers") as may be selected from time to time by
Distributors for the provision of distribution-related personal
shareholder services in connection with the sale of Shares to
the Dealers' clients and customers ("Customers") to Customers
who may from time to time directly or beneficially own Shares.
The
<PAGE> 2
distribution-related personal continuing shareholder services to be
rendered by Dealers under the Service Agreements may include, but
shall not be limited to, the following: (i) distributing sales
literature; (ii) answering routine Customer inquiries concerning the
Fund and the Shares; (iii) assisting Customers in changing dividend
options, account designations and addresses, and in enrolling
into any of several retirement plans offered in connection with the
purchase of Shares; (iv) assisting in the establishment and
maintenance of customer accounts and records, and in the
processing of purchase and redemption transactions; (v) investing
dividends and capital gains distributions automatically in Shares;
and (vi) providing such other information and services as the
Fund or the Customer may reasonably request.
(c) Distributors may also enter into Bank
Shareholder Service Agreements substantially in the form attached
hereto as Exhibit B ("Bank Agreements") with selected banks acting
in an agency capacity for their customers ("Banks"). Banks acting
in such capacity will provide some or all of the shareholder
services to their customers as set forth in the Bank Agreements from
time to time.
(d) Distributors may also enter into Agency
Pricing Agreements substantially in the form attached hereto as
Exhibit C ("Pricing Agreements") with selected retirement plan
service providers acting in an agency capacity for their customers
("Retirement Plan Providers"). Retirement Plan Providers acting in
such capacity will provide some or all of the shareholder services
to their customers as set forth in the Pricing Agreements from time
to time.
(e) Distributors may also enter into Shareholder
Service Agreements substantially in the form attached hereto as
Exhibit D ("Bank Trust Department Agreements and Brokers for Bank
Trust Department Agreements") with selected bank trust departments
and brokers for bank trust departments. Such bank trust departments
and brokers for bank trust departments will provide some or all of
the shareholder services to their customers as set forth in the Bank
Trust Department Agreements and Brokers for Bank Trust Department
Agreements from time to time.
SECTION 4. This Plan shall not take effect with respect to any
Portfolio until it has been approved by a vote of at least a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the applicable
Shares.
SECTION 5. This Plan shall not take effect until it has been
approved, together with any related agreements, by votes of the majority of
both (a) the Board of Trustees of the Fund, and (b) those trustees of the Fund
who are not "interested persons" of the Fund (as defined in the 1940 Act) and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it (the "Dis-interested Trustees"), cast in person at
a meeting called for the purpose of voting on this Plan or such agreements.
SECTION 6. Unless sooner terminated pursuant to Section 8, this
Plan shall continue in effect until June 30, 1998, and thereafter shall
continue in effect so long as such continuance is specifically approved, at
least annually, in the manner provided for approval of this Plan in Section 5.
-2-
<PAGE> 3
SECTION 7. Distributors shall provide to the Fund's Board of
Trustees and the Board of Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such expenditures
were made.
SECTION 8. This Plan may be terminated with respect to any
Portfolio at any time by vote of a majority of the Dis-interested Trustees, or
by vote of a majority of the outstanding voting securities of the applicable
Shares. If this Plan is terminated, the obligation of the Fund to make
payments pursuant to this Plan will also cease and the Fund will not be
required to make any payments beyond the termination date even with respect to
expenses incurred prior to the termination date.
SECTION 9. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated with
respect to any Portfolio at any time, without payment of any
penalty, by vote of a majority of the Dis-interested Trustees
or by a vote of the outstanding voting securities of the Fund
attributable to the applicable Shares, on not more than sixty
(60) days' written notice to any other party to the agreement;
and
(b) that such agreement shall terminate
automatically in the event of its assignment.
SECTION 10. This Plan may not be amended with respect to any
Portfolio to increase materially the amount of distribution expenses provided
for in Section 2 hereof unless such amendment is approved in the manner
provided in Section 4 hereof, and no material amendment to the Plan shall be
made unless approved in the manner provided for in Section 5 hereof.
AIM INVESTMENT SECURITIES FUNDS
(on behalf of its Retail Classes)
Attest: /s/ OFELIA M. MAYO By: /s/ CAROL F. RELIHAN
------------------------ -----------------------------
Assistant Secretary Senior Vice President
Effective as of August 6, 1993, as amended as of March 8, 1994, as further
amended as of September 10, 1994, and as further amended as of November 18,
1994.
Amended and restated for all Portfolios as of June 30, 1997.
-3-
<PAGE> 4
APPENDIX A
TO
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all
services rendered and all facilities furnished under the Distribution Plan for
each Portfolio (or Class thereof) as designated below, a Distribution Fee*
determined by applying the annual rate set forth below as to each Portfolio (or
Class thereof) to the average daily net assets of the Portfolio (or Class
thereof) for the plan year, computed in a manner used for the determination of
the offering price of shares of the Portfolio.
<TABLE>
<CAPTION>
PORTFOLIO/CLASS ANNUAL RATE
--------------- -----------
<S> <C>
AIM Limited Maturity Treasury Shares 0.15%
</TABLE>
- ---------------
* The Distribution Fee is payable apart from the sales charge, if any, as
stated in the current prospectus for the applicable Class and the
applicable Portfolio. The amount of the Distribution Fee is subject to
any applicable limitations imposed from time to time by applicable
rules of the National Association of Securities Dealer, Inc.
-4-
<PAGE> 1
EXHIBIT 15(b)
EXHIBIT A
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE] FOR SALE OF SHARES
A I M Distributors, Inc. OF THE AIM MUTUAL FUNDS
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each
of the AIM-managed mutual funds (or designated classes of such funds) listed on
Schedule A to this Agreement (the "Funds"), under a Distribution Plan (the
"Plan") adopted pursuant to said Rule. This Agreement, being made between A I M
Distributors, Inc. ("Distributors"), solely as agent for the Funds, and the
undersigned authorized dealer, defines the services to be provided by the
authorized dealer for which it is to receive payments pursuant to the Plan
adopted by each of the Funds. The Plan and the Agreement have been approved by
a majority of the directors of each of the Funds, including a majority of the
directors who are not interested persons of such Funds, and who have no direct
or indirect financial interest in the operation of the Plan or related
agreements (the "Dis-interested Directors"), by votes cast in person at a
meeting called for the purpose of voting on the Plan. Such approval included a
determination that in the exercise of their reasonable business judgement and
in light of their fiduciary duties, there is a reasonable likelihood that the
Plan will benefit such Fund and its shareholders.
1 To the extent that you provide distribution-related continuing personal
shareholder services to customers who may, from time to time, directly or
beneficially own shares of the Funds, including but not limited to,
distributing sales literature, answering routine customer inquiries
regarding the Funds, assisting customers in changing dividend options,
account designations and addresses, and in enrolling into any of several
special investment plans offered in connection with the purchase of the
Fund's shares, assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions, investing dividends and capital gains distributions
automatically in shares and providing such other services as the Funds or
the customer may reasonably request, we, solely as agent for the Funds,
shall pay you a fee periodically or arrange for such fee to be paid to you.
2 The fee paid with respect to each Fund will be calculated at the end of each
payment period (as indicated in Schedule A) for each business day of the
Fund during such payment period at the annual rate set forth in Schedule A
as applied to the average net asset value of the shares of such Fund
purchased or acquired through exchange on or after the Plan Calculation
Date shown for such Fund on Schedule A. Fees calculated in this manner
shall be paid to you only if your firm is the dealer of record at the close
of business on the last business day of the applicable payment period, for
the account in which such shares are held (the "Subject Shares"). In cases
where Distributors has advanced payment to you of the first year's fee for
shares sold at net asset value and subject to contingent deferred sales
charge, no additional payments will be made to you during the first year
the Subject Shares are held.
3 The total of the fees calculated for all of the Funds listed on Schedule A
for any period with respect to which calculations are made shall be paid
to you within 45 days after the close of such period.
4 We reserve the right to withhold payment with respect to the Subject Shares
purchased by you and redeemed or repurchased by the Fund or by us as Agent
within seven (7) business days after the date of our confirmation of such
purchase. We reserve the right at any time to impose minimum fee payment
requirements before any periodic payments will be made to you hereunder.
5 This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
6 You shall furnish us and the Funds with such information as shall
reasonably be requested either by the directors of the Funds or by us with
respect to the fees paid to you pursuant to this Agreement.
7 We shall furnish the directors of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under the Plan by
us and the purposes for which such expenditures were made.
8 Neither you nor any of your employees or agents are authorized to make any
representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds, and you shall have no authority
to act as agent for the Funds or for Distributors.
7/97
<PAGE> 2
9 We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10 This Agreement and Schedule A may be amended at any time without your
consent by Distributors mailing a copy of an amendment to you at the address
set forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this Agreement
within thirty (30) days of your receipt of such amendment.
11 This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty by the vote of a majority of the directors
of such Fund who are Dis-interested Directors or by a vote of a majority of
the Fund's outstanding shares, on sixty (60) days' written notice. It will
be terminated by any act which terminates either the Selected Dealer
Agreement between your firm and us or the Fund's Distribution Plan, and in
any event, it shall terminate automatically in the event of its assignment
as that term is defined in the 1940 Act.
12 The provisions of the Distribution Agreement between any Fund and us,
insofar as they relate to the Plan, are incorporated herein by reference.
This Agreement shall become effective upon execution and delivery hereof
and shall continue in full force and effect as long as the continuance of
the Plan and this related Agreement are approved at least annually by a
vote of the directors, including a majority of the Dis-interested
Directors, cast in person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to the address of
Distributors as shown at the bottom of this Agreement. Any notice to you
shall be duly given if mailed or telegraphed to you at the address
specified by you below.
13 You represent that you provide to your customers who own shares of the
Funds personal services as defined from time to time in applicable
regulations of the National Association of Securities Dealers, Inc., and
that you will continue to accept payments under this Agreement only so long
as you provide such services.
14 This Agreement shall be construed in accordance with the laws of the State
of Texas.
A I M DISTRIBUTORS, INC.
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor Income Fund A Shares 0.25 August 4, 1997
AIM Advisor Income Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Asian Growth Fund A Shares 0.25 November 3, 1997
AIM Asian Growth Fund B Shares 0.25 November 3, 1997
AIM Asian Growth Fund C Shares 1.00** November 3, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 July 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM European Development Fund A Shares 0.25 November 3, 1997
AIM European Development Fund B Shares 0.25 November 3, 1997
AIM European Development Fund C Shares 1.00** November 3, 1997
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
10/97
<PAGE> 4
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
10/97
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
(0.35% for AIM Advisor Income Fund) is paid as an asset-based sales charge,
as those terms are defined under the rules of the National Association of
Securities Dealers, Inc.
*** Fund closed to investments on October 3, 1997.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
10/97
<PAGE> 1
EXHIBIT 15(c)
EXHIBIT B
[LOGO APPEARS HERE] BANK SHAREHOLDER
A I M Distributors, Inc. SERVICE AGREEMENT
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms and
conditions of this Agreement shall be as follows:
1 We shall provide continuing personal shareholder and administration
services for holders of the Shares who are also our clients. Such services
to our clients may include, without limitation, some or all of the
following: answering shareholder inquiries regarding the Shares and the AIM
Funds; performing subaccounting; establishing and maintaining shareholder
accounts and records; processing and bunching customer purchase and
redemption transactions; providing periodic statements showing a
shareholder's account balance and the integration of such statements with
those of other transactions and balances in the shareholder's other
accounts serviced by us; forwarding applicable AIM Funds prospectuses, proxy
statements, reports and notices to our clients who are holders of Shares;
and such other administrative services as you reasonably may request, to
the extent we are permitted by applicable statute, rule or regulations to
provide such services. We represent that we shall accept fees hereunder
only so long as we continue to provide personal shareholder services to our
clients.
2 Shares purchased by us as agents for our clients will be registered (choose
one) (in our name or in the name of our nominee) (in the names of our
clients). The client will be the beneficial owner of the Shares purchased
and held by us in accordance with the client's instructions and the client
may exercise all applicable rights of a holder of such Shares. We agree to
transmit to the AIM Funds' transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each
client any proxy statements, periodic shareholder reports and other
communications received from the Company by us on behalf of our clients.
The Company agrees to pay all out-of-pocket expenses actually incurred by
us in connection with the transfer by us of such proxy statements and
reports to our clients as required by applicable law or regulation. We
agree to transfer record ownership of a client's Shares to the client
promptly upon the request of a client. In addition, record ownership will
be promptly transferred to the client in the event that the person or
entity ceases to be our client.
3 Within five (5) business days of placing a purchase order we agree to send
(i) a cashiers check to the Company, or (ii) a wire transfer to the AIM
Funds' transfer agent, in an amount equal to the amount of all purchase
orders placed by us on behalf of our clients and accepted by the Company.
4 We agree to make available to the Company, upon the Company's request, such
information relating to our clients who are beneficial owners of Shares and
their transactions in such Shares as may be required by applicable laws and
regulations or as may be reasonably requested by the Company. The names of
our customers shall remain our sole property and shall not be used by the
Company for any other purpose except as needed for servicing and
information mailings in the normal course of business to holders of the
Shares.
5 We shall provide such facilities and personnel (which may be all or any
part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying out
the purposes of this Agreement.
6 Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are
authorized to assist in distribution of any of the AIM Funds' shares except
those contained in the then current Prospectus applicable to the Shares;
and we shall have no authority to act as agent for the Company or the AIM
Funds. Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors,
Inc. will be a party, nor will they be represented as a party, to any
agreement that we may enter into with our clients.
7/97
<PAGE> 2
7 In consideration of the services and facilities described herein, we shall
receive from the Company on behalf of the AIM Funds an annual service fee,
payable at such intervals as may be set forth in Schedule A hereto, of a
percentage of the aggregate average net asset value of the Shares owned
beneficially by our clients during each payment period, as set forth in
Schedule A hereto. We understand that this Agreement and the payment of
such service fees has been authorized and approved by the Boards of
Directors/Trustees of the AIM Funds, and is subject to limitations imposed
by the National Association of Securities Dealers, Inc. In cases where the
Company has advanced payments to us of the first year's fee for shares sold
with a contingent deferred sales charge, no payments will be made to us
during the first year the subject Shares are held.
8 The AIM Funds reserve the right, at their discretion and without notice, to
suspend the sale of any Shares or withdraw the sale of Shares.
9 We understand that the Company reserves the right to amend this Agreement
or Schedule A hereto at any time without our consent by mailing a copy of
an amendment to us at the address set forth below. Such amendment shall
become effective on the date specified in such amendment unless we elect to
terminate this Agreement within thirty (30) days of our receipt of such
amendment.
10 This Agreement may be terminated at any time by the Company on not less
than 15 days' written notice to us at our principal place of business. We,
on 15 days' written notice addressed to the Company at its principal place
of business, may terminate this Agreement, said termination to become
effective on the date of mailing notice to us of such termination. The
Company's failure to terminate for any cause shall not constitute a waiver
of the Company's right to terminate at a later date for any such cause.
This Agreement shall terminate automatically in the event of its assignment,
the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940, as amended.
11 All communications to the Company shall be sent to it at Eleven Greenway
Plaza, Suite 1919, Houston, Texas, 77046-1173. Any notice to us shall be
duly given if mailed or telegraphed to us at this address shown on this
Agreement.
12 This Agreement shall become effective as of the date when it is executed
and dated below by the Company. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor Income Fund A Shares 0.25 August 4, 1997
AIM Advisor Income Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Asian Growth Fund A Shares 0.25 November 3, 1997
AIM Asian Growth Fund B Shares 0.25 November 3, 1997
AIM Asian Growth Fund C Shares 1.00** November 3, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM European Development Fund A Shares 0.25 November 3, 1997
AIM European Development Fund B Shares 0.25 November 3, 1997
AIM European Development Fund C Shares 1.00** November 3, 1997
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
10/97
<PAGE> 4
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ----------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
10/97
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
(0.35% for AIM Advisor Income Fund) is paid as an asset-based sales charge,
as those terms are defined under the rules of the National Association of
Securities Dealers, Inc.
*** Fund closed to new investments on October 3, 1997.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
10/97
<PAGE> 1
EXHIBIT 15(d)
EXHIBIT C
AGENCY PRICING AGREEMENT
(THE AIM FAMILY OF FUNDS--Registered Trademark--)
This Agreement is entered into as of the____ of ____________, 1997,
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. SERVICES
Plan Provider shall provide shareholder and administration services
for the Plans and/or their Participants, including, without
limitation: answering questions about the Funds; assisting in changing
dividend options, account designations and addresses; establishing and
maintaining shareholder accounts and records; and assisting in
processing purchase and redemption transactions (the "Services").
Plan Provider shall comply with all applicable laws, rules and
regulations, including requirements regarding prospectus delivery and
maintenance and preservation of records. To the extent allowed by
law, Plan Provider shall provide Distributor with copies of all
records that Distributor may reasonably request. Distributor or its
affiliate will recognize each Plan as an unallocated account in each
Fund, and will not maintain separate accounts in each Fund for each
Participant. Except to the extent provided in Section 3, all Services
performed by Plan Provider shall be as an independent contractor and
not as an employee or agent of Distributor or any of the Funds. Plan
Provider and Plan Representatives, and not Distributor, shall take all
necessary action so that the transactions contemplated by this
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.
2. 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
<PAGE> 2
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.
Distributor or its affiliate 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.
3. ORDERS AND SETTLEMENT
If Plan Provider receives instructions in proper form from
Participants or Plan Representatives before the Close of Trading on a
Business Day, Plan Provider will process such instructions that same
evening. On the next Business Day, Plan Provider will transmit orders
for net purchases or redemptions of Shares to Distributor or its
designee by 9:00 a.m. Central Time and wire payment for net purchases
by 2:00 p.m. Central Time. Distributor or its affiliate will wire
payment for net redemptions on the Business Day following the day the
order is executed for the Accounts. In doing so, Plan Provider will
be considered the Funds' agent, and Shares will be purchased and
redeemed as of the Business Day on which Plan Provider receives the
instructions. Plan Provider will record time and date of receipt of
instructions and will, upon request, provide such instructions and
other records relating to the Services to Distributor's auditors. If
Plan Provider receives instructions in proper form after the Close of
Trading on a Business Day, Plan Provider will treat the instructions
as if received on the next Business Day.
4. REPRESENTATIONS WITH RESPECT TO THE DISTRIBUTOR AND THE FUNDS
Plan Provider and its agents shall limit representations concerning a
Fund or Shares to 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 and Morningstar, and in current
sales literature created by Plan Provider and submitted to and
approved in writing by Distributor prior to its use.
5. 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 Distributor for written approval prior to use.
Plan Provider shall provide copies of its regulatory filings that
include any reference to A I M Management Group Inc. or its
subsidiaries or the Funds to Distributor. 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.
-2-
<PAGE> 3
6. TERMINATION
(a) This Agreement may be terminated with respect to any Fund at
any time without 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 Plan, 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 ninety (90)
days' prior written notice to the other party at the address
specified below.
7. 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.
-3-
<PAGE> 4
(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.
8. 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.
9. 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. Each party represents that 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. Additionally, each party represents that this
Agreement, when executed and delivered, shall constitute its valid,
legal and binding obligation, enforceable in accordance with its
terms.
Plan Provider further represents, warrants, and covenants that:
(a) 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 not required to be registered as such;
(b) the arrangements provided for in this Agreement will be
disclosed to the Plan Representatives; and
(c) 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 not required to be registered as such.
Distributor further represents, warrants and covenants, that:
(a) it is registered as a broker-dealer under the 1934 Act and any
applicable state securities laws; and
-4-
<PAGE> 5
(b) the Funds' advisors are registered as investment advisors
under the Investment Advisers Act of 1940, the Funds are
registered as investment companies under the 1940 Act and Fund
Shares are registered under the Securities Act.
10. MODIFICATION
This Agreement and Exhibit A may be amended at any time by Distributor
without Plan Provider's consent by Distributor mailing a copy of an
amendment to Plan Provider at the address set forth below. Such
amendment shall become effective thirty (30) days from the date of
mailing unless this Agreement is terminated by the Plan Provider
within such thirty (30) days.
11. 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.
12. SURVIVAL
The provisions of Sections 1, 5 and 7 shall survive termination of
this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by
their duly authorized officers as of the date first above written.
______________________________________
(PLAN PROVIDER)
By:___________________________________
Print Name:___________________________
Title:________________________________
Address: _____________________________
______________________________________
______________________________________
A I M DISTRIBUTORS, INC.
(DISTRIBUTOR)
By:___________________________________
Print Name:___________________________
Title:________________________________
11 Greenway Plaza
Suite 100
Houston, Texas 77210
-5-
<PAGE> 6
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 Class A and Class C Shares
of the Plans' balances for the prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- ---------- ----------
<S> <C>
AIM Advisor Funds, Inc.
- -----------------------
AIM Advisor Flex Fund .25%
AIM Advisor Income Fund (*) .25%
AIM Advisor International Value Fund .25%
AIM Advisor Large Cap Value Fund .25%
AIM Advisor MultiFlex Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds, Inc.
- ----------------------
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
- ---------------
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.
- -----------------------------
AIM Asian Growth Fund .25%
AIM European Development Fund .25%
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
- -------------------------------
AIM Limited Maturity Treasury Fund .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 Advisor Income Fund was closed to new investments on October 3,
1997
** AIM Aggressive Growth Fund is currently closed to new investors.
<PAGE> 1
EXHIBIT 15(e)
A I M DISTRIBUTORS, INC.
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
(BROKERS FOR BANK TRUST DEPARTMENTS)
_____________, 19___
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we shall
accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating
<PAGE> 2
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
to shares of the Funds owned by our clients. AIM Distributors, on behalf
of the Funds, agrees to pay all out-of- pocket expenses actually
incurred by us in connection with the transfer by us of such proxy
statements and reports to our clients as required under applicable laws
or regulations.
3. We agree to transfer to AIM Distributors in a timely manner as set forth
in the applicable prospectus, federal funds in an amount equal to the
amount of all purchase orders placed by us and accepted by AIM
Distributors. In the event that AIM Distributors fails to receive such
federal funds on such date (other than through the fault of AIM
Distributors), we shall indemnify the applicable Fund and AIM
Distributors against any expense (including overdraft charges) incurred
by the applicable Fund and/or AIM Distributors as a result of the
failure to receive such federal funds.
4. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
7. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
8. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
9. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
<PAGE> 3
Shareholder Service Agreement Page 3
(Brokers for Bank Trust Departments)
10. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause shall
not constitute a waiver of AIM Distributors's right to terminate at a
later date for any such cause. This Agreement may be terminated with
respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates the Selected
Dealer Agreement between us and AIM Distributors or a Fund's
Distribution Plan, and in any event, shall terminate automatically in
the event of its assignment by us, the term "assignment" for this
purpose having the meaning defined in Section 2(a)(4) of the 1940 Act.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same
instrument. This Agreement shall not relieve us or AIM Distributors from
any obligations either may have under any other agreements between us.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 4
Shareholder Service Agreement Page 4
(Brokers for Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-----------------------------------
(Firm Name)
-----------------------------------
(Address)
-----------------------------------
City/State/Zip/County
By:
----------------------------
Name:
------------------------------
Title:
----------------------------
Dated:
-----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Dated:
----------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
Funds Fees
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor Income Fund*
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM Aggressive Growth Fund **
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
- ---------
* AIM Advisor Income Fund was closed to new investments on October 3,
1997.
** Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 6
A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE]
A I M Distributors, Inc. (BANK TRUST DEPARTMENTS)
_________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating
<PAGE> 7
Shareholder Service Agreement Page 2
(Bank Trust Departments)
to shares of the Funds owned by our clients. AIM Distributors, on
behalf of the Funds, agrees to pay all out-of- pocket expenses actually
incurred by us in connection with the transfer by us of such proxy
statements and reports to our clients as required under applicable laws
or regulations.
3. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
4. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
5. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
6. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
7. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
8. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
9. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for
<PAGE> 8
Shareholder Service Agreement Page 3
(Bank Trust Departments)
any such cause. This Agreement may be terminated with respect to any
Fund at any time by the vote of a majority of the directors or trustees
of such Fund who are disinterested directors or by a vote of a majority
of the Fund's outstanding shares, on not less than 60 days' written
notice to us at our principal place of business. This Agreement will be
terminated by any act which terminates the Agreement for Purchase of
Shares of The AIM Family of Funds--Registered Trademark-- between us and
AIM Distributors or a Fund's Distribution Plan, and in any event, it
shall terminate automatically in the event of its assignment by us, the
term "assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
10. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
11. This Agreement and the Agreement for Purchase of Shares of The AIM Family
of Funds--Registered Trademark-- through Bank Trust Departments
constitute the entire agreement between us and AIM Distributors and
supersede all prior oral or written agreements between the parties
hereto. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which shall constitute the same
instrument.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 9
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
----------------------------------
(Firm Name)
----------------------------------
(Address)
----------------------------------
City/State/Zip/County
By:
---------------------------
Name:
-----------------------------
Title:
---------------------------
Dated:
----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Dated:
---------------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 10
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
Funds Fees
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor Income Fund*
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM Aggressive Growth Fund**
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
- ----------
* AIM Advisor Income Fund was closed to new investments on October 3, 1997.
** Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 1
EXHIBIT 18(b)
AMENDED AND RESTATED MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS
1. This Amended and Restated Multiple Class Plan (the "Plan") adopted in
accordance with Rule 18f-3 under the Act shall govern the terms and
conditions under which the Funds may issue separate Classes of Shares
representing interests in one or more Portfolios of each Fund.
2. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
a. Act - Investment Company Act of 1940, as amended.
b. CDSC - contingent deferred sales charge.
c. CDSC Period - the period of years following acquisition of
Shares during which such Shares may be assessed a CDSC upon
redemption.
d. Class - a class of Shares of a Fund representing an interest
in a Portfolio.
e. Class A Shares - shall mean those Shares designated as Class A
Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class A Shares for purposes of this Plan.
f. Class B Shares - shall mean those Shares designated as Class B
Shares in the Fund's organizing documents.
g. Class C Shares - shall mean those Shares designated as Class C
Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class C Shares for purposes of this Plan.
h. Directors - the directors or trustees of a Fund.
i. Distribution Expenses - expenses incurred in activities which
are primarily intended to result in the distribution and sale
of Shares as defined in a Plan of Distribution and/or
agreements relating thereto.
j. Distribution Fee - a fee paid by a Fund to the Distributor to
compensate the Distributor for Distribution Expenses.
k. Distributor - A I M Distributors, Inc. or Fund Management
Company, as applicable.
l. Fund - those investment companies advised by A I M Advisors,
Inc. which have adopted this Plan.
1
<PAGE> 2
m. Institutional Shares - shall mean Shares of a Fund
representing an interest in a Portfolio offered for sale to
institutional customers as may be approved by the Directors
from time to time and as set forth in the Fund's prospectus.
n. Plan of Distribution - Any plan adopted under Rule 12b-1 under
the Act with respect to payment of a Distribution Fee.
o. Portfolio - a series of the Shares of a Fund constituting a
separate investment portfolio of the Fund.
p. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of personal services to Fund shareholders
and/or the maintenance of shareholder accounts.
q. Share - a share of common stock of or beneficial interest in
a Fund, as applicable.
3. Allocation of Income and Expenses.
a. Distribution and Service Fees - Each Class shall bear
directly any and all Distribution Fees and/or Service Fees
payable by such Class pursuant to a Plan of Distribution
adopted by the Fund with respect to such Class.
b. Transfer Agency and Shareholder Recordkeeping Fees - Each
Class shall bear directly the transfer agency fees and
expenses and other shareholder recordkeeping fees and
expenses specifically attributable to that Class.
c. Allocation of Other Expenses - Each Class shall bear
proportionately all other expenses incurred by a Fund based
on the relative net assets attributable to each such Class.
d. Allocation of Income, Gains and Losses - Except to the extent
provided in the following sentence, each Portfolio will
allocate income and realized and unrealized capital gains and
losses to a Class based on the relative net assets of each
Class. Notwithstanding the foregoing, each Portfolio that
declares dividends on a daily basis will allocate income on
the basis of settled shares.
e. Waiver and Reimbursement of Expenses - A Portfolio's adviser,
underwriter or any other provider of services to the
Portfolio may waive or reimburse the expenses of a particular
Class or Classes.
4. Distribution and Servicing Arrangements. The distribution and
servicing arrangements identified below will apply for the following
Classes offered by a Fund with respect to a Portfolio. The provisions
of the Fund's prospectus describing the distribution and servicing
arrangements in detail are incorporated herein by this reference.
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
2
<PAGE> 3
shares, for larger purchases, under a combined
purchase privilege, under a right of accumulation,
under a letter of intent or for certain categories of
purchasers as permitted by Rule 22(d) of the Act and as set
forth in the Fund's prospectus. Class A Shares that are not
subject to a front-end sales charge as a result of the
foregoing shall be subject to a CDSC for the CDSC Period set
forth in Section 5(a) of this Plan if so provided in the
Fund's prospectus. The offering price of Shares subject to a
front-end sales charge shall be computed in accordance with
Rule 22c-1 and Section 22(d) of the Act and the rules and
regulations thereunder. Class A Shares shall be subject to
ongoing Service Fees and/or Distribution Fees approved from
time to time by the Directors and set forth in the Fund's
prospectus. Although AIM Cash Reserve Shares, AIM Limited
Maturity Treasury Shares, AIM Tax-Free Intermediate Shares
and shares of AIM Tax-Exempt Bond Fund of Connecticut and AIM
Tax Exempt Cash Fund are not designated as "Class A", they
are substantially similar to Class A Shares as defined herein
and shall be deemed to be Class A Shares for the purposes of
this Plan.
b. Class B Shares. Class B Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set
forth in Section 5(b), (iii) subject to ongoing Service Fees
and Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus, and (iv)
converted to Class A Shares eight years from the end of the
calendar month in which the shareholder's order to purchase
was accepted as set forth in the Fund's prospectus.
c. Class C Shares. Class C Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set
forth in Section 5(c), and (iii) subject to ongoing Service
Fees and Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus.
d. Institutional Shares. Institutional Shares shall be (i)
offered at net asset value, (ii) offered only to certain
categories of institutional customers as approved from time
to time by the Directors and as set forth in the Fund's
prospectus and (iii) may be subject to ongoing Service Fees
and/or Distribution Fees as approved from time to time by the
Directors and set forth in the Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that
do not incur a front-end sales charge and of Class B Shares and Class
C Shares as follows:
a. Class A Shares. The CDSC Period for Class A Shares shall be 18
months. The CDSC Rate shall be as set forth in the Fund's
prospectus, the relevant portions of which are incorporated
herein by this reference. No CDSC shall be imposed on Class A
Shares unless so provided in a Fund's prospectus.
b. Class B Shares. The CDSC Period for the Class B Shares shall
be six years. The CDSC Rate for the Class B Shares shall be
as set forth in the Fund's prospectus, the relevant portions
of which are incorporated herein by this reference.
3
<PAGE> 4
c. Class C Shares. The CDSC Period for the Class C Shares shall
be one year. The CDSC Rate for the Class C Shares shall be as
set forth in the Fund's prospectus, the relevant portions of
which are incorporated herein by reference.
d. Method of Calculation. The CDSC shall be assessed on an
amount equal to the lesser of the then current market value
or the cost of the Shares being redeemed. No sales charge
shall be imposed on increases in the net asset value of the
Shares being redeemed above the initial purchase price. No
CDSC shall be assessed on Shares derived from reinvestment of
dividends or capital gains distributions. The order in which
Shares are to be redeemed when not all of such Shares would
be subject to a CDSC shall be determined by the Distributor
in accordance with the provisions of Rule 6c-10 under the Act.
e. Waiver. The Distributor may in its discretion waive a CDSC
otherwise due upon the redemption of Shares and disclosed in
the Fund's prospectus or statement of additional information
and, for the Class A Shares, as allowed under Rule 6c-10 under
the Act.
6. Exchange Privileges. Exchanges of Shares shall be permitted between
Funds as follows:
a. Class A Shares may be exchanged for Class A Shares of another
Portfolio, subject to certain limitations set forth in the
Fund's prospectus as it may be amended from time to time,
relevant portions of which are incorporated herein by this
reference.
b. Class B Shares may be exchanged for Class B Shares of another
Portfolio at their relative net asset value.
c. Class C Shares may be exchanged for Class C Shares of any
other Portfolio at their relative net asset value.
d. Depending upon the Portfolio from which and into which an
exchange is being made and when the shares were purchased,
shares being acquired in an exchange may be acquired at their
offering price, at their net asset value or by paying the
difference in sales charges, as disclosed in the Fund's
prospectus and statement of additional information.
e. CDSC Computation. The CDSC payable upon redemption of Class A
Shares, Class B Shares and Class C Shares subject to a CDSC
shall be computed in the manner described in the Fund's
prospectus.
7. Service and Distribution Fees. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's
prospectus, relevant portions of which are incorporated herein by this
reference. All other terms and conditions with respect to Service Fees
and Distribution Fees shall be governed by the Plan of Distribution
adopted by the Fund with respect to such fees and Rule 12b-1 of the
Act.
4
<PAGE> 5
8. Conversion of Class B Shares.
a. Shares Received upon Reinvestment of Dividends and
Distributions - Shares purchased through the reinvestment of
dividends and distributions paid on Shares subject to
conversion shall be treated as if held in a separate
sub-account. Each time any Shares in a Shareholder's account
(other than Shares held in the sub-account) convert to Class A
Shares, a proportionate number of Shares held in the
sub-account shall also convert to Class A Shares.
b. Conversions on Basis of Relative Net Asset Value - All
conversions shall be effected on the basis of the relative
net asset values of the two Classes without the imposition of
any sales load or other charge.
c. Amendments to Plan of Distribution for Class A Shares - If
any amendment is proposed to the Plan of Distribution under
which Service Fees and Distribution Fees are paid with
respect to Class A Shares of a Fund that would increase
materially the amount to be borne by those Class A Shares,
then no Class B Shares shall convert into Class A Shares of
that Fund until the holders of Class B Shares of that Fund
have also approved the proposed amendment. If the holders of
such Class B Shares do not approve the proposed amendment, the
Directors of the Fund and the Distributor shall take such
action as is necessary to ensure that the Class voting
against the amendment shall convert into another Class
identical in all material respects to Class A Shares of the
Fund as constituted prior to the amendment.
9. This Plan shall not take effect until a majority of the Directors of a
Fund, including a majority of the Directors who are not interested
persons of the Fund, shall find that the Plan, as proposed and
including the expense allocations, is in the best interests of each
Class individually and the Fund as a whole.
10. This Plan may not be amended to materially change the provisions of
this Plan unless such amendment is approved in the manner specified in
Section 9 above.
5
<PAGE> 1
EXHIBIT 18(c)
SECOND AMENDED AND RESTATED MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS
1. This Second Amended and Restated Multiple Class Plan (the "Plan")
adopted in accordance with Rule 18f-3 under the Act shall govern the
terms and conditions under which the Funds may issue separate Classes
of Shares representing interests in one or more Portfolios of each
Fund.
2. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
a. Act - Investment Company Act of 1940, as amended.
b. CDSC - contingent deferred sales charge.
c. CDSC Period - the period of years following acquisition of
Shares during which such Shares may be assessed a CDSC upon
redemption.
d. Class - a class of Shares of a Fund representing an interest
in a Portfolio.
e. Class A Shares - shall mean those Shares designated as Class
A Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class A Shares for purposes of this Plan.
f. Class B Shares - shall mean those Shares designated as Class
B Shares in the Fund's organizing documents.
g. Class C Shares - shall mean those Shares designated as Class
C Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class C Shares for purposes of this Plan.
h. Directors - the directors or trustees of a Fund.
i. Distribution Expenses - expenses incurred in activities which
are primarily intended to result in the distribution and sale
of Shares as defined in a Plan of Distribution and/or
agreements relating thereto.
j. Distribution Fee - a fee paid by a Fund to the Distributor
to compensate the Distributor for Distribution Expenses.
k. Distributor - A I M Distributors, Inc. or Fund Management
Company, as applicable.
l. Fund - those investment companies advised by A I M Advisors,
Inc. which have adopted this Plan.
1
<PAGE> 2
m. Institutional Shares - shall mean Shares of a Fund
representing an interest in a Portfolio offered for sale to
institutional customers as may be approved by the Directors
from time to time and as set forth in the Fund's prospectus.
n. Plan of Distribution - Any plan adopted under Rule 12b-1
under the Act with respect to payment of a Distribution Fee.
o. Portfolio - a series of the Shares of a Fund constituting a
separate investment portfolio of the Fund.
p. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of personal services to Fund shareholders
and/or the maintenance of shareholder accounts.
q. Share - a share of common stock of or beneficial interest in
a Fund, as applicable.
3. Allocation of Income and Expenses.
a. Distribution and Service Fees - Each Class shall bear
directly any and all Distribution Fees and/or Service Fees
payable by such Class pursuant to a Plan of Distribution
adopted by the Fund with respect to such Class.
b. Transfer Agency and Shareholder Recordkeeping Fees - Each
Class shall bear directly the transfer agency fees and
expenses and other shareholder recordkeeping fees and
expenses specifically attributable to that Class; provided,
however, that where two or more Classes of a Portfolio pay
such fees and/or expenses at the same rate or in the same
amount, those Classes shall bear proportionately such fees
and expenses based on the relative net assets attributable to
each such Class.
c. Allocation of Other Expenses - Each Class shall bear
proportionately all other expenses incurred by a Fund based
on the relative net assets attributable to each such Class.
d. Allocation of Income, Gains and Losses - Except to the extent
provided in the following sentence, each Portfolio will
allocate income and realized and unrealized capital gains and
losses to a Class based on the relative net assets of each
Class. Notwithstanding the foregoing, each Portfolio that
declares dividends on a daily basis will allocate income on
the basis of settled shares.
e. Waiver and Reimbursement of Expenses - A Portfolio's adviser,
underwriter or any other provider of services to the
Portfolio may waive or reimburse the expenses of a particular
Class or Classes.
4. Distribution and Servicing Arrangements. The distribution and
servicing arrangements identified below will apply for the following
Classes offered by a Fund with respect to a Portfolio. The provisions
of the Fund's prospectus describing the distribution and servicing
arrangements in detail are incorporated herein by this reference.
2
<PAGE> 3
a. Class A Shares. Class A Shares shall be offered at net asset
value plus a front-end sales charge as approved from time to
time by the Directors and set forth in the Fund's prospectus,
may be reduced or eliminated for certain money market fund
shares, for larger purchases, under a combined purchase
privilege, under a right of accumulation, under a letter of
intent or for certain categories of purchasers as permitted
by Rule 22(d) of the Act and as set forth in the Fund's
prospectus. Class A Shares that are not subject to a
front-end sales charge as a result of the foregoing shall be
subject to a CDSC for the CDSC Period set forth in
Section 5(a) of this Plan if so provided in the Fund's
prospectus. The offering price of Shares subject to a
front-end sales charge shall be computed in accordance with
Rule 22c-1 and Section 22(d) of the Act and the rules and
regulations thereunder. Class A Shares shall be subject to
ongoing Service Fees and/or Distribution Fees approved from
time to time by the Directors and set forth in the Fund's
prospectus. Although AIM Cash Reserve Shares, AIM Limited
Maturity Treasury Shares, AIM Tax-Free Intermediate Shares
and shares of AIM Tax-Exempt Bond Fund of Connecticut and AIM
Tax Exempt Cash Fund are not designated as "Class A", they
are substantially similar to Class A Shares as defined herein
and shall be deemed to be Class A Shares for the purposes of
this Plan.
b. Class B Shares. Class B Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set
forth in Section 5(b), (iii) subject to ongoing Service Fees
and Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus, and (iv)
converted to Class A Shares eight years from the end of the
calendar month in which the shareholder's order to purchase
was accepted as set forth in the Fund's prospectus.
c. Class C Shares. Class C Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set
forth in Section 5(c), and (iii) subject to ongoing Service
Fees and Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus.
d. Institutional Shares. Institutional Shares shall be (i)
offered at net asset value, (ii) offered only to certain
categories of institutional customers as approved from time
to time by the Directors and as set forth in the Fund's
prospectus and (iii) may be subject to ongoing Service Fees
and/or Distribution Fees as approved from time to time by the
Directors and set forth in the Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that
do not incur a front-end sales charge and of Class B Shares and Class
C Shares as follows:
a. Class A Shares. The CDSC Period for Class A Shares shall be
18 months. The CDSC Rate shall be as set forth in the Fund's
prospectus, the relevant portions of which are incorporated
herein by this reference. No CDSC shall be imposed on Class A
Shares unless so provided in a Fund's prospectus.
b. Class B Shares. The CDSC Period for the Class B Shares
shall be six years. The CDSC Rate for the Class B Shares
shall be as set forth in the Fund's prospectus, the relevant
portions of which are incorporated herein by this reference.
3
<PAGE> 4
c. Class C Shares. The CDSC Period for the Class C Shares shall
be one year. The CDSC Rate for the Class C Shares shall be as
set forth in the Fund's prospectus, the relevant portions of
which are incorporated herein by reference.
d. Method of Calculation. The CDSC shall be assessed on an
amount equal to the lesser of the then current market value
or the cost of the Shares being redeemed. No sales charge
shall be imposed on increases in the net asset value of the
Shares being redeemed above the initial purchase price. No
CDSC shall be assessed on Shares derived from reinvestment of
dividends or capital gains distributions. The order in which
Shares are to be redeemed when not all of such Shares would
be subject to a CDSC shall be determined by the Distributor
in accordance with the provisions of Rule 6c-10 under the
Act.
e. Waiver. The Distributor may in its discretion waive a CDSC
otherwise due upon the redemption of Shares and disclosed in
the Fund's prospectus or statement of additional information
and, for the Class A Shares, as allowed under Rule 6c-10
under the Act.
6. Exchange Privileges. Exchanges of Shares shall be permitted between
Funds as follows:
a. Class A Shares may be exchanged for Class A Shares of another
Portfolio, subject to certain limitations set forth in the
Fund's prospectus as it may be amended from time to time,
relevant portions of which are incorporated herein by this
reference.
b. Class B Shares may be exchanged for Class B Shares of another
Portfolio at their relative net asset value.
c. Class C Shares may be exchanged for Class C Shares of any
other Portfolio at their relative net asset value.
d. Depending upon the Portfolio from which and into which an
exchange is being made and when the shares were purchased,
shares being acquired in an exchange may be acquired at their
offering price, at their net asset value or by paying the
difference in sales charges, as disclosed in the Fund's
prospectus and statement of additional information.
e. CDSC Computation. The CDSC payable upon redemption of Class A
Shares, Class B Shares and Class C Shares subject to a CDSC
shall be computed in the manner described in the Fund's
prospectus.
7. Service and Distribution Fees. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's
prospectus, relevant portions of which are incorporated herein by this
reference. All other terms and conditions with respect to Service Fees
and Distribution Fees shall be governed by the Plan of Distribution
adopted by the Fund with respect to such fees and Rule 12b-1 of the
Act.
4
<PAGE> 5
8. Conversion of Class B Shares.
a. Shares Received upon Reinvestment of Dividends and
Distributions - Shares purchased through the reinvestment of
dividends and distributions paid on Shares subject to
conversion shall be treated as if held in a separate
sub-account. Each time any Shares in a Shareholder's account
(other than Shares held in the sub-account) convert to
Class A Shares, a proportionate number of Shares held in the
sub-account shall also convert to Class A Shares.
b. Conversions on Basis of Relative Net Asset Value - All
conversions shall be effected on the basis of the relative
net asset values of the two Classes without the imposition of
any sales load or other charge.
c. Amendments to Plan of Distribution for Class A Shares - If
any amendment is proposed to the Plan of Distribution under
which Service Fees and Distribution Fees are paid with
respect to Class A Shares of a Fund that would increase
materially the amount to be borne by those Class A Shares,
then no Class B Shares shall convert into Class A Shares of
that Fund until the holders of Class B Shares of that Fund
have also approved the proposed amendment. If the holders of
such Class B Shares do not approve the proposed amendment,
the Directors of the Fund and the Distributor shall take such
action as is necessary to ensure that the Class voting
against the amendment shall convert into another Class
identical in all material respects to Class A Shares of the
Fund as constituted prior to the amendment.
9. This Plan shall not take effect until a majority of the Directors of a
Fund, including a majority of the Directors who are not interested
persons of the Fund, shall find that the Plan, as proposed and
including the expense allocations, is in the best interests of each
Class individually and the Fund as a whole.
10. This Plan may not be amended to materially change the provisions of
this Plan unless such amendment is approved in the manner specified in
Section 9 above.
5
<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, 1997.
</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-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 431,928,484
<INVESTMENTS-AT-VALUE> 434,422,415
<RECEIVABLES> 6,343,699
<ASSETS-OTHER> 123,934
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 440,890,048
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,212,825
<TOTAL-LIABILITIES> 2,212,825
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 443,515,589
<SHARES-COMMON-STOCK> 43,572,323
<SHARES-COMMON-PRIOR> 50,399,269
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,332,297)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,493,931
<NET-ASSETS> 438,677,223
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 24,654,293
<OTHER-INCOME> 0
<EXPENSES-NET> (2,128,383)
<NET-INVESTMENT-INCOME> 22,525,910
<REALIZED-GAINS-CURRENT> (328,964)
<APPREC-INCREASE-CURRENT> 4,775,213
<NET-CHANGE-FROM-OPS> 26,972,159
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (22,525,910)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,459,367
<NUMBER-OF-SHARES-REDEEMED> (33,903,093)
<SHARES-REINVESTED> 1,616,780
<NET-CHANGE-IN-ASSETS> (63,838,582)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7,003,333)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 837,760
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,133,546
<AVERAGE-NET-ASSETS> 366,506,207
<PER-SHARE-NAV-BEGIN> 9.97
<PER-SHARE-NII> .54
<PER-SHARE-GAIN-APPREC> .10
<PER-SHARE-DIVIDEND> (.54)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.07
<EXPENSE-RATIO> .54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<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,
1997.
</LEGEND>
<CIK> 0000842790
<NAME> AIM INVESTMENT SECURITIES FUNDS
<SERIES>
<NUMBER> 002
<NAME> LIMITED MATURITY TREASURY INSTITUTIONAL SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 431,928,484
<INVESTMENTS-AT-VALUE> 434,422,415
<RECEIVABLES> 6,343,699
<ASSETS-OTHER> 123,934
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 440,890,048
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,212,825
<TOTAL-LIABILITIES> 2,212,825
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 443,515,589
<SHARES-COMMON-STOCK> 43,572,323
<SHARES-COMMON-PRIOR> 50,399,269
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,332,297)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,493,931
<NET-ASSETS> 438,677,223
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 24,654,293
<OTHER-INCOME> 0
<EXPENSES-NET> (2,128,383)
<NET-INVESTMENT-INCOME> 22,525,910
<REALIZED-GAINS-CURRENT> (328,964)
<APPREC-INCREASE-CURRENT> 4,775,213
<NET-CHANGE-FROM-OPS> 26,972,159
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (22,525,910)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,459,367
<NUMBER-OF-SHARES-REDEEMED> (33,903,093)
<SHARES-REINVESTED> 1,616,780
<NET-CHANGE-IN-ASSETS> (63,838,582)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7,003,333)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 837,760
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,133,546
<AVERAGE-NET-ASSETS> 52,373,873
<PER-SHARE-NAV-BEGIN> 9.97
<PER-SHARE-NII> .56
<PER-SHARE-GAIN-APPREC> .10
<PER-SHARE-DIVIDEND> (.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.07
<EXPENSE-RATIO> .31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
