<PAGE> 1
As filed with the Securities and Exchange Commission on November 18, 1998
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. 10 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 14
(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
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(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
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(Name and Address of Agent for Service)
Copy to:
Jeffrey H. Kupor, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Amendment
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph a(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
(Continued on Next Page)
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If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
<PAGE> 3
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
APPLICATION INSIDE
AIM Investment Securities Funds
RETAIL CLASS OF AIM LIMITED MATURITY
TREASURY FUND
PROSPECTUS
NOVEMBER 18, 1998
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 18,
1998, 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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
</TABLE>
<TABLE>
<S> <C>
SUMMARY............................... 2
THE FUND.............................. 4
Table of Fees and Expenses.......... 4
Financial Highlights................ 5
Performance......................... 6
Investment Program.................. 6
Management.......................... 8
Organization of the Trust........... 9
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--....... A-1
Introduction to The AIM Family of
Funds............................ A-1
How to Purchase Shares.............. A-1
Terms and Conditions of Purchase of
the AIM Funds.................... A-2
Special Plans....................... A-10
Exchange Privilege.................. A-12
How to Redeem Shares................ A-15
Determination of Net Asset Value.... A-19
Dividends, Distributions and Tax
Matters.......................... A-19
General Information................. A-23
APPLICATION INSTRUCTIONS.............. B-1
</TABLE>
SUMMARY
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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 two investment portfolios: AIM LIMITED MATURITY
TREASURY FUND (the "Fund") and AIM HIGH YIELD FUND II. 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 different 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
approximately 90 investment company portfolios encompassing a broad range of
investment objectives. 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, generally 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
2
<PAGE> 5
Fund's shares or, subject to certain conditions, in shares of another fund in
The AIM Family of Funds. See "Dividends, Distributions and Tax Matters" and
"Special Plans."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com,
Invest With Discipline, La Familia AIM de Fondos and La Familia AIM de Fondos
and Design are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 6
THE FUND
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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, 1998. 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> 7
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FINANCIAL HIGHLIGHTS
Shown below are the financial highlights during each of the fiscal years
ended July 31, 1998, 1997, 1996 and 1995, the eleven months ended July 31, 1994,
each of the years in the five-year period ended August 31, 1993. 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,
-------------------------------------------------------- --------------------------------
1998 1997 1996 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................. $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79
Income from investment
operations:
Net investment income..... 0.53 0.54 0.55 0.54 0.35 0.42 0.58 0.72
Net gains (losses) on
securities (both realized
and unrealized).......... -- 0.10 (0.06) 0.07 (0.20) 0.05 0.29 0.22
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations.......... 0.53 0.64 0.49 0.61 0.15 0.47 0.87 0.94
-------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income....... (0.53) (0.54) (0.55) (0.54) (0.35) (0.42) (0.58) (0.72)
Distributions from net
realized capital gains.. -- -- -- -- (0.08) (0.02) (0.09) --
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions... (0.53) (0.54) (0.55) (0.54) (0.43) (0.44) (0.67) (0.72)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period.................... $ 10.07 $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01
======== ======== ======== ======== ======== ======== ======== ========
Total return(a)............ 5.42% 6.55% 4.98% 6.36% 1.52% 4.65% 8.93% 9.95%
======== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted).......... $345,355 $389,812 $359,048 $274,480 $329,942 $348,937 $260,454 $131,880
======== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets...... 0.54%(b) 0.54% 0.54% 0.51% 0.47%(c) 0.46% 0.48% 0.54%
======== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets.................. 5.29%(b) 5.35% 5.45% 5.44% 3.75%(c) 4.07% 5.60% 7.25%
======== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate... 133% 130% 117% 120% 120% 123% 120% 215%
======== ======== ======== ======== ======== ======== ======== ========
Borrowings for the period:
Amount of debt outstanding
at end of period (000s
omitted)................ -- -- -- -- -- -- -- --
Average amount of debt
outstanding during the
period (000s omitted)(f) -- -- -- -- -- -- -- --
Average number of shares
outstanding during the
period (000s omitted)(f) 37,552 36,600 32,350 28,337 34,101 30,416 18,378 10,559
Average amount of debt per
share during the period. -- -- -- -- -- -- -- --
<CAPTION>
AUGUST 31,
------------------
1990 1989
------- -------
<S> <C> <C>
Net asset value, beginning
of period................. $ 9.78 $ 9.80
Income from investment
operations:
Net investment income..... 0.77 0.84
Net gains (losses) on
securities (both realized
and unrealized).......... 0.01 (0.02)
------- -------
Total from investment
operations.......... 0.78 0.82
------- -------
Less distributions:
Dividends from net
investment income....... (0.77) (0.84)
Distributions from net
realized capital gains.. -- --
------- -------
Total distributions... (0.77) (0.84)
------- -------
Net asset value, end of
period.................... $ 9.79 $ 9.78
======= =======
Total return(a)............ 8.32% 8.71%
======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted).......... $79,871 $70,781
======= =======
Ratio of expenses to
average net assets...... 0.50%(d) 0.45%(e)
======= =======
Ratio of net investment
income to average net
assets.................. 7.90%(d) 8.59%(e)
======= =======
Portfolio turnover rate... 192% 220%
======= =======
Borrowings for the period:
Amount of debt outstanding
at end of period (000s
omitted)................ -- $ 9,943
Average amount of debt
outstanding during the
period (000s omitted)(f) $ 5,101 $14,301
Average number of shares
outstanding during the
period (000s omitted)(f) 7,389 7,295
Average amount of debt per
share during the period. $ 0.69 $ 1.96
</TABLE>
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(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 $378,032,807.
(c) Annualized.
(d) After waiver of advisory fees.
(e) After waiver of advisory fees and expense reimbursements.
(f) Averages computed on a daily basis.
5
<PAGE> 8
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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> 9
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 Investment Company
Act of 1940 (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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund is permitted to invest
in other investment companies to the extent permitted by the 1940 Act, and rules
and regulations thereunder, and, if applicable, exemptive orders granted by the
SEC.
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 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> 10
- --------------------------------------------------------------------------------
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 is a wholly owned subsidiary of AIM Management, a
holding company engaged in the financial services business and is an indirect,
wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are
an independent investment management group engaged in institutional investment
management and retail mutual fund businesses in the United States, Europe and
the Pacific Region. Information concerning the Board of Trustees may be found in
the Statement of Additional Information.
For a discussion of AIM Management's and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
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 (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its subsidiaries, manages or advises
approximately 90 investment company portfolios encompassing a broad range of
investment objectives.
Under the terms of the Advisory Agreement, AIM supervises all aspects of
the Fund's operations and provides investment advisory services to 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. AIM and the
Fund have entered into a Master Administrative Services Agreement, 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, AFS,
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 Board of 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,
1998, 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, 1998, the Fund paid 0.01% of its average daily
net assets to AIM for reimbursement for administrative services.
FEE WAIVERS. In order to increase the yield to investors, AIM may from time
to time voluntarily waive or reduce its fee, while retaining its ability to be
reimbursed for such fee prior to the end of such fiscal year. Fee waivers or
reductions and waivers of expense reimbursements, other than those set forth in
the Advisory Agreement, may be rescinded at any time without notice to
investors.
PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Fund. AIM's investment staff consists of 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
Scott W. Johnson, Karen Dunn Kelley and Marcel S. Theriot. Mr. Johnson is Vice
President of A I M Capital Management, Inc. ("AIM Capital"), a wholly owned
subsidiary of AIM, and has been responsible for the Fund since 1998. He has been
associated with AIM since 1994 and has been an investment professional since
1994. Prior to 1994 he attended Vanderbilt University. Ms. Kelley is Senior Vice
President of AIM Capital; Vice President of AIM and of the Trust; and has been
responsible for the Fund since 1992. Ms. Kelley has been associated with AIM
since 1989 and has a total of 15 years of experience as an investment
professional. Mr. Theriot is an investment officer of AIM Capital and has been
responsible for the Fund since 1998. He has been associated
8
<PAGE> 11
with AIM and/or its subsidiaries since 1994 and has been an investment
professional since 1994. Prior to 1994 he was a Service Marketing Representative
with Van Kampen American Capital Asset Management, Inc.
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement
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.
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. (the
"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 Amended
and Restated Agreement and Declaration of Trust, dated November 5, 1998 (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> 12
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 at least
two-thirds 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.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP,
Philadelphia, Pennsylvania, serves as counsel to the Trust and passes upon
certain legal matters for the Trust.
10
<PAGE> 13
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR REAL ESTATE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND II
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP EQUITY FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL INFRASTRUCTURE FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for
non-resident aliens) or Form W-9 (certifying exempt status) accompanying the
registration information will be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
MCF-11/98
A-1
<PAGE> 14
Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM SMALL CAP OPPORTUNITIES FUND is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM SMALL CAP OPPORTUNITIES FUND is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM HIGH YIELD FUND II, AIM INCOME FUND,
AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY
MARKET FUND, AIM MUNICIPAL BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
STRATEGIC INCOME FUND,AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND
and AIM WORLDWIDE GROWTH FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), the
"Multiple Class Funds," may be purchased at their respective net asset value
plus a sales charge as indicated below, except that Class A shares of AIM DOLLAR
FUND and AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY
MARKET FUND are sold without a sales charge and Class B shares (the "Class B
shares") and Class C shares (the "Class C shares") of the Multiple Class Funds
which offer such classes are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. Class B shares of AIM
DOLLAR FUND, however, may be acquired only by an exchange of shares of another
AIM Fund. These contingent deferred sales charges are described under the
caption "How to Redeem Shares -- Multiple Distribution System." Securities
dealers and other persons entitled
MCF-11/98
A-2
<PAGE> 15
to receive compensation for selling or servicing shares of a Multiple Class Fund
may receive different compensation for selling or servicing one particular class
of shares over another class in the same Multiple Class Fund. Factors an
investor should consider prior to purchasing Class A, Class B or Class C shares
(or, if applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are
described below under "Special Information Relating to Multiple Class Funds."
For information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM BASIC VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP EQUITY FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH 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(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
- ---------------
(1) AIM SMALL CAP OPPORTUNITIES FUND will not accept any single purchase in
excess of $250,000.
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-11/98
A-3
<PAGE> 16
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM HIGH YIELD FUND II, AIM
INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND,
AIM MUNICIPAL BOND FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
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.
MCF-11/98
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<PAGE> 17
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1.00% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed 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.
MCF-11/98
A-5
<PAGE> 18
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class C shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class C shares redeemed
within one year from the date such shares were purchased are subject to a
1.00% contingent deferred sales charge. No contingent deferred sales charge
will be imposed if Class C shares are redeemed after one year from the date
such shares were purchased. Redemptions of Class C shares and associated
charges are further described under the caption "How to Redeem
Shares -- Multiple Distribution System."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to
MCF-11/98
A-6
<PAGE> 19
bring the account value up to $500. If a fund determines that a shareholder has
provided incorrect information in opening an account with a fund or in the
course of conducting subsequent transactions with the fund related to such
account, the fund may, in its discretion, redeem the account and distribute the
proceeds of such redemption to the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A shares of the AIM Funds that
are otherwise subject to an initial sales charge, provided that such purchases
are made by a "purchaser" as hereinafter defined. Purchases of Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for (i) Class A
shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gain distributions
will not be applied to the LOI. At any time during the 13-month period after
meeting the original obligation, a purchaser may revise his intended investment
amount upward by submitting a written and signed request. Such a revision will
not change the original expiration date. By signing an LOI, a purchaser is not
making a binding commitment to purchase additional shares, but if purchases made
within the 13-month period do not total the amount specified, the investor will
pay the in-
MCF-11/98
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<PAGE> 20
creased amount of sales charge as described below. Purchases made within 90 days
before signing an LOI will be applied toward completion of the LOI. The LOI
effective date will be the date of the first purchase with the 90-day period.
The Transfer Agent will process necessary adjustments upon the expiration or
completion date of the LOI. Purchases made more than 90 days before signing an
LOI will be applied toward completion of the LOI based on the value of the
shares purchased calculated at the public offering price on the effective date
of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by
MCF-11/98
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<PAGE> 21
CIGNA Investments, Inc. or any of its affiliated companies for the benefit of
its directors' deferred compensation plans; (f) discretionary advised clients of
AIM or AIM Capital; (g) registered representatives and employees of dealers who
have entered into agreements with AIM Distributors (or financial institutions
that have arrangements with such dealers with respect to the sale of shares of
the AIM Funds) and any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, provided that
purchases at net asset value are permitted by the policies of such person's
employer; (h) certain broker-dealers, investment advisers or bank trust
departments that provide asset allocation, similar specialized investment
services or investment company transaction services for their customers, that
charge a minimum annual fee for such services, and that have entered into an
agreement with AIM Distributors with respect to their use of the AIM Funds in
connection with such services; (i) any employee or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any
employee, of Triformis Inc.; (j) shareholders of the AIM/GT Funds as of April
30, 1987 who since that date continually have owned shares of one or more of the
AIM/GT Funds; and (k) certain former AMA Investment Advisers' shareholders who
became shareholders of the AIM GLOBAL HEALTH CARE FUND in October 1989, and who
have continuously held shares in the AIM/GT Funds since that time.
In addition, shares of any AIM Fund (except AIM SMALL CAP OPPORTUNITIES FUND)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the Code
and sponsored by nonprofit organizations defined under Section 501(c)(3) of the
Code. Such plans will qualify for purchases at net asset value provided that (1)
the total amount invested in the plan is at least $1,000,000, (2) the sponsor
signs a $1,000,000 LOI, (3) such shares are purchased by an employer-sponsored
plan with at least 100 eligible employees, or (4) all of the plan's transactions
are executed through a single financial institution or service organization who
has entered into an agreement with AIM Distributors with respect to their use of
the AIM Funds in connection with such accounts. Section 403(b) plans sponsored
by public educational institutions will not be eligible for net asset value
purchases based on the aggregate investment made by the plan or the number of
eligible employees. Participants in such plans will be eligible for reduced
sales charges based solely on the aggregate value of their individual
investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE
NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay investment
dealers or other financial service firms for share purchases of the Load Funds
(as defined under the caption "Exchange Privilege") sold at net asset value to
an employee benefit plan in accordance with this paragraph as follows: 1% of the
first $2 million of such purchases, plus 0.80% of the next $1 million of such
purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of
amounts in excess of $20 million of such purchases and up to 0.10% of the net
asset value of any Class A shares of AIM LIMITED MATURITY TREASURY FUND sold at
net asset value to an employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone 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."
MCF-11/98
A-9
<PAGE> 22
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value, on a per fund basis, at the time the shareholder
elects to participate in the Systematic Withdrawal Plan. Systematic Withdrawal
Plans with respect to shares subject to a contingent deferred sales charge that
exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to
MCF-11/98
A-10
<PAGE> 23
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges." The account from which
exchanges are to be made must have a value of at least $5,000 when a shareholder
elects to begin this program, and the exchange minimum is $50 per transaction.
All of the accounts that are part of this program must have identical
registrations. The net asset value of shares purchased under this program may
vary, and may be more or less advantageous than if shares were not exchanged
automatically. There is no charge for entering the Dollar Cost Averaging
program. Sale charges may apply, as described under the caption "Exchange
Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be rebalanced
on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
MCF-11/98
A-11
<PAGE> 24
- --------------------------------------------------------------------------------
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 INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM HIGH YIELD FUND II -- CLASS A
FUND -- CLASS A AIM INCOME FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM CHARTER FUND -- CLASS A FUND -- CLASS A
AIM CONSTELLATION AIM INTERNATIONAL GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM DEVELOPING MARKETS AIM JAPAN GROWTH FUND -- CLASS A
FUND -- CLASS A AIM LATIN AMERICAN GROWTH
AIM EMERGING MARKETS FUND -- CLASS A
FUND -- CLASS A AIM MID CAP EQUITY
AIM EMERGING MARKETS DEBT FUND -- CLASS A
FUND -- CLASS A AIM MONEY MARKET
AIM EUROPE GROWTH FUND -- CLASS A
FUND -- CLASS A AIM MUNICIPAL BOND
AIM EUROPEAN DEVELOPMENT FUND -- CLASS A
FUND -- CLASS A AIM NEW PACIFIC GROWTH
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SELECT GROWTH FUND -- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AIM SMALL CAP GROWTH
AND SERVICES FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES AIM SMALL CAP OPPORTUNITIES
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL GOVERNMENT INCOME AIM STRATEGIC INCOME
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL GROWTH AIM TAX-EXEMPT BOND FUND
FUND -- CLASS A OF CONNECTICUT -- CLASS A
AIM GLOBAL GROWTH & AIM VALUE FUND -- CLASS A
INCOME FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A
AIM GLOBAL HEALTH CARE AIM WORLDWIDE GROWTH
FUND -- CLASS A FUND -- CLASS A
</TABLE>
MCF-11/98
A-12
<PAGE> 25
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(and Class A shares of AIM DOLLAR FUND); (ii) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM SMALL CAP OPPORTUNITIES FUND are currently not available.
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,
apply if No Load shares were Offering 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 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.
MCF-11/98
A-13
<PAGE> 26
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or among Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
MCF-11/98
A-14
<PAGE> 27
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS 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 other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM FLOATING RATE
FUND pursuant to an exchange will be subject, in lieu of the contingent deferred
sales charge described above, to a contingent deferred sales charge equivalent
to the early withdrawal charge on the shares of AIM FLOATING RATE FUND. For
purposes of computing such early withdrawal charge, the holding period of Class
B shares being redeemed will include the holding period of AIM FLOATING RATE
FUND shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
account value, on a per fund basis, of the shareholder's investment in Class B
or Class C shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan, (4) effected pursuant to the right of a Multiple
Class Fund to liquidate a shareholder's account if the aggregate net asset value
of shares held in the account is less than the designated minimum account size
described in the prospectus of such Multiple Class Fund, (5) effected by AIM of
its investment in Class B or Class C shares and (6) of Class C shares where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payment otherwise payable to the dealer described in the last paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
MCF-11/98
A-15
<PAGE> 28
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, 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 account value, on a per fund basis, of the shareholder's investment in Class
A shares at the time the shareholder elects to participate in the Systematic
Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
MCF-11/98
A-16
<PAGE> 29
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
only). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
MCF-11/98
A-17
<PAGE> 30
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund at the net asset value next computed after receipt by the
Transfer Agent of the funds to be reinvested; provided, however, if the
redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY
FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject
to the difference in sales charge between the shares redeemed and the shares the
proceeds are reinvested in. The shareholder must ask the Transfer Agent for such
privilege at the time of reinvestment. A realized gain on the redemption is
taxable, and reinvestment will not alter the taxes due on any capital gains,
except under the circumstances described below. If there has been a loss on the
redemption and shares of the same fund are repurchased, all of the loss may not
be tax deductible, depending on the timing and amount reinvested. Under the
Code, if the redemption proceeds of fund shares on which a sales charge was paid
are reinvested in shares of the same fund, or exchanged for shares of another
AIM Fund, at a reduced sales charge within 90 days of the payment of the sales
charge, the shareholder's basis in the fund shares redeemed may not include the
amount of the sales charge paid, thereby reducing the loss or increasing the
gain recognized from the redemption; however, the shareholder's basis in the
fund shares purchased will include the sales charge. Each AIM Fund may amend,
suspend or cease offering the privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
MCF-11/98
A-18
<PAGE> 31
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of determining
net asset value per share, futures and options contracts generally will be
valued 15 minutes after the close of trading of the NYSE. The net asset value
per share is calculated by subtracting a class' liabilities from its assets and
dividing the result by the total number of class shares outstanding. The
determination of net asset value per share is made in accordance with generally
accepted accounting principles. Among other items, liabilities include accrued
expenses and dividends payable, and total assets include portfolio securities
valued at their market value, as well as income accrued but not yet received.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the supervision of the fund's
officers and in accordance with methods which are specifically authorized by its
governing Board of Directors or Trustees. Short-term obligations with maturities
of 60 days or less, and the securities held by the Money Market Funds, are
valued at amortized cost as reflecting fair value. AIM HIGH INCOME MUNICIPAL
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM
TAX-FREE INTERMEDIATE FUND value variable rate securities that have an
unconditional demand or put feature exercisable within seven days or less at
par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
</TABLE>
MCF-11/98
A-19
<PAGE> 32
<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 GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM HIGH YIELD FUND II.................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in 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
MCF-11/98
A-20
<PAGE> 33
obtain a form to authorize such reinvestments in another AIM Fund. Such
reinvestments into the AIM Funds are not subject to sales charges, and shares so
purchased are automatically credited to the account of the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund or AIM Cash Reserve Shares
because of higher distribution fees paid by Class B and Class C shares.
Dividends on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains
(taxable at a maximum rate of 20%), regardless of the length of time the
shareholder held his shares. Recent legislation provides that a maximum tax rate
of 20% (10% for taxpayers in the 15% marginal tax bracket) will apply to gain
recognized after December 31, 1997 on capital assets held for more than one
year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH YIELD FUND, AIM HIGH YIELD
FUND II, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. Certain dividends and distributions declared
in October, November or December of a calendar year are taxable to shareholders
as though received on December 31 of that year if paid to them during January of
the following calendar year. No gain or loss will be recognized by shareholders
upon the automatic conversion of Class B shares of a Multiple Class Fund into
Class A shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
MCF-11/98
A-21
<PAGE> 34
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
MCF-11/98
A-22
<PAGE> 35
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
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-11/98
A-23
<PAGE> 36
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-11/98
B-1
<PAGE> 37
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. 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").
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 redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-11/98
B-2
<PAGE> 38
[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> 39
STATEMENT OF
ADDITIONAL INFORMATION
AIM INVESTMENT SECURITIES FUNDS
----------
AIM HIGH YIELD FUND II
AND
CLASS A SHARES 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 FOR THE
ABOVE-NAMED FUNDS, COPIES 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 18, 1998
RELATING TO PROSPECTUS OF AIM HIGH YIELD FUND II DATED: OCTOBER 1, 1998
AND PROSPECTUS OF CLASS A SHARES OF THE AIM LIMITED MATURITY TREASURY FUND
DATED: NOVEMBER 18, 1998
<PAGE> 40
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION.......................................................................................................................1
GENERAL INFORMATION ABOUT THE TRUST................................................................................................1
The Trust and its Shares..................................................................................................1
PERFORMANCE INFORMATION............................................................................................................2
Yield Calculations........................................................................................................2
Total Return Calculations.................................................................................................2
Historical Portfolio Results..............................................................................................3
PORTFOLIO TRANSACTIONS.............................................................................................................4
General Brokerage Policy..................................................................................................4
Allocation of Portfolio Transactions......................................................................................5
Section 28(e) Standards...................................................................................................5
Portfolio Turnover........................................................................................................6
INVESTMENT OBJECTIVES AND POLICIES.................................................................................................6
High Yield and Limited Maturity...........................................................................................6
High Yield................................................................................................................7
INVESTMENT RESTRICTIONS...........................................................................................................12
Additional Investment Restrictions of the Funds..........................................................................14
Investing for Control....................................................................................................14
MANAGEMENT........................................................................................................................15
Trustees and Officers....................................................................................................15
Remuneration of Trustees.................................................................................................18
AIM Funds Retirement Plan for Eligible Directors/Trustees................................................................20
Deferred Compensation Agreements.........................................................................................20
Investment Advisory and Other Services...................................................................................21
Distribution Plans.......................................................................................................23
THE DISTRIBUTION AGREEMENTS.......................................................................................................25
HOW TO PURCHASE AND REDEEM SHARES.................................................................................................26
NET ASSET VALUE DETERMINATION.....................................................................................................27
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS..........................................................................................28
Reinvestment of Dividends and Distributions..............................................................................28
Tax Matters..............................................................................................................28
Qualification as a Regulated Investment Company..........................................................................28
Excise Tax on Regulated Investment Companies.............................................................................30
Fund Distributions.......................................................................................................30
Sale or Redemption of Fund Shares........................................................................................31
Foreign Shareholders.....................................................................................................31
Effect of Future Legislation; Local Tax Considerations...................................................................32
DESCRIPTION OF FUND SHARES........................................................................................................32
</TABLE>
ii
<PAGE> 41
<TABLE>
<S> <C>
MISCELLANEOUS INFORMATION.........................................................................................................32
Audit Reports............................................................................................................32
Legal Matters............................................................................................................33
Custodian and Transfer Agent.............................................................................................33
Principal Holders of Securities..........................................................................................33
FINANCIAL STATEMENTS..............................................................................................................FS
</TABLE>
iii
<PAGE> 42
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, dated November 18,
1998, which relates to the Class A shares of AIM Limited Maturity Treasury Fund
and in another Prospectus (collectively, the "Prospectuses" and each separately
a "Prospectus") dated October 1, 1998, which relates to Class A, Class B and
Class C shares of AIM High Yield Fund II (collectively, the "Funds", and each
separately a "Fund"). Copies of the Prospectuses and additional copies of this
Statement of Additional Information may be obtained without charge by writing
the principal distributor of the Funds' shares, A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, Texas 77210-4739, or by calling (800)
347-4246. Investors must receive and should read the Prospectus before they
invest in any Fund.
This Statement of Additional Information is intended to furnish
investors with additional information concerning the Funds. Some of the
information set forth in this Statement of Additional Information is also
included in the Prospectuses. Additionally, the Prospectuses 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 Prospectuses and this Statement of Additional
Information, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
GENERAL INFORMATION ABOUT THE 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, AIM
Limited Maturity Treasury Fund ("Limited Maturity") was reorganized on October
15, 1993, as a portfolio of AIM Investment Securities Funds, a Delaware business
trust. A copy of the Trust's Amended and Restated Agreement and Declaration of
Trust dated November 5, 1998, (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, Limited Maturity 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 Limited Maturity (or a class thereof) is that of the Predecessor
Fund (or corresponding class thereof). The AIM High Yield II Fund portfolio
("High Yield") was created as of June 9, 1998. 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 Prospectuses 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 Fund, 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 a 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.
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Each share of beneficial interest of a 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 Trust offers two separate Funds with
differing Class structures: Class A shares and the Institutional Class of
Limited Maturity and Class A, Class B and Class C shares of High Yield. As
further described in the Prospectuses, each 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 of the respective Funds are entitled to share
pro rata in the net assets belonging to each Fund available for distribution.
Under Delaware law, the 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 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 the trustees to all parties, and each
party thereto must expressly waive all rights of action directly against
shareholders of the Trust. The Trust Agreement provides for indemnification out
of the property of a Fund for all losses and expenses of any shareholder of such
Fund held liable on account of being or having been a shareholder. Thus, the
risk of a shareholder incurring financial loss is limited to circumstances in
which the Fund would be unable to meet its obligations and wherein the
complaining party was not held to be bound by the disclaimer.
PERFORMANCE INFORMATION
YIELD CALCULATIONS
Yields for each Fund used in advertising are computed as follows: (a)
divide a 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.
Income calculated for the purpose of calculating a 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 a Fund may differ from the rate of
distributions that Fund paid over the same period or the rate of income reported
in that Fund's financial statements.
Each Fund may also quote its distribution rate, which expresses the
historical amount of income a Fund paid as dividends to its shareholders as a
percentage of the Fund's offering price. The distribution rate for the Class A
shares of Limited Maturity for the thirty day period ended July 31, 1998, was
4.99%. This distribution rate was calculated by dividing dividends declared over
the thirty days ended July 31, 1998, as applicable, by the maximum offering
price of the Class A shares of Limited Maturity at the end of the period and
annualizing the result. High Yield had not commenced operations as of July 31,
1998.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of a 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
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<PAGE> 44
hypothetical investment in a 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 a 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 a Fund.
In addition to average annual total return, a Fund may quote unaveraged
or cumulative total return reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total returns may
be quoted as a percentage or as a dollar amount, and may be calculated for a
single investment, a series of investments, and/or a series of redemptions over
any time period. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their contributions to total
return. Total returns, 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 or maximum
contingent deferred sales charge into account. If quoted without the sales
charge or contingent deferred sales charge, the performance quotation will be
noted by an asterisk or other conspicuous footnote disclosing this fact.
Excluding a Fund's sales charge or contingent deferred sales charge from a total
return calculation produces a higher total return figure.
HISTORICAL PORTFOLIO RESULTS
A 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. A Fund may also advertise mutual fund
performance rankings which have been assigned to it by such monitoring services.
A 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, a
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 a 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, a 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 a 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 of
Limited Maturity for the one and five year periods ended July 31, 1998, and the
period beginning December 15, 1987 (date operations commenced) through July 31,
1998.
<TABLE>
<CAPTION>
AVERAGE
ANNUAL RETURN CUMULATIVE RETURN
------------- -----------------
<S> <C> <C>
One year ended 07/31/98 5.42% 5.42%
Five year ended 07/31/98 4.73% 26.02%
12/15/87 through 07/31/98 6.52% 83.70%
</TABLE>
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<PAGE> 45
The 30-day yield for the Class A shares as of July 31, 1998, was 5.04%
High Yield had not commenced operations as of July 31, 1998.
During the one-year period ended July 31, 1998, a hypothetical $1,000
investment in the Class A shares of Limited Maturity at the beginning of such
period would have been worth $1,055. During the five-year period ended July 31,
1998, a hypothetical $1,000 investment in the Class A shares of Limited Maturity
at the beginning of such period would have been worth $1,200. For the period
from December 15, 1987 (date operations commenced) through July 31, 1998, a
hypothetical $1,000 investment in the Class A shares of Limited Maturity would
have been worth $1,837. Each of these figures assume the maximum sales charge
was paid and all distributions were reinvested.
PORTFOLIO TRANSACTIONS
GENERAL BROKERAGE POLICY
A I M Advisors, Inc. ("AIM") makes decisions to buy and sell securities
for each Fund, selects broker-dealers, effects the Funds' investment portfolio
transactions, allocates brokerage fees in such transactions, and where
applicable, negotiates commissions and spreads on transactions. Since most
purchases and sales of portfolio securities by the Funds are usually principal
transactions, the Funds incur little or no brokerage commissions. AIM's primary
consideration in effecting a security transaction is to obtain the most
favorable execution of the order, which includes the best price on the security
and a low commission rate. While AIM seeks reasonably competitive commission
rates, the Funds may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
In the event a Fund purchases securities traded in the over-the-counter
market, the Fund deals directly with dealers who make markets in the securities
involved, except when better prices are available elsewhere. Portfolio
transactions placed through dealers who are primary market makers are effected
at net prices without commissions, but which include compensation in the form of
a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. Although in recent years many overseas stock
markets have adopted a system of negotiated rates, a number of markets maintain
an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Funds) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Funds and other mutual funds advised by AIM or A I M
Capital Management, Inc. (collectively, the "AIM Funds") in particular,
including sales of the Funds and of the other AIM Funds. In connection with (3)
above, the Funds' trades may be executed directly by dealers that sell shares of
the AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a
Fund any commissions, fees, brokerage or similar payments paid by the Fund on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of a Fund's portfolio securities in a
tender or exchange offer.
Under the Investment Company Act of 1940, as amended, (the "1940 Act"),
certain persons affiliated with the Trust are prohibited from dealing with the
Funds as principal in any purchase or sale of securities unless an exemptive
order allowing such transactions is obtained from the SEC. The Funds may engage
in certain principal and agency transactions with banks and their affiliates
that own 5% or more of the outstanding
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<PAGE> 46
voting securities of an AIM Fund, provided the conditions of an exemptive order
received by the AIM Funds from the SEC are met. In addition, a Fund may purchase
or sell a security from or to another AIM Fund provided the Funds follow
procedures adopted by the Boards of Directors/Trustees of the various AIM Funds,
including the Trust. These inter-fund transactions do not generate brokerage
commissions but may result in custodial fees or taxes or other related expenses.
The 1940 Act also prohibits the Funds from purchasing a security being
publicly underwritten by a syndicate of which certain persons affiliated with
the Trust are members except in accordance with certain conditions.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some
of these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by one of
the Funds and by another AIM Fund or one or more of these investment accounts.
However, the position of each account in the same securities and the length of
time that each account may hold its investment in the same securities may vary.
The timing and amount of purchase by each account will also be determined by its
cash position. If the purchase or sale of securities is consistent with the
investment policies of the Fund(s) and one or more of these accounts, and is
considered at or about the same time, AIM will fairly allocate transactions in
such securities among the Fund(s) and these accounts. AIM may combine such
transactions, in accordance with applicable laws and regulations, to obtain the
most favorable execution. Simultaneous transactions could, however, adversely
affect a Fund's ability to obtain or dispose of the full amount of a security
which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided ... viewed in terms of
either that particular transaction or [AIM's] overall responsibilities with
respect to the accounts as to which it exercises investment discretion." The
services provided by the broker also must lawfully and appropriately assist AIM
in the performance of its investment decision-making responsibilities.
Accordingly, in recognition of research services provided to it, a Fund may pay
a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally or in
written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging
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<PAGE> 47
of meetings with management of companies, and the providing of access to
consultants who supply research information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services provided
to AIM by broker-dealers are available for the benefit of all accounts managed
or advised by AIM or by its affiliates. Some broker-dealers may indicate that
the provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the Funds. However, the Funds are not under any obligation to deal
with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Funds is not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research services
had they not been provided by broker-dealers, the expenses to AIM could be
considered to have been reduced accordingly.
Limited Maturity paid no brokerage commissions to brokers affiliated
with that 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 a Fund, and may increase capital gains which
are taxable as ordinary income when distributed to shareholders.
Changes in the portfolio holdings of a Fund are made without regard to
whether a sale would result in a profit or loss. The turnover rates of Limited
Maturity for the fiscal years ended July 31, 1998, 1997 and 1996, were 133%,
130% and 117%, respectively.
INVESTMENT OBJECTIVES AND POLICIES
The following discussion of investment policies supplements the
discussion of the investment objectives and policies set forth in the
Prospectuses under the headings "Investment Programs" and should be read only in
conjunction with the Prospectuses. There can be no assurance that a Fund will
achieve its investment objective. The values of the securities in which a Fund
invests fluctuate based upon interest rates and market factors.
HIGH YIELD AND LIMITED MATURITY
REPURCHASE AGREEMENTS. A repurchase agreement involves the purchase by
a Fund of an investment contract from a financial institution, such as a
domestic bank or primary dealers in U.S. Government securities or U.S. Treasury
obligations. 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 a 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 a
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, a
Fund would incur a loss to the extent that the proceeds from a sale
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<PAGE> 48
of the underlying securities were less than the repurchase price under the
agreement. A 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 a 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, a 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 a 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.
Limited Maturity's investment policies permit it to invest in
repurchase agreements with banks and broker-dealers pertaining to U.S. Treasury
obligations. However, in order to maximize the Fund's dividends which are exempt
from state income taxation, as a matter of operating policy, the Fund does not
currently invest in repurchase agreements.
HIGH YIELD
DELAYED DELIVERY AGREEMENTS. Delayed delivery agreements involve
commitments by the Fund to dealers or issuers to acquire securities or
instruments at a specified future date beyond the customary same-day settlement
for such securities or instruments. These commitments may fix the payment price
and interest rate to be received on the investment. Delayed delivery agreements
will not be used as a speculative or leverage technique. Rather, from time to
time, AIM can anticipate that cash for investment purposes will result from,
among other things, scheduled maturities of existing portfolio instruments or
from net sales of shares of a Fund. To assure that the Fund will be as fully
invested as possible in instruments meeting the Fund's investment objective, the
Fund may enter into delayed delivery agreements, but only to the extent of
anticipated funds available for investment during a period of not more than five
business days. Until the settlement date, the Fund will segregate liquid assets
of a dollar value sufficient at all times to make payment for the delayed
delivery securities. No more than 25% of the Fund's total assets will be
committed to delayed delivery agreements and when-issued securities, as
described below. The delayed delivery securities, which will not begin to accrue
interest or dividends until the settlement date, will be recorded as an asset of
the Fund and will be subject to the risk of market fluctuation. The purchase
price of the delayed delivery securities is a liability of the Fund until
settlement. Absent extraordinary circumstances, the Fund will not sell or
otherwise transfer the delayed delivery securities prior to settlement. If cash
is not available to the Fund at the time of settlement, the Fund may be required
to dispose of portfolio securities that it would otherwise hold to maturity in
order to meet its obligation to accept delivery under a delayed delivery
agreement. The Board of Trustees has determined that entering into delayed
delivery agreements does not present a materially increased risk of loss to
shareholders, but the Board of Trustees may restrict the use of delayed delivery
agreements if the risk of loss is determined to be material.
WHEN-ISSUED SECURITIES. Many new issues of securities are offered on a
"when-issued" basis, that is, the date for delivery of and payment for the
securities is not fixed at the date of purchase, but is set after the securities
are issued (normally within forty-five days after the date of the transaction).
The payment obligation and, if applicable, the interest rate that will be
received on the securities are fixed at the time the buyer enters into the
commitment. The Fund will only make commitments to purchase such securities with
the intention of actually acquiring such securities, but the Fund may sell these
securities before the settlement date if it is deemed advisable. No additional
when-issued commitments will be made if as a result more than 25% of the Fund's
total assets would become committed to purchases of when-issued securities and
delayed delivery agreements.
If the Fund purchases a when-issued security, it will direct its
custodian bank to collateralize the when-issued commitment by segregating liquid
assets in the same fashion as required for a delayed delivery agreement. Such
segregated liquid assets will likewise be marked-to-market, and the amount
segregated will be increased if necessary to maintain adequate coverage of the
when-issued commitments.
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<PAGE> 49
Securities purchased on a when-issued basis and the securities held in
the Fund's portfolio are subject to changes in market value based upon the
public's perception of the creditworthiness of the issuer and, if applicable,
changes in the level of interest rates. Therefore, if the Fund is to remain
substantially fully invested at the same time that it has purchased securities
on a when-issued basis, there will be a possibility that the market value of the
Fund's assets will fluctuate to a greater degree. Furthermore, when the time
comes for the Fund to meet its obligations under when-issued commitments, the
Fund will do so by using then available cash flow, by sale of the segregated
liquid assets, by sale of other securities or, although it would not normally
expect to do so, by directing the sale of the when-issued securities themselves
(which may have a market value greater or less than the Fund's payment
obligation).
A sale of securities to meet such obligations carries with it a greater
potential for the realization of net short-term capital gains, which are not
exempt from federal income taxes. The value of when-issued securities on the
settlement date may be more or less than the purchase price.
FOREIGN EXCHANGE TRANSACTIONS. Purchases and sales of foreign
securities are usually made with foreign currencies, and consequently the Fund
may from time to time hold cash balances in the form of foreign currencies and
multinational currency units. Such foreign currencies and multinational currency
units will usually be acquired on a spot (i.e., cash) basis at the spot rate
prevailing in foreign exchange markets, and will result in currency conversion
costs to the Fund. The Fund attempts to purchase and sell foreign currencies on
as favorable a basis as practicable; however, some price spread on foreign
exchange transactions (to cover service charges) may be incurred, particularly
when the Fund changes investments from one country to another, or when U.S.
dollars are used to purchase foreign securities. Certain countries could adopt
policies which would prevent the Fund from transferring cash out of such
countries, and the Fund may be affected either favorably or unfavorably by
fluctuations in relative exchange rates while they hold foreign currencies.
RULE 144A SECURITIES. The Fund may purchase securities which, while
privately placed, are eligible for purchase and resale pursuant to Rule 144A
under the Securities Act of 1933 (the "1933 Act"). This Rule permits certain
qualified institutional buyers, such as the Fund, to trade in privately placed
securities even though such securities are not registered under the 1933 Act.
AIM, under the supervision of the Trust's Board of Trustees, will consider
whether securities purchased under Rule 144A are illiquid and thus subject to
the Fund's restriction of investing no more than 15% of its net assets in
illiquid securities. Determination of whether a Rule 144A security is liquid or
not is a question of fact. In making this determination AIM will consider the
trading markets for the specific security taking into account the unregistered
nature of a Rule 144A security. In addition, AIM could consider the (i)
frequency of trades and quotes, (ii) number of dealers and potential purchasers,
(iii) dealer undertakings to make a market, and (iv) nature of the security and
of market place trades (for example, the time needed to dispose of the security,
the method of soliciting offers and the mechanics of transfer). The liquidity of
Rule 144A securities will also be monitored by AIM and, if as a result of
changed conditions, it is determined that a Rule 144A security is no longer
liquid, the Fund's holdings of illiquid securities will be reviewed to determine
what, if any, action is required to assure that the Fund does not invest more
than 15% of its net assets in illiquid securities. Investing in Rule 144A
securities could have the effect of increasing the amount of the Fund's
investments in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities.
REVERSE REPURCHASE AGREEMENTS. Reverse Repurchase Agreements involve
the sale of securities held by the Fund, with an agreement that the Fund will
repurchase the securities at an agreed upon price and date. The Fund may employ
reverse repurchase agreements (i) for temporary emergency purposes, such as to
meet unanticipated net redemptions so as to avoid liquidating other portfolio
securities during unfavorable market conditions; (ii) to cover short-term cash
requirements resulting from the timing of trade settlements; or (iii) to take
advantage of market situations where the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction. At the time it enters into a reverse repurchase
agreement, the Fund will segregate liquid assets having a dollar value equal to
the repurchase price. Reverse repurchase agreements are considered borrowings by
the Fund under the 1940 Act.
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<PAGE> 50
LENDING PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities (principally to
broker-dealers) to the extent of one-third of its total assets. Such loans would
be callable at any time and would be continuously secured by collateral equal to
no less than the market value, determined daily, of the loaned securities. Such
collateral will be cash or debt securities issued or guaranteed by the U.S.
Government or any of its agencies. The Fund would continue to receive the income
on loaned securities and would, at the same time, earn interest on the loan
collateral or on the investment of the loan collateral if it were cash. Any cash
collateral pursuant to these loans would be invested in short-term money market
instruments. Where voting or consent rights with respect to loaned securities
pass to the borrower, the Fund will follow the policy of calling the loan, in
whole or in part as may be appropriate, to permit the exercise of such voting or
consent rights if the matters involved are expected to have a material effect on
the Fund's investment in the loaned securities. Lending securities entails a
risk of loss to the Fund if and to the extent that the market value of the
securities loaned were to increase and the lender did not increase the
collateral accordingly.
COVERED CALL OPTIONS. The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. The exercise
price of a call option may be below, equal to, or above the current market value
of the underlying security at the time the option is written. When a Fund writes
a covered call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the last sale
price, or in the absence of a sale, the last offering price. If a written call
option expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the closing
purchase transaction exceeds the premium received when the option was written)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call option
owns or has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in return
for the premium paid by the purchaser of the option, the Fund has given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security increase, but has retained the risk of loss
should the price of the underlying security decline. During the option period,
the Fund may be required at any time to deliver the underlying security against
payment of the exercise price. This obligation is terminated upon the expiration
of the option period or at such earlier time at which the Fund effects a closing
purchase transaction by purchasing (at a price which may be higher than was
received when the call option was written) a call option identical to the one
originally written.
SHORT SALES. The Fund may from time to time make short sales of
securities which it owns or which it has the right to acquire through the
conversion or exchange of other securities it owns. In a short sale, a fund does
not immediately deliver the securities sold and does not receive the proceeds
from the sale. A fund is said to have a short position in the securities sold
until it delivers the securities sold, at which time it receives the proceeds of
the sale. The Fund will neither make short sales of securities nor maintain a
short position unless, at all times when a short position is open, the Fund owns
an equal amount of such securities or securities convertible into or
exchangeable, without payment of any further consideration, for securities of
the same issue as, and equal in amount to, the securities sold short. This is a
technique known as selling short "against the box." To secure its obligation to
deliver the securities sold short, the Fund will segregate with its custodian,
an equal amount of the securities sold short or securities convertible into or
exchangeable for such securities.
Since the Fund ordinarily will want to continue to receive interest and
dividend payments on securities in its portfolio which are convertible into the
securities sold short, the Fund will normally close out a short
9
<PAGE> 51
position by purchasing and delivering an equal amount of the securities sold
short, rather than by delivering securities which it already holds.
The Fund will make a short sale, as a hedge, when it believes that the
price of a security may decline, causing a decline in the value of a security
owned by the Fund or a security convertible into or exchangeable for such
security, or when the Fund does not want to sell the security it owns, because,
among other reasons, it wishes to defer recognition of gain or loss for federal
income tax purposes. In such case, any future losses in the Fund's long position
should be reduced by a gain in the short position. Conversely, any gain in the
long position should be reduced by a loss in the short position. The extent to
which such gains or losses are reduced will depend upon the amount of the
security sold short relative to the amount the Fund owns, either directly or
indirectly, and, in the case where the Fund owns convertible securities, changes
in the conversion premium. In determining the number of shares to be sold short
against the Fund's position in a convertible security, the anticipated
fluctuation in the conversion premium is considered. The Fund may also make
short sales to generate additional income from the investment of the cash
proceeds of short sales.
FUTURES CONTRACTS. In cases of purchases of futures contracts, an
amount of liquid assets, equal to the cost of the futures contracts (less any
related margin deposits), will be segregated to collateralize the position and
ensure that the use of such futures contracts is unleveraged. Unlike when the
Fund purchases or sells a security, no price is paid or received by the Fund
upon the purchase or sale of a futures contract. Initially, the Fund will be
required to deposit with its custodian for the account of the broker a stated
amount, as called for by the particular contract, of liquid assets. This amount
is known as "initial margin." The nature of initial margin in futures
transactions is different from that of margin in securities transactions in that
futures contract margin does not involve the borrowing of funds by the customer
to finance the transactions.
Rather, the initial margin is in the nature of a performance bond or
good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract assuming all contractual obligations have
been satisfied. Subsequent payments, called "variation margin," to and from the
broker will be made on a daily basis as the price of the futures contract
fluctuates, making the long and short positions in the futures contract more or
less valuable. This process is known as "marking-to-market." For example, when
the Fund has purchased a stock index futures contract and the price of the
underlying stock index has risen, that position will have increased in value and
the Fund will receive from the broker a variation margin payment with respect to
that increase in value. Conversely, where the Fund has purchased a stock index
futures contract and the price of the underlying stock index has declined, that
position would be less valuable and the Fund would be required to make a
variation margin payment to the broker. Variation margin payments would be made
in a similar fashion when the Fund has purchased an interest rate futures
contract. At any time prior to expiration of the futures contract, the Fund may
elect to close the position by taking an opposite position which will operate to
terminate the Fund's position in the futures contract. A final determination of
variation margin is then made, additional cash is required to be paid by or
released to the Fund and the Fund realizes a loss or a gain.
A description of the various types of futures contracts which may be
utilized by the Fund is as follows:
Interest Rate Futures Contracts - An interest rate futures contract is
an agreement between two parties to buy and sell a debt security for a set price
on a future date. Currently, there are futures contracts based on long-term U.S.
Treasury bonds, U.S. Treasury notes, U.S. Treasury bills, Eurodollars and the
Bond Buyer Municipal Bond Index.
Stock Index Futures Contracts - A stock index assigns relative values
to the common stocks included in the index and the index fluctuates with changes
in the market values of the common stocks so included. A stock index futures
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of the last trading day of
the contract and the price at which the futures contract is originally struck.
No physical delivery of the underlying stocks in the index is made. Currently,
stock index futures contracts can be purchased or sold primarily with respect to
broad based stock indices such as the Standard & Poor's 500
10
<PAGE> 52
Stock Index, the New York Stock Exchange Composite Index, the American Stock
Exchange Major Market Index, the NASDAQ - 100 Stock Index and the Value Line
Stock Index.
Foreign Currency Futures Contracts - Futures contracts may also be used
to hedge the risk of changes in the exchange rates of foreign currencies.
OPTIONS ON FUTURES CONTRACTS. An option on a futures contract gives the
purchaser the right, in return for the premium paid, to assume a position in a
futures contract (a long position if the option is a call and a short position
if the option is a put) at a specified exercise price at any time during the
option exercise period. The writer of the option is required upon exercise to
assume an offsetting futures position (a short position if the option is a call
and a long position if the option is a put) at a specified exercise price at any
time during the period of the option. Upon exercise of the option, the
assumption of offsetting futures positions by the writer and holder of the
option will be accompanied by delivery of the accumulated cash balance in the
writer's futures margin account which represents the amount by which the market
price of the futures contract, at exercise, exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract. If an option on a futures contract is exercised on the last
trading date prior to the expiration date of the option, the settlement will be
made entirely in cash equal to the difference between the exercise price of the
option and the closing price of the futures contract on the expiration date.
The Fund may purchase and sell put and call options on futures
contracts in order to hedge the value of its portfolio against changes in market
conditions. Depending on the pricing of the option compared to either the price
of the futures contract upon which it is based or the price of the underlying
securities or currency, it may or may not be less risky than ownership of the
futures contract or underlying securities or currency.
RISKS AS TO FUTURES CONTRACTS AND RELATED OPTIONS. The use of futures
contracts and related options as hedging devices presents several risks. One
risk arises because of the imperfect correlation between movements in the price
of hedging instruments and movements in the price of the stock, debt securities
or foreign currency which are the subject of the hedge. If the price of a
hedging instrument moves less than the price of the stocks, debt securities or
foreign currency which are the subject of the hedge, the hedge will not be fully
effective. If the price of a hedging instrument moves more than the price of the
stock, debt securities or foreign currency, the Fund will experience either a
loss or a gain on the hedging instrument which will not be completely offset by
movements in the price of the stock, debt securities or foreign currency which
are the subject of the hedge. The use of options on futures contracts involves
the additional risk that changes in the value of the underlying futures contract
will not be fully reflected in the value of the option.
Successful use of hedging instruments by the Fund is also subject to
AIM's ability to predict correctly movements in the direction of the stock
market, of interest rates or of foreign exchange rates. Because of possible
price distortions in the futures and options markets, and because of the
imperfect correlation between movements in the prices of hedging instruments and
the investments being hedged, even a correct forecast by AIM of general market
trends may not result in a completely successful hedging transaction.
It is also possible that where the Fund has sold futures contracts to
hedge its portfolio against a decline in the market, the market may advance and
the value of stocks or debt securities held in the Fund's portfolio may decline.
If this occurred, the Fund would lose money on the futures contracts and also
experience a decline in the value of its portfolio securities. Similar risks
exist with respect to foreign currency hedges.
Positions in futures contracts or options may be closed out only on an
exchange on which such contracts are traded. Although the Fund intends to
purchase or sell futures contracts or purchase options only on exchanges or
boards of trade where there appears to be an active market, there is no
assurance that a liquid market on an exchange or board of trade will exist for
any particular contract or at any particular time. If there is not a liquid
market at a particular time, it may not be possible to close a futures position
or purchase an option at such time. In the event of adverse price movements
under those circumstances, the Fund would continue to be required to segregate
additional liquid assets for payment of maintenance margin on its futures
11
<PAGE> 53
positions. The extent to which the Fund may engage in futures contracts or
related options will be limited by Internal Revenue Code requirements for
qualification as a regulated investment company and the Fund's intent to
continue to qualify as such. The result of a hedging program cannot be foreseen
and may cause the Fund to suffer losses which it would not otherwise sustain.
INVESTMENT RESTRICTIONS
The most significant investment restrictions applicable to the Funds'
investment programs are set forth in the Prospectuses. 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
Funds may, however, retain any security purchased in accordance with such
restrictions irrespective of changes in the values of a Fund's assets occurring
subsequent to the time of purchase.
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 Limited Maturity, such 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).
The Trust has obtained an opinion of Dechert Price & Rhoads, special
counsel to the Trust, that shares of Limited Maturity are eligible for
investment by a federal credit union. In order to ensure that shares of Limited
Maturity 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
12
<PAGE> 54
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; or
(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.
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 High Yield, such Fund may not:
(1) borrow money or issue senior securities or mortgage,
pledge, or hypothecate its assets, except that the Fund may enter into
financial futures contracts, reverse repurchase agreements, and borrow
from banks to pay for redemptions and for temporary purposes in an
amount not exceeding one-third of the value of its total assets
(including the amount of such borrowings) less its liabilities
(excluding the amount of such borrowings) and may secure such
borrowings by pledging up to one-third of the value of its total
assets. For the purpose of this restriction, collateral arrangements
with respect to margin for a financial futures contract are not deemed
to be a pledge of assets. The Fund will not purchase securities while
borrowings in excess of 5% of its total assets are outstanding;
(2) make short sales of securities or maintain short
positions, unless, at all times when a short position is open, the Fund
owns at least an equal amount of the securities sold short or owns
securities convertible into or exchangeable for at least an equal
amount of such securities sold short, without the payment of further
consideration;
(3) purchase or sell real estate or interests therein, but the
Fund may purchase and sell (a) securities which are secured by real
estate, and (b) the securities of companies which invest or deal in
real estate or interests therein, including real estate investment
trusts;
(4) act as a securities underwriter;
(5) purchase or sell commodities or commodity contracts, other
than financial futures contracts and options thereon;
(6) purchase the securities of any issuer if, as a result, the
Fund would fail to be a diversified company within the meaning of the
1940 Act and the rules and regulations promulgated thereunder, as such
statute, rules and regulations are amended from time to time; provided,
however, that the Fund may purchase securities of other investment
companies to the extent permitted by the 1940 Act and the rules and
regulations promulgated thereunder (as such statute, rules and
regulations are amended from time to time) or to the extent permitted
by exemptive order or other similar relief;
13
<PAGE> 55
(7) concentrate 25% or more of its total assets in the
securities of issuers in a particular industry; provided, however, that
securities guaranteed by banks or subject to financial guaranty
insurance are not subject to this limitation; and provided further,
that securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities are not included within this
restriction;
(8) make loans, except that the Fund may lend its portfolio
securities provided that the value of the securities loaned does not
exceed 33-1/3% of its total assets, and except that the Fund may enter
into repurchase agreements;
(9) purchase securities on margin, except that the Fund may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities and may make margin payments in
connection with transactions in financial futures contracts and options
thereon; or
(10) invest in puts, calls, or any combinations thereof,
except, however, that the Fund may invest in financial futures
contracts, purchase and sell options on financial futures contracts,
may acquire and hold puts which relate to equity securities acquired by
the Fund, and may sell covered call options.
ADDITIONAL INVESTMENT RESTRICTIONS OF THE FUNDS
The Funds' investment programs are also subject to a number of
investment restrictions which reflect self-imposed standards as well as federal
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 FOR CONTROL
The Funds will not invest in companies for purposes of exercising
control or management.
14
<PAGE> 56
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. Unless otherwise
indicated, the address of each trustee and officer is 11 Greenway Plaza, Suite
100, Houston, Texas 77046.
<TABLE>
<CAPTION>
==========================================================================================================
Positions Held PRINCIPAL OCCUPATION DURING AT LEAST THE
-------------- ----------------------------------------
NAME, ADDRESS AND AGE with Registrant PAST 5 YEARS
--------------------- --------------- ------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (79) Trustee and Chairman of the Board of Directors,
Chairman A I M Management Group Inc.,
A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc. and Fund
Management Company; and Vice Chairman
and Director, AMVESCAP PLC.
- ----------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (54) 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 (74) 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.
- ----------------------------------------------------------------------------------------------------------
EDWARD K. DUNN, JR. (63) Trustee Chairman of the Board of Directors,
2 Hopkins Plaza, 20th Floor Mercantile Mortgage Corp. Formerly, Vice
Baltimore, MD 21201 Chairman of the Board of Directors and
President, Mercantile-Safe Deposit & Trust
Co.; and President, Mercantile Bankshares.
- ----------------------------------------------------------------------------------------------------------
JACK M. FIELDS (46) Trustee Chief Executive Officer, Texana Global, Inc.
8810 Will Clayton Parkway (foreign trading company) and Twenty First
Jetero Plaza, Suite E Century Group, Inc. (a governmental affairs
Humble, TX 77338 company). Formerly, Member of the U.S.
House of Representatives.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- --------
* A trustee who is an "interested person" of the Trust and AIM
as defined in the 1940 Act.
15
<PAGE> 57
<TABLE>
<CAPTION>
==========================================================================================================
Positions Held PRINCIPAL OCCUPATION DURING AT LEAST THE
-------------- ----------------------------------------
NAME, ADDRESS AND AGE with Registrant PAST 5 YEARS
--------------------- --------------- ------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
**CARL FRISCHLING (61) Trustee Partner, Kramer, Levin, Naftalis & Frankel
919 Third Avenue (law firm). Formerly, Partner, Reid & Priest
New York, NY 10022 (law firm).
- ----------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (51) Trustee and Director, President and Chief Executive
President Officer, A I M Management Group Inc.;
Director and President, A I M Advisors,
Inc.; Director and Senior Vice President,
A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services,
Inc., and Fund Management Company; and
Director, AMVESCAP PLC.
- ----------------------------------------------------------------------------------------------------------
PREMA MATHAI-DAVIS (48) Trustee Chief Executive Officer, YWCA of the U.S.A.;
350 Fifth Avenue, Suite 301 Commissioner, New York City Department for
New York, NY 10118 the Aging; and Member of the Board of
Directors, Metropolitan Transportation
Authority of New York State.
- ----------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (56) Trustee Attorney in private practice in Houston,
6363 Woodway, Suite 825 Texas.
Houston, TX 77057
- ----------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (75) 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 (59) 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>
- --------
** 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.
16
<PAGE> 58
<TABLE>
<CAPTION>
==========================================================================================================
Positions Held PRINCIPAL OCCUPATION DURING AT LEAST THE
-------------- ----------------------------------------
NAME, ADDRESS AND AGE with Registrant PAST 5 YEARS
--------------------- --------------- ------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
***JOHN J. ARTHUR (54) Senior Vice Director, Senior Vice President and
President and Treasurer, A I M Advisors, Inc.; and Vice
Treasurer President and Treasurer, A I M Management
Group Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc. and Fund Management Company.
- ----------------------------------------------------------------------------------------------------------
GARY T. CRUM (51) Senior Vice Director and President, A I M Capital
President Management, Inc.; Director and Senior Vice
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 (44) Senior Vice Director, Senior Vice President, General
President and Counsel and Secretary, A I M Advisors, Inc.;
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 Vice President,
A I M Capital Management, Inc. and
A I M Distributors, Inc.
- ----------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President and Vice President and Fund Controller,
Assistant Treasurer A I M Advisors, Inc.; and Assistant Vice
President and Assistant Treasurer, Fund
Management Company.
- ----------------------------------------------------------------------------------------------------------
MELVILLE B. COX (55) Vice President Vice President and Chief Compliance Officer,
A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc. and Fund
Management Company.
- ----------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (38) Vice President Senior Vice President, A I M Capital
Management, Inc. and Vice President,
A I M Advisors, Inc.
==========================================================================================================
</TABLE>
- --------
*** Mr. Arthur and Ms. Relihan are married to each other.
17
<PAGE> 59
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, Dunn,
Fields, Frischling, Pennock, Robinson (Chairman), 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, Dunn, Fields, Frischling, Pennock, Robinson and Sklar (Chairman). 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 (Chairman), Daly, Dunn, Fields, Pennock, 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.
18
<PAGE> 60
Set forth below is information regarding compensation paid or accrued
for each trustee of the Trust:
<TABLE>
<CAPTION>
===========================================================================================================
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM THE BY ALL FROM ALL
DIRECTOR FUNDS(1) AIM FUNDS(2) AIM FUNDS(3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------
Bruce L. Crockett 1,172 67,774 84,000
- -----------------------------------------------------------------------------------------------------------
Owen Daly II 1,172 103,542 84,000
- -----------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr.(4) 437 0 0
- -----------------------------------------------------------------------------------------------------------
Jack M. Fields 1,164 0 0
- -----------------------------------------------------------------------------------------------------------
Carl Frischling(5) 1,172 96,520 68,000
- -----------------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- -----------------------------------------------------------------------------------------------------------
John F. Kroeger(6) 1,119 94,132 66,000
- -----------------------------------------------------------------------------------------------------------
Prema Mathai-Davis(4) 0 0 0
- -----------------------------------------------------------------------------------------------------------
Lewis F. Pennock 1,172 55,777 67,000
- -----------------------------------------------------------------------------------------------------------
Ian W. Robinson 1,153 85,912 68,000
- -----------------------------------------------------------------------------------------------------------
Louis S. Sklar 1,165 84,370 66,500
===========================================================================================================
</TABLE>
- ----------
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended July 31, 1998, including interest earned
thereon, was $6,426.
(2) During the fiscal year ended July 31, 1998, the total estimated amount
of expenses allocated to Limited Maturity in respect of such retirement
benefits was $2,778. Data reflects compensation for the calendar year
ended December 31, 1997.
(3) Each Trustee serves as a director or trustee of a total of 12
registered investment companies advised by AIM as of December 31, 1997
(comprised of over 50 portfolios). Data reflect total compensation
earned during the calendar year ended December 31, 1997.
(4) Mr. Dunn and Ms. Mathai-Davis did not serve as Trustees during the
calendar year ended December 31, 1997.
(5) The Trust paid the law firm of Kramer, Levin, Naftalis & Frankel $4,177
in legal fees for services provided to Limited Maturity during the
fiscal year ended July 31, 1998. Mr. Frischling, a trustee of the
Trust, is a partner at such firm.
(6) Mr. Kroeger resigned as a Trustee of the Trust on June 11, 1998, and on
that date became a consultant to the Trust.
19
<PAGE> 61
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 years of
service for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock,
Robinson, Sklar and Mdm. Mathai-Davis are 11, 11, 0, 1, 21, 20, 6, 11, 8 and 0
years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
=============================================================
Number of Annual Retainer Paid By All AIM Funds
Years of
Service With $80,000
the AIM Funds
=============================================================
<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 Funds, 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
20
<PAGE> 62
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 Trust'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 Trust. 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 Funds and of each other AIM Fund from which they are deferring
compensation.
INVESTMENT ADVISORY AND OTHER SERVICES
The Trust, on behalf of the Funds, 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.
AIM was organized in 1976, and together with its subsidiaries advises
or manages over 90 investment company portfolios encompassing a broad range of
investment objectives. 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,
England. AMVESCAP PLC and its subsidiaries are an independent investment
management group engaged in institutional investment management and retail fund
businesses in the Unites 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 and the Trust have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear all personal
securities transactions subject to the Code of Ethics, (b) to file reports or
duplicate confirmations regarding such transactions (c) to refrain from
personally engaging in (i) short-term trading of a security, (ii) transactions
involving a security within seven days of an AIM Fund transaction involving the
same security, and (iii) transactions involving securities being considered for
investment by an AIM Fund and (d) to abide by certain other provisions under the
Code of Ethics. The Code of Ethics also prohibits investment personnel and all
other AIM employees from purchasing securities in an initial public offering.
Personal trading reports are reviewed periodically by AIM, and the Board of
Trustees reviews quarterly and annual reports (including information on any
substantial violations of the Code of Ethics). Violations of the Code of Ethics
may include censure, monetary penalties, suspension or termination of
employment.
The Advisory Agreement provides that each Fund will pay or cause to be
paid all expenses of that 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 will continue from year to year 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
each Fund (as defined in the 1940 Act) and (ii) the affirmative vote of a
majority of the trustees
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<PAGE> 63
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. A Fund or AIM may terminate the Advisory Agreement with
respect to that Fund 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 Limited
Maturity a fee calculated at the following annual rates, based on the average
daily net assets of the Fund during the year:
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $500 million 0.20%
Amount over $500 million 0.175%
</TABLE>
Under the Advisory Agreement, AIM is entitled to receive from High Yield a fee
calculated at the following annual rates, based on the average daily net assets
of the Fund during the year:
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $500 million 0.625%
Next $500 million 0.55%
Amount over $1 billion 0.50%
</TABLE>
For the fiscal years ended July 31, 1998, 1997 and 1996, AIM received
advisory fees from Limited Maturity of $855,900, $837,760 and $933,207,
respectively.
In order to increase the return 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 each fiscal year. AIM has agreed to
voluntarily waive a portion of its advisory fees payable by High Yield in an
amount sufficient to limit the total annual operating expenses of the Class A
shares to 1.00% of average daily net assets, and of Class B and Class C shares
to 1.75% of average daily net assets until such time as High Yield's total
assets equal or exceed $100 million. Fee waivers or reductions, other than those
set forth in the Advisory Agreement, may be rescinded at any time and without
notice to investors.
The Administrative Services Agreement for the Funds provides that AIM
may provide or arrange for the performance of certain accounting, shareholder
servicing and other administrative services to the Funds which are not required
to be performed by AIM under the Advisory Agreement. For such services, AIM
would be entitled to receive from each 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 from year to year 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 a 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.
For the fiscal years ended July 31, 1998, 1997 and 1996, Limited
Maturity reimbursed AIM for certain accounting, shareholder servicing and
administrative services in the amounts of $59,396, $66,785 and $60,857,
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 Funds. 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 a Fund, maintain
shareholder accounts and provide shareholders with information regarding the
Fund and other accounts.
22
<PAGE> 64
DISTRIBUTION PLANS
THE CLASS A AND C PLAN. The Trust has adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A shares of
Limited Maturity and High Yield, and the Class C shares of High Yield (the
"Class A and C Plan"). Such plan provides that the Class A shares of Limited
Maturity and High Yield pay 0.15% and 0.25%, respectively, per annum of their
average daily net assets as compensation to AIM Distributors for the purpose of
financing any activity which is primarily intended to result in the sale of the
Class A shares. Under the Class A and C Plan, Class C shares of High Yield pay
compensation to AIM Distributors at an annual rate of 1.00% of the average daily
net assets attributable to Class C shares for the purpose of financing any
activity which is primarily intended to result in the sale of Class C shares. Of
such amount payable with respect to Class C shares, High Yield pays a service
fee of 0.25% of the average daily net assets attributable to Class C shares to
selected dealers and other institutions which furnish continuing personal
shareholder services to their customers who purchase and own Class C shares.
Activities appropriate for financing under the Class A and C Plan include, but
are not limited to, the following: printing of prospectuses and statements of
additional information and reports for other than existing shareholders;
overhead; preparation and distribution of advertising material and sales
literature; expenses of organizing and conducting sales seminars; supplemental
payments to dealers and other institutions such as asset-based sales charges or
as payments of service fees under shareholder service arrangements; and costs of
administering the Class A and C Plan.
THE CLASS B PLAN. The Trust has also adopted a Master Distribution Plan
pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of High
Yield (the "Class B Plan", and collectively with the Class A and C Plan, the
"Plans"). Under the Class B Plan, High Yield pays compensation to AIM
Distributors at an annual rate of 1.00% of the average daily net assets
attributable to Class B shares. Of such amount, the Fund pays a service fee of
0.25% of the average daily net assets attributable to Class B shares to selected
dealers and other institutions which furnish continuing personal shareholder
services to its customers who purchase and own Class B shares. Amounts paid in
accordance with the Class B Plan may be used to finance any activity primarily
intended to result in the sale of Class B shares, including but not limited to
printing of prospectuses and statements of additional information and reports
for other than existing shareholders; overhead; preparation and distribution of
advertising material and sales literature; expenses of organizing and conducting
sales seminars; supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements; and costs of administering the Class B Plan. AIM
Distributors may transfer and sell from time to time its rights to payments
under the Class B Plan in order to finance distribution expenditures in respect
of Class B shares.
BOTH PLANS. Pursuant to an incentive program, AIM Distributors may
enter into agreements ("Shareholder Service Agreements") with investment dealers
selected from time to time by AIM Distributors for the provision of distribution
assistance in connection with the sale of the Funds' shares to such dealers'
customers, and for the provision of continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Funds. The distribution assistance and continuing personal shareholder services
to be rendered by dealers under the Shareholder Service Agreements may include,
but shall not be limited to, the following: distributing sales literature;
answering routine customer inquiries concerning the Funds; assisting customers
in changing dividend options, account designations and addresses, and in
enrolling in any of several special investment plans offered in connection with
the purchase of the Funds' shares; assisting in the establishment and
maintenance of customer accounts and records and in the processing of purchase
and redemption transactions; investing dividends and any capital gains
distributions automatically in the Funds' shares; and providing such other
information and services as the Funds or the customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding a Fund and
the Trust; performing sub-accounting; establishing and maintaining
23
<PAGE> 65
shareholder accounts and records; processing customer purchase and redemption
transactions; providing periodic statements showing a shareholder's account
balance and the integration of such statements with those of other transactions
and balances in the shareholder's other accounts serviced by the bank;
forwarding applicable prospectuses, proxy statements, reports and notices to
bank clients who hold Fund shares; and such other administrative services as a
Fund reasonably may request, to the extent permitted by applicable statute, rule
or regulation. Similar agreements may be permitted under the Plans for
institutions which provide recordkeeping for and administrative services to
401(k) plans.
Financial intermediaries and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
selling shares of one particular class over another.
Under a Shareholder Service Agreement, a Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement will be calculated at the end of each payment period for each
business day of the Funds during such period at the annual rates of 0.15% of the
average daily net asset value of Limited Maturity's Class A shares, and 0.25% of
the average daily net asset value of High Yield's shares, purchased or acquired
through exchange. Fees calculated in this manner shall be paid only to those
selected dealers or other institutions who are dealers or institutions of record
at the close of business on the last business day of the applicable payment
period for the account in which such Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the National Association of Securities Dealers,
Inc. and NASD Regulation, Inc. (the "NASD"). The Plans conform to rules of the
NASD by limiting payments made to dealers and other financial institutions who
provide continuing personal shareholder services to their customers who purchase
and own shares of the Funds to no more than 0.25% per annum of the average daily
net assets of the Funds attributable to the customers of such dealers or
financial institutions, and by imposing a cap on the total sales charges,
including asset based sales charges, that may be paid by the Funds and their
respective classes.
AIM Distributors does not act as principal, but rather as agent for the
Funds, in making dealer incentive and shareholder servicing payments under the
Plans. These payments are an obligation of the Funds and not of AIM
Distributors.
For the fiscal year ended July 31, 1998, AIM Distributors received fees
under the Class A and C Plan in the amount of $567,049, which constituted 0.15%
of the average daily net assets of the Class A shares of Limited Maturity. An
estimate by category of actual fees paid by the Class A shares of Limited
Maturity during the fiscal year ended July 31, 1998, were allocated as follows:
<TABLE>
<S> <C>
Advertising $ 14,787
Printing and mailing prospectuses, semi-annual reports 986
and annual reports (other than to current shareholders)
Seminars 2,957
Compensation to Underwriters to partially offset other 0
marketing expenses
Compensation to Sales Personnel 0
Compensation to Dealers including finder's fees 548,319
</TABLE>
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Trustees, including a majority
of the trustees who are not "interested persons" (as defined in the 1940 Act) of
the Trust and who have no direct or indirect financial interest in the operation
of the Plans or in any agreements related to the Plans (the "Independent
Trustees"). In approving the Plans in accordance with the requirements of Rule
12b-1, the trustees considered various factors and determined that there is a
reasonable likelihood that the Plans would benefit each affected class of the
Funds and its respective shareholders.
24
<PAGE> 66
The Plans do not obligate the Funds to reimburse AIM Distributors for
the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Funds will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
The Plans require AIM Distributors to provide the Board of Trustees at
least quarterly with a written report of the amounts expended pursuant to the
Plans and the purposes for which such expenditures were made. The Board of
Trustees reviews these reports in connection with their decisions with respect
to the Plans.
Unless terminated earlier in accordance with their terms, the Plans
continue in effect until June 30, 1999 and thereafter, as long as such
continuance is specifically approved at least annually by the Board of Trustees,
including a majority of the Independent Trustees.
The Plans may be terminated by the vote of a majority of the
Independent Trustees, or, with respect to a particular class, by the vote of a
majority of the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution
expenses paid by the applicable class requires shareholder approval; otherwise,
the Plans may be amended by the Trustees, including a majority of the
Independent Trustees, by votes cast in person at a meeting called for the
purpose of voting upon such amendment. As long as the Plans are in effect, the
selection or nomination of the Independent Trustees is committed to the
discretion of the Independent Trustees. In the event the Class A and C Plan is
amended in a manner which the Board of Trustees determines would materially
increase the charges paid by holders of Class A shares of High Yield under the
Class A and C Plan, the Class B shares of High Yield will no longer convert into
Class A shares of High Yield unless the Class B shares, voting separately,
approve such amendment. If the Class B shareholders do not approve such
amendment, the Board of Trustees will (i) create a new class of shares of High
Yield which is identical in all material respects to the Class A shares as they
existed prior to the implementation of the amendment, and (ii) ensure that the
existing Class B shares of High Yield will be exchanged or converted into such
new class of shares no later than the date the Class B shares were scheduled to
convert into Class A shares.
The principal differences between the Class A and C Plan and the Class
B Plan are: The Class A and C Plan allows payment to AIM Distributors or to
dealers or financial institutions of up to 0.15% and 0.25% of the average daily
net assets of Limited Maturity's or High Yield's respective Class A shares, as
compared to 1.00% of such assets of High Yield's Class B and Class C shares;
(ii) the Class B Plan obligates Class B shares to continue to make payments to
AIM Distributors following termination of the Class B shares Distribution
Agreement with respect to Class B shares sold by or attributable to the
distribution efforts of AIM Distributors, unless there has been a complete
termination of the Class B Plan (as defined in such Plan); and (iii) the Class B
Plan expressly authorizes AIM Distributors to assign, transfer or pledge its
rights to payments pursuant to the Class B Plan.
THE DISTRIBUTION AGREEMENTS
Information concerning AIM Distributors and the continuous offering of
the Funds' shares is set forth in each Prospectus under the caption "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." The
Trust has entered into a Master Distribution Agreement with AIM Distributors
relating to the Class A shares of Limited Maturity and the Class A and Class C
shares of High Yield and a separate Master Distribution Agreement with AIM
Distributors relating to the Class B shares of High Yield. Both such Master
Distribution Agreements are hereinafter collectively referred to as the
"Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing prospectuses and
statements of additional information relating to public offerings
25
<PAGE> 67
made by AIM Distributors pursuant to the Distribution Agreements (other than
those prospectuses and statements of additional information distributed to
existing shareholders of the Funds), and any promotional or sales literature
used by AIM Distributors or furnished by AIM Distributors to dealers in
connection with the public offering of the Funds' shares, including expenses of
advertising in connection with such public offerings. AIM Distributors has not
undertaken to sell any specified number of shares of any classes of the Funds.
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B and Class C shares at the
time of such sales.
Payments with respect to Class B shares will equal 4.0% of the purchase
price of the Class B shares sold by the dealer or institution, and will consist
of a sales commission equal to 3.75% of the purchase price of the Class B shares
sold plus an advance of the first year service fee of 0.25% with respect to such
shares. The portion of the payments to AIM Distributors under the Class B Plan
which constitutes an asset-based sales charge (0.75%) is intended in part to
permit AIM Distributors to recoup a portion of such sales commissions plus
financing costs. AIM Distributors anticipates that it requires a number of years
to recoup from Class B Plan payments the sales commissions paid to dealers and
institutions in connection with sales of Class B shares. In the future, if
multiple distributors serve a Fund, each such distributor (or its assignee or
transferee) would receive a share of the payments under the Class B Plan based
on the portion of the Fund's Class B shares sold by or attributable to the
distribution efforts of that distributor.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares at the time of such sales. Payments with respect to
Class C shares will equal 1.00% of the purchase price of the Class C shares sold
by the dealer or institution, and will consist of a sales commission of 0.75% of
the purchase price of the Class C shares sold plus an advance of the first year
service fee of 0.25% with respect to such shares. AIM Distributors will retain
all payments received by it relating to Class C shares for the first year after
they are purchased. The portion of the payments to AIM Distributors under the
Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will pay quarterly to
dealers and institutions 1.00% of 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.
The Trust (on behalf of any class of the Funds) or AIM Distributors may
terminate the Distribution Agreements on sixty (60) days' written notice without
penalty. The Distribution Agreements will terminate automatically in the event
of their assignment. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset-based
distribution fees in respect of the outstanding Class B shares attributable to
the distribution efforts of AIM Distributors; provided, however, that a complete
termination of the Class B Plan (as defined in such Plan) would terminate all
payments by the Fund of asset based sales charges and service fees to AIM
Distributors. Termination of the Class B Plan or the Distribution Agreement for
Class B shares would not affect the obligation of the Fund's and its Class B
shareholders to pay contingent deferred sales charges.
For the fiscal years ended July 31, 1998, 1997 and 1996, the total
sales charges paid in connection with the sale of the Class A shares of Limited
Maturity were $219,035 , $340,764 and $540,727, respectively, of which AIM
Distributors retained $56,989, $105,675 and $193,686, respectively.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner in which shares of the Funds may
be purchased appears in the Prospectuses under the caption "How to Purchase
Shares", "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
26
<PAGE> 68
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 Class A shares. Since
there is little expense associated with unsolicited orders placed directly with
AIM Distributors by persons, who, because of their relationship with the Funds
or with AIM and its affiliates, are familiar with the Funds, or whose programs
for purchase involve little expense (e.g., due to the size of the transaction
and shareholder records required), AIM Distributors believes that it is
appropriate and in the Funds' best interests that such persons, and certain
other persons whose purchases result in relatively low expenses of distribution,
be permitted to purchase Class A shares of the Funds through AIM Distributors
without payment of a sales charge. The persons who may purchase Class A shares
of the Funds without a sales charge are set forth in the Prospectuses under the
caption "Terms and Conditions of Purchase of the AIM Funds."
Complete information concerning the method of exchanging shares of the
Funds for shares of the other mutual funds managed or advised by AIM is set
forth in the Prospectuses under the caption "Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in
the Prospectuses under the caption "How to Redeem Shares." In addition to the
Funds' 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 Funds 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 applicable Fund next determined after such order is
received. Such arrangement is subject to timely receipt by AFS of all required
documents in good order. If such documents are not received within a reasonable
time after the order is placed, the order is subject to cancellation. While
there is no charge imposed by the Funds or by AIM Distributors (other than any
applicable contingent deferred sales charge) when shares are redeemed or
repurchased, dealers may charge a fair service fee for handling the transaction.
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the New York Stock Exchange (the "NYSE") is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the NYSE is closed for other than customary weekend and holiday closings, (c)
the SEC has by order permitted such suspension, or (d) an emergency, as
determined by the SEC, exists making disposition of portfolio securities or the
valuation of the net assets of the Funds not reasonably practicable.
The Trust agrees to redeem shares of the Funds, or any other future
portfolios of the Trust, solely in cash up to the lesser of $250,000 or 1% of
the Funds' 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 Funds 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
In accordance with the current SEC rules and regulations, the net asset
value of a share of each Fund is normally determined once daily as of the close
of trading of the New York Stock Exchange (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 is determined as of the close of the NYSE on such day. The net
asset value per share 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.
27
<PAGE> 69
Each equity security held by High Yield is valued at its last sales
price on the exchange where the security is principally traded or, lacking any
sales on a particular day, the security is valued at the mean between the
closing bid and asked prices on that day. Each security traded in the
over-the-counter market (but not including securities reported on the NASDAQ
National Market System) is valued at the mean between the last bid and asked
prices based upon quotes furnished by market makers for such securities. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the mean
between the closing bid and asked prices on that day. Debt securities are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance on
quoted prices, and may reflect appropriate factors such as institution-size
trading in similar groups of securities, developments related to special
securities, yield, quality, coupon rate, maturity, type of issue, individual
trading characteristics and other market data. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued on the
basis of amortized cost. For purposes of determining net asset value per share,
futures and options contracts generally will be valued 15 minutes after the
close of trading of the NYSE.
Generally, trading in foreign securities, corporate bonds, U.S.
Government securities and money market instruments is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of each Fund's shares are
determined at such times. Foreign currency exchange rates are also generally
determined prior to the close of the NYSE. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the times at
which such values are determined and the close of the NYSE which will not be
reflected in the computation of a Fund's net asset value. If events materially
affecting the value of such securities occur during such period, then these
securities will be valued at their fair value as determined in good faith by or
under the supervision of the Board of Trustees.
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 a 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 a 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 a 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
Each 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, a 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
28
<PAGE> 70
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, each Fund must
derive at least 90% of its gross income from dividends, interest, certain
payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies (to the extent such
currency gains are 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").
In general, gain or loss recognized by a Fund on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by a Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time a Fund held the debt obligation. In addition,
if a 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.
Limited Maturity 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, a 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 a 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.
29
<PAGE> 71
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of 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).
Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that a Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
FUND DISTRIBUTIONS
Each 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 are not expected to qualify
for the 70% dividends received deduction for corporations.
Each Fund may either retain or distribute to shareholders its net
long-term capital gain for each taxable year. Each 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 (taxable at a maximum rate of 20% for non-corporate shareholders),
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 a 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 a Fund elects to
retain net capital gain, it is expected that the Fund also will elect to have
shareholders treated as if each received a distribution of its pro rata share of
such gain, with the result that each shareholder will be required to report its
pro rata share of such gain on its tax return as long-term capital gain, will
receive a refundable tax credit for its pro rata share of tax paid by the Fund
on the gain, and will increase the tax basis for its shares by an amount equal
to the deemed distribution less the tax credit.
Distributions by a 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 a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of a Fund (or any other fund in The AIM Family
30
<PAGE> 72
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 a 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 a 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.
Each 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 a 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 a 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%. 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 a 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.
31
<PAGE> 73
If the income from a 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 a Fund, capital gain dividends and amounts retained by
the Fund that are designated as undistributed net capital gains.
If the income from a 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, a 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 a Fund,
including the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and regulations issued thereunder as in effect
on the date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from the
rules for U.S. federal income taxation described above. The tax treatment of
foreign investors may also differ from the treatment for U.S. investors
described above. Shareholders are urged to consult their tax advisors as to the
consequences of these and other state and local tax rules affecting investments
in a Fund.
DESCRIPTION OF FUND SHARES
Each share of a Fund is entitled to one vote, to participate equally in
dividends and distributions declared with respect to shares of that 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 Funds 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 financial statements for each Fund. 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 Funds.
32
<PAGE> 74
LEGAL MATTERS
Legal matters for the Trust are passed upon by Ballard Spahr Andrews &
Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania.
CUSTODIAN AND TRANSFER AGENT
The Bank of New York, 90 Washington Street, 11th Floor, New York, New
York 10286, is custodian of all securities and cash of Limited Maturity. State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110,
is custodian of all securities and cash of High Yield. The custodians attend to
the collection of principal and income, pay and collect all monies for
securities bought and sold by the respective Funds, and perform 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 Funds' shares. These services do not include any supervisory function over
management or provide any protection against any possible depreciation of
assets. The Funds pay the Custodians and the Transfer Agent such compensation as
may be agreed upon from time to time.
Chase Bank of Texas, N.A., 712 Main, Houston, Texas 77002, serves as
Sub-Custodian for retail purchases of the AIM Funds.
PRINCIPAL HOLDERS OF SECURITIES
As of October 26, 1998, the trustees and officers of the Trust as a
group owned less than 1% of the outstanding shares of any class of the Trust.
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 of Limited Maturity, as
of October 26, 1998 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*
--------------- -------
<S> <C>
Merrill Lynch Pierce Fenner & Smith 16.60%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</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 of
Limited Maturity, as of October 26, 1998 and the percent of outstanding shares
owned by such shareholders are as follows:
- --------
* The Trust has no knowledge as to whether all or any portion
of the shares owned of record are also owned beneficially.
33
<PAGE> 75
<TABLE>
<CAPTION>
Percent
Name and Address Owned of
of Record Owner Record*
--------------- -------
<S> <C>
Frost National Bank 87.58%**
Muir & Co.
c/o Frost
P. O. Box 2479
San Antonio, TX 78298-2479
Esor & Co. 6.03%
Attn: Trust Operations
P. O. Box 19006
Green Bay, WI 54307-9006
</TABLE>
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 of AIM High Yield Fund
II, as of October 26, 1998 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*
--------------- -------
<S> <C>
Jonathan C. Schoolar 35.69%**
3722 Tartan Lane
Houston, TX 77025
Gary T. Crum 35.69%**
11 Greenway Plaza
Suite 100
Houston, TX 77046
AIM Advisors, Inc. 20.97%**
Attn: David Hessel
11 Greenway Plaza
Suite 100
Houston, TX 77046
</TABLE>
Since Class A and Class C shares of High Yield are not yet available for
sale to the public, AIM, which provided the initial capitalization of High
Yield, currently owns all of the Class B and Class C shares of the Fund. High
Yield expects that the sale of Class B and Class C shares to the public will
promptly reduce the percentage of such classes owned by AIM. However, at this
time, AIM owns more than 25% of the Fund's outstanding shares, and therefore may
be presumed to be in "control" of the Fund, as defined in the 1940 Act.
- --------
* 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.
34
<PAGE> 76
FINANCIAL STATEMENTS
FS
<PAGE> 77
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 AIM
Limited Maturity Treasury Fund (a series of AIM Investment Securities Funds)
including the schedule of investments, as of July 31, 1998, and the related
statement of operations for the year then ended, the statements 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 four-year period then ended,
the eleven months ended July 31, 1994 and the year 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, 1998, 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
AIM Limited Maturity Treasury Fund as of July 31, 1998, 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 four-year period then ended, the eleven months ended
July 31, 1994 and the year ended August 31, 1993, in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
September 4, 1998
Houston, Texas
FS-1
<PAGE> 78
SCHEDULE OF INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
MATURITY (000S) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. TREASURY NOTES-99.00%
5.875% 08/31/99 $32,250 $ 32,384,160
- -------------------------------------------------------------------------------------------------------------
5.75% 09/30/99 32,045 32,143,378
- -------------------------------------------------------------------------------------------------------------
5.625% 10/31/99 32,275 32,324,058
- -------------------------------------------------------------------------------------------------------------
5.625% 11/30/99 33,400 33,456,446
- -------------------------------------------------------------------------------------------------------------
5.625% 12/31/99 33,000 33,059,400
- -------------------------------------------------------------------------------------------------------------
5.375% 01/31/00 33,075 33,022,742
- -------------------------------------------------------------------------------------------------------------
5.50% 02/29/00 33,000 33,006,930
- -------------------------------------------------------------------------------------------------------------
5.50% 03/31/00 32,000 32,008,320
- -------------------------------------------------------------------------------------------------------------
5.625% 04/30/00 32,300 32,367,184
- -------------------------------------------------------------------------------------------------------------
5.50% 05/31/00 32,500 32,501,300
- -------------------------------------------------------------------------------------------------------------
5.375% 06/30/00 32,840 32,783,515
- -------------------------------------------------------------------------------------------------------------
5.375% 07/31/00 33,000 32,936,930
- -------------------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost $391,293,845) 391,994,363
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.00% 391,994,363
- -------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.00% 3,970,184
- -------------------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $395,964,547
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
FS-2
<PAGE> 79
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$391,293,845) $ 391,994,363
- --------------------------------------------------------
Cash 58,653
- --------------------------------------------------------
Receivables for:
Fund shares sold 1,240,495
- --------------------------------------------------------
Interest 4,627,571
- --------------------------------------------------------
Investment in deferred compensation plan 24,994
- --------------------------------------------------------
Other assets 73,132
- --------------------------------------------------------
Total assets 398,019,208
- --------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 1,023,583
- --------------------------------------------------------
Dividends 599,786
- --------------------------------------------------------
Deferred compensation 24,994
- --------------------------------------------------------
Accrued administrative services fees 5,227
- --------------------------------------------------------
Accrued advisory fees 67,422
- --------------------------------------------------------
Accrued distribution fees 62,503
- --------------------------------------------------------
Accrued transfer agent fees 33,450
- --------------------------------------------------------
Accrued operating expenses 237,696
- --------------------------------------------------------
Total liabilities 2,054,661
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 395,964,547
========================================================
</TABLE>
<TABLE>
<S> <C>
NET ASSETS:
Class A $ 345,355,189
========================================================
Institutional Class $ 50,609,358
========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 34,300,002
========================================================
Institutional Class 5,026,426
========================================================
Class A:
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
========================================================
Institutional Class:
Net asset value and offering price per
share $ 10.07
- --------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $24,949,619
- -------------------------------------------------------
EXPENSES:
Advisory fees 855,900
- -------------------------------------------------------
Administrative services fees 59,396
- -------------------------------------------------------
Custodian fees 36,726
- -------------------------------------------------------
Transfer agent fees-Class A 307,594
- -------------------------------------------------------
Transfer agent fees-Institutional Class 45,118
- -------------------------------------------------------
Trustees' fees and expenses 24,508
- -------------------------------------------------------
Distribution fees-Class A (See Note 2) 567,049
- -------------------------------------------------------
Other 298,763
- -------------------------------------------------------
Total expenses 2,195,054
- -------------------------------------------------------
Less: Expenses paid indirectly (4,054)
- -------------------------------------------------------
Net expenses 2,191,000
- -------------------------------------------------------
Net investment income 22,758,619
- -------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain from investment
securities 1,855,056
- -------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities (1,793,413)
- -------------------------------------------------------
Net gain from investment securities 61,643
- -------------------------------------------------------
Net increase in net assets resulting from
operations $22,820,262
=======================================================
</TABLE>
See Notes to Financial Statements.
FS-3
<PAGE> 80
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 22,758,619 $ 22,525,910
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities 1,855,056 (328,964)
- --------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (1,793,413) 4,775,213
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 22,820,262 26,972,159
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (20,003,878) (19,613,259)
- --------------------------------------------------------------------------------------------
Institutional Class (2,754,741) (2,912,651)
- --------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (44,498,315) 27,226,897
- --------------------------------------------------------------------------------------------
Institutional Class 1,723,996 (95,511,728)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (42,712,676) (63,838,582)
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 438,677,223 502,515,805
- --------------------------------------------------------------------------------------------
End of period $395,964,547 $ 438,677,223
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $400,652,004 $ 443,515,589
- --------------------------------------------------------------------------------------------
Undistributed net investment income 88,842 --
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (5,476,817) (7,332,297)
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 700,518 2,493,931
- --------------------------------------------------------------------------------------------
$395,964,547 $ 438,677,223
============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE> 81
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998
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 AIM Limited Maturity Treasury Fund (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 Class A shares and the Institutional Class. Matters
affecting each portfolio or class are voted on exclusively by the shareholders
of such portfolio or class. The assets, liabilities and operations of each
portfolio are accounted for separately. Information presented in these financial
statements pertains only to the Fund.
The 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. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
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. On
July 31, 1998, undistributed net investment income was increased by $88,842,
undistributed net realized gain (loss) decreased by $424 and paid-in-capital
decreased by $89,266 in order to comply with the requirements of the
American Institute of Certified Public Accountants Statement of Position
93-2. Net assets of the Fund were unaffected by the reclassifications
discussed above.
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 $5,440,638, 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, 1998, the Fund
reimbursed AIM $59,396 for such services.
The Fund, pursuant to a transfer agent and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. On September 20, 1997, the Board of Trustees
of the Fund approved the appointment of AFS as transfer agent of the
Institutional Class effective December 29, 1997. During the year ended July 31,
1998, AFS was paid $136,066 with respect to Class A shares, and for the period
December 29, 1997 through July 31, 1998, AFS was paid $26,979 with respect to
the Institutional Class. Prior to the effective date of the agreement with AFS,
the Fund paid A I M Institutional Fund Services, Inc. $18,419 pursuant to a
transfer agency and shareholder services agreement with respect to the
Institutional Class for the period August 1, 1997 through December 28, 1997.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and a master distribution agreement with Fund Management Company
("FMC") to serve as
FS-5
<PAGE> 82
the distributor for the Institutional Class. The Trust has adopted a Plan
pursuant to Rule 12b-1 under the 1940 Act (the "Plan") with respect to the Class
A shares. The Fund pays AIM Distributors compensation at an annual rate of 0.15%
of the average daily net assets attributable to the Class A 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 Class A shares of the Fund. Any amounts not paid
as a service fee under the 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, 1998, the Fund paid AIM Distributors $567,049 as compensation under the
Plan.
AIM Distributors received commissions of $56,989 during the year ended
July 31, 1998 from sales of Class A shares. Such commissions are not an expense
of the Fund. They are deducted from, and are not included in, proceeds from
sales of Class A shares. Certain officers and trustees of the Trust are officers
and directors of AIM, AIM Distributors, FMC and AFS.
During the year ended July 31, 1998, the Fund paid legal fees of $4,177 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
The Fund received reductions in transfer agency fees from AFS (an affiliate of
AIM) of $4,054 under an expense offset arrangement which resulted in a reduction
of the Fund's total expenses of $4,054 during the year ended July 31, 1998.
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) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. 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 May 1, 1998, the Fund was limited
to borrowing up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. During the year ended July 31, 1998, 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, 1998 was
$569,622,549 and $612,378,696, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of July 31, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 692,739
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (17,945)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 674,794
=========================================================
Cost of investments for tax purposes is $391,319,569.
</TABLE>
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, 1998 and 1997 were
as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 22,832,451 $ 229,871,705 22,795,689 $ 228,371,816
- --------------------------------------------------------------------------------
Institutional Class 1,450,340 14,604,304 2,663,678 26,662,958
- --------------------------------------------------------------------------------
Issued as a
reinvestment of
dividends:
Class A 1,671,295 16,825,885 1,600,608 16,029,270
- --------------------------------------------------------------------------------
Institutional Class 4,391 44,205 16,172 161,587
- --------------------------------------------------------------------------------
Reacquired:
Class A (28,922,414) (291,195,905) (21,687,977) (217,174,189)
- --------------------------------------------------------------------------------
Institutional Class (1,281,958) (12,924,513) (12,215,116) (122,336,273)
- --------------------------------------------------------------------------------
(4,245,895) $ (42,774,319) (6,826,946) $ (68,284,831)
================================================================================
</TABLE>
FS-6
<PAGE> 83
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A shares
outstanding during each of the years in the four-year period ended July 31,
1998, the eleven months ended July 31, 1994 and the year ended August 31, 1993.
<TABLE>
<CAPTION>
JULY 31,
----------------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.53 0.54 0.55 0.54 0.35 0.42
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) -- 0.10 (0.06) 0.07 (0.20) 0.05
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Total from investment operations 0.53 0.64 0.49 0.61 0.15 0.47
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.53) (0.54) (0.55) (0.54) (0.35) (0.42)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Distributions from net realized gains -- -- -- -- (0.08) (0.02)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Total distributions (0.53) (0.54) (0.55) (0.54) (0.43) (0.44)
- ------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.07 $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24
============================================================ ======== ======== ======== ======== ======== ========
Total return(a) 5.42% 6.55% 4.98% 6.36% 1.52% 4.65%
============================================================ ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $345,355 $389,812 $359,048 $274,480 $329,942 $348,937
============================================================ ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.54%(b) 0.54% 0.54% 0.51% 0.47%(c) 0.46%
============================================================ ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 5.29%(b) 5.35% 5.45% 5.44% 3.75%(c) 4.07%
============================================================ ======== ======== ======== ======== ======== ========
Portfolio turnover rate 133% 130% 117% 120% 120% 123%
============================================================ ======== ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are based on average net assets of $378,032,807.
(c) Annualized.
FS-7
<PAGE> 84
Prospectus
- --------------------------------------------------------------------------------
The AIM Limited Maturity Treasury Fund (the
"Fund"), a portfolio of AIM Investment Securities Funds
(the "Trust"), is an open-end, series, management
investment company designed for institutions seeking
liquidity with minimum fluctuation in principal value,
and, consistent with this investment objective, the
highest total return achievable. To achieve its
objective, the Fund will invest in an actively managed
portfolio of U.S. Treasury notes and other direct
obligations of the U.S. Treasury.
THERE CAN BE NO ASSURANCE THAT THE FUND WILL
ACHIEVE ITS OBJECTIVE. THE NET ASSET VALUE OF THE FUND
VARIES DEPENDING ON THE MARKET VALUE OF ITS ASSETS. THE
FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND THE FUND'S
SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This Prospectus sets forth basic information that
investors should know about the Fund prior to investing
and should be read and retained for future reference. A
Statement of Additional Information, dated November 18,
1998, 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
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AIM INVESTMENT
SECURITIES FUNDS
AIM
LIMITED
MATURITY
TREASURY
FUND
INSTITUTIONAL
CLASS
NOVEMBER 18, 1998
[LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 659-1005
<PAGE> 85
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 two investment portfolios: the AIM Limited Maturity Treasury Fund (the
"Fund") and AIM High Yield Fund II. The Fund consists of two classes: a retail
class (the 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 THE 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 Shares of 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
Shares of the Institutional Class are sold at net asset value. No purchase or
redemption charges are imposed by the Fund. Institutions may charge fees to
their customers for services provided in connection with the maintenance of
customer accounts with the Institutions, and customers should consult with their
Institutions to obtain a schedule of any applicable fees. The minimum initial
investment in the Institutional 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
Redemption of shares 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."
2
<PAGE> 86
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 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, generally 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
approximately 90 investment company portfolios encompassing a broad range of
investment objectives. 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 Fund Services,
Inc. ("Transfer Agent" or "AFS"), 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.
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, aimfunds.com,
Invest With Discipline, La Familia AIM de Fondos and La Familia AIM de Fondos
and Design are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 87
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, 1998.
<TABLE>
<S> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as a %
of offering price)..................................... None
Maximum sales load on reinvested dividends (as a % of
offering price)........................................ None
Deferred sales load (as a % of original purchase price or
redemption proceeds,
as applicable)......................................... None
Redemption fees (as a % of amount redeemed, if
applicable)............................................ None
Exchange fee.............................................. None
Annual Fund Operating Expenses
(as a % of average net assets)
Management fees........................................... 0.20%
12b-1 fees................................................ None
Other expenses............................................ 0.12%
----
Total fund operating expenses............................. 0.32%
====
</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
CLASS
-------------
<S> <C>
1 year..................................................... $ 3
3 years.................................................... $10
5 years.................................................... $18
10 years.................................................... $41
</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> 88
FINANCIAL HIGHLIGHTS
Shown below are the financial highlights during each of the fiscal years ended
July 31, 1998, 1997, 1996 and 1995, the eleven months ended July 31, 1994 and
each of the years in the five-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,
--------------------------------------------------------- --------------------------------
1998 1997 1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period.................. $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79
Income from investment
operations:
Net investment income...... 0.56 0.56 0.58 0.57 0.37 0.44 0.60 0.73
Net gains (losses) on
securities (both realized
and unrealized).......... -- 0.10 (0.06) 0.07 (0.20) 0.05 0.29 0.22
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations............. 0.56 0.66 0.52 0.64 0.17 0.49 0.89 0.95
-------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income........ (0.56) (0.56) (0.58) (0.57) (0.37) (0.44) (0.60) (0.73)
Distributions from net
realized capital gains... -- -- -- -- (0.08) (0.02) (0.09) --
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions...... (0.56) (0.56) (0.58) (0.57) (0.45) (0.46) (0.69) (0.73)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period..................... $ 10.07 $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01
======== ======== ======== ======== ======== ======== ======== ========
Total return (a)............ 5.66% 6.79% 5.27% 6.61% 1.72% 4.88% 9.14% 10.08%
======== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)........... $ 50,609 $ 48,866 $143,468 $129,530 $134,971 $130,690 $ 89,352 $ 25,528
======== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets....... 0.32%(b) 0.31% 0.27% 0.28% 0.25%(c) 0.24% 0.28% 0.41%(d)
======== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets................... 5.51%(b) 5.56% 5.72% 5.70% 3.98%(c) 4.30% 5.76% 7.36%(d)
======== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate.... 133% 130% 117% 120% 120% 123% 120% 215%
======== ======== ======== ======== ======== ======== ======== ========
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)...................... -- -- -- -- -- -- -- --
Average number of shares
outstanding during the
period (000s omitted)
(g)...................... 4,958 5,230 13,982 12,540 16,864 9,785 6,097 1,477
Average amount of debt per
share during the
period................... -- -- -- -- -- -- -- --
<CAPTION>
AUGUST 31,
---------------------
1990 1989
---- ----
<S> <C> <C>
Net asset value, beginning
of period.................. $ 9.78 $ 9.80
Income from investment
operations:
Net investment income...... 0.79 0.85
Net gains (losses) on
securities (both realized
and unrealized).......... 0.01 (0.02)
-------- --------
Total from investment
operations............. 0.80 0.83
-------- --------
Less distributions:
Dividends from net
investment income........ (0.79) (0.85)
Distributions from net
realized capital gains... -- --
-------- --------
Total distributions...... (0.79) (0.85)
-------- --------
Net asset value, end of
period..................... $ 9.79 $ 9.78
======== ========
Total return (a)............ 8.52% 8.87%
======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)........... $ 10,378 $ 16,065
======== ========
Ratio of expenses to
average net assets....... 0.31%(e) 0.31%(f)
======== ========
Ratio of net investment
income to average net
assets................... 8.12%(e) 8.69%(f)
======== ========
Portfolio turnover rate.... 192% 220%
======== ========
Borrowings for the period:
Amount of debt outstanding
at end of period (000s
omitted)................. -- $ 2,257
Average amount of debt
outstanding during the
period (000s omitted)
(g)...................... $ 834 3,562
Average number of shares
outstanding during the
period (000s omitted)
(g)...................... 1,208 1,817
Average amount of debt per
share during the
period................... $ 0.69 $ 1.96
</TABLE>
- ---------------
(a) For periods less than one year, total return is not annualized.
(b) Ratios are based on average net assets of $49,917,358.
(c) Annualized.
(d) After expense reimbursements.
(e) After waiver of advisory fees and expense reimbursements.
(f) After waiver of advisory fees.
(g) Averages computed on a daily basis.
5
<PAGE> 89
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> 90
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 Investment Company
Act of 1940 (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.
Investment in Other Investment Companies. The Fund is permitted to invest in
other investment companies to the extent permitted by the 1940 Act, and rules
and regulations thereunder, and, if applicable, exemptive orders granted by the
SEC.
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 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> 91
PURCHASE OF SHARES
Shares of the Institutional Class are sold to Institutions on a continuing
basis at the net asset value of such shares next determined after an order has
been accepted by the Fund. No purchase or redemption charges are imposed by the
Fund; however, Institutions may charge their customers a recordkeeping, account
maintenance or other fee in connection with their accounts, and such customers
should consult with their Institutions to obtain a schedule of applicable fees.
In order to maximize its income, the Fund attempts to remain as fully invested
as practicable. Accordingly, in order to be accepted for execution, purchase
orders must be submitted to and received by AFS 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 AFS 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 AFS 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 AFS at
P.O. Box 4497, Houston, Texas 77210-4497. Account Applications may be obtained
from AFS. 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 AFS. 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 AFS 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 AFS 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 re-
8
<PAGE> 92
quest effected prior to 4:00 p.m. Eastern Time will not be wired to the
redeeming shareholder until the next business day of the Fund. A redemption
request received by AFS 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 AFS.
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, generally are paid annually.
The dividends accrued and paid for each class of the Fund's shares will
consist of: (a) interest accrued and discounts earned (including both original
issue and market discount) for the Fund, allocated based upon each class's pro
rata share of the net assets of the Fund, less (b) Trust expenses accrued for
the applicable dividend period attributable to the Fund, such as custodian fees,
trustee's fees, and accounting and legal expenses, allocated based upon each
class's 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 AFS at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173 and will become effective with dividends paid after its receipt
by AFS. 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.
9
<PAGE> 93
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 AFS.
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 Class, 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.
10
<PAGE> 94
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 A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management's and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
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. AIM was organized in 1976 and, together with its subsidiaries,
manages or
11
<PAGE> 95
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. AIM is a wholly owned subsidiary of AIM
Management, a holding company engaged in the financial services business. AIM
Management is an indirect wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC
and its subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific Region.
Under the terms of the Advisory Agreement, AIM supervises all aspects of the
Fund's operations and provides investment advisory services to 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. AIM and the
Fund have entered into a Master Administrative Services Agreement (the
"Administrative Services Agreement"), 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 AFS, a wholly owned
subsidiary of AIM and registered transfer agent, have entered into the Transfer
Agency and Service Agreement, pursuant to which AFS provides transfer agency,
dividend distribution and disbursement, and shareholder services to the Fund.
For the fiscal year ended July 31, 1998, 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 0.32%.
For the fiscal year ended July 31, 1998 the Fund paid 0.01% of its average
daily net assets to AIM for reimbursement for administrative services.
FEE WAIVERS
In order to increase the yield to investors, AIM may from time to time
voluntarily waive or reduce its fee, while retaining its ability to be
reimbursed for such fee prior to the end of such fiscal year. Fee waivers or
reductions and waivers of expense reimbursements, other than those set forth in
the Advisory Agreement, may be rescinded at any time, without notice to
investors.
PORTFOLIO MANAGEMENT
AIM uses a team approach and disciplined investment strategy in providing
investment advisory services to all its accounts, including the Fund. AIM's
investment staff consists of 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 Scott W. Johnson, Karen Dunn Kelley and Marcel S.
Theriot. Mr. Johnson is Vice President of A I M Capital Management, Inc. ("AIM
Capital"), a wholly owned subsidiary of AIM, and has been responsible for the
Fund since 1998. He has been associated with AIM since 1994 and has been an
investment professional since 1994. Prior to 1994 he attended Vanderbilt
University. Ms. Kelley is Senior Vice President of A I M Capital; Vice President
of AIM and of the Trust; and has been responsible for the Fund since 1992. Ms.
Kelley has been associated with AIM since 1989 and has a total of 15 years of
experience as an investment professional. Mr. Theriot is an investment officer
of AIM Capital and has been responsible for the Fund since 1998. He has been
associated with AIM and/or its subsidiaries since 1994 and has been an
investment professional since 1994. Prior to 1994 he was a Service Marketing
Representative with Van Kampen American Capital Asset Management, Inc.
DISTRIBUTION OF SHARES
The Trust has entered into a Distribution Agreement 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
12
<PAGE> 96
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 Amended and
Restated Agreement and Declaration of Trust, dated November 5, 1998 (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 AIM, 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
AFS acts as transfer agent and dividend disbursing agent for the Institutional
Class. 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.
13
<PAGE> 97
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
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.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries rely
on both internal software systems as well as external software systems provided
by third parties. Many software systems in use today are unable to distinguish
between the year 2000 and the year 1900. This defect if not cured will likely
adversely affect the services that AIM Management, its subsidiaries and other
service providers provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
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.
14
<PAGE> 98
================================================================================
AIM INVESTMENT SECURITIES FUNDS
AIM LIMITED MATURITY TREASURY FUND
INSTITUTIONAL CLASS
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 659-1005
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 659-1005
AUDITORS
KPMG PEAT MARWICK LLP
700 Louisiana
Houston, Texas 77002
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street, 11th Floor
New York, New York 10286
TRANSFER AGENT
A I M FUND SERVICES, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
================================================================================
PROSPECTUS
November 18, 1998
AIM
INVESTMENT
SECURITIES FUNDS
---------------------
AIM LIMITED MATURITY
TREASURY FUND
---------------------
INSTITUTIONAL CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary.......................................... 2
Table of Fees and Expenses....................... 4
Financial Highlights............................. 5
Suitability For Investors........................ 6
Investment Program............................... 6
Purchase of Shares............................... 8
Redemption of Shares............................. 8
Dividends and Distributions...................... 9
Taxes............................................ 10
Net Asset Value.................................. 10
Performance Information.......................... 10
Reports to Shareholders.......................... 11
Management of the Trust.......................... 11
Portfolio Transactions and Brokerage
Allocation..................................... 13
General Information.............................. 13
</TABLE>
================================================================================
<PAGE> 99
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 18, 1998
RELATING TO THE PROSPECTUS DATED NOVEMBER 18, 1998
<PAGE> 100
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
General Brokerage Policy............................... 13
Allocation of Portfolio Transactions................... 14
Section 28(e) Standards................................ 14
Taxes....................................................... 15
Qualification as a Regulated Investment Company........ 15
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........................................ 18
Financial Statements........................................ FS-1
</TABLE>
i
<PAGE> 101
INTRODUCTION
AIM Investment Securities Funds (the "Trust") is a series mutual fund
currently offering two investment portfolios: the AIM Limited Maturity Treasury
Fund (the "Fund") and AIM High Yield Fund II. 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 18, 1998. 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.
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 Amended and Restated Agreement and
Declaration of Trust, dated November 5, 1998, (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 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 the trustees to all parties, and each
party
1
<PAGE> 102
thereto must expressly waive all rights of action directly against shareholders
of the Trust. The Trust Agreement provides for indemnification out of the
property of a Fund for all losses and expenses of any shareholder of such Fund
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 Fund 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 and officers of
the Trust will not be personally responsible for any act, omission or obligation
of the Trust or any trustee or officer. However, nothing in the Declaration of
Trust protects a trustee against any liability to the Trust or to the
shareholders to which a trustee or officer would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office with the Trust. The Declaration
of Trust provides for indemnification by the Trust of the trustees and the
officers, employees or agents of the Trust if it is determined that such person
acted in good faith and reasonably believed: (1) in the case of conduct in his
official care or conduct in his official capacity for the Trust, that his
conduct was in the Trust's best interests, (2) in all of the cases, that his
conduct was at least not opposed to the Trust's best interests and (3) in a
criminal proceeding, that he had no reason to believe that his conduct was
unlawful. 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 two-thirds of the
outstanding 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. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
POSITIONS HELD PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE WITH REGISTRANT AT LEAST THE PAST 5 YEARS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
**CHARLES T. BAUER (79) Trustee and Chairman of the Board of Directors, A I M
Chairman Management Group Inc., A I M Advisors, Inc.,
A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc.
and Fund Management Company; and Vice Chairman
and Director, AMVESCAP PLC.
- ---------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (54) 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 (74) 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.
- ---------------------------------------------------------------------------------------------------------
EDWARD K. DUNN, JR.(63) Trustee Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 20th Floor Mortgage Corp.; Formerly, Vice Chairman of the
Baltimore, MD 21201 Board of Directors and President,
Mercantile -- Safe Deposit & Trust Co.; and
President, Mercantile Bankshares.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
** A trustee who is an "interested person" of the Trust and AIM as defined in
the 1940 Act.
2
<PAGE> 103
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
POSITIONS HELD PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE WITH REGISTRANT AT LEAST THE PAST 5 YEARS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
JACK M. FIELDS (46) Trustee Chief Executive Officer, Texana Global, Inc.
8810 Will Clayton Parkway (foreign trading company) and Twenty First
Jetero Plaza, Suite E Century Group, Inc. (a governmental affairs
Humble, TX 77338 company). Formerly, Member of the U.S. House
of Representatives.
- ---------------------------------------------------------------------------------------------------------
*CARL FRISCHLING (61) Trustee Partner, Kramer, Levin, Naftalis & Frankel
919 Third Avenue (law firm). Formerly, Partner, Reid & Priest
New York, NY 10022 (law firm).
- ---------------------------------------------------------------------------------------------------------
**ROBERT H. GRAHAM (51) Trustee and Director, President and Chief Executive
President Officer, A I M Management Group Inc.; Director
and President, A I M Advisors, Inc.; and
Director and Senior Vice President, A I M
Capital Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc. and Fund
Management Company; and Director, AMVESCAP
PLC.
- ---------------------------------------------------------------------------------------------------------
PREMA MATHAI-DAVIS(48) Trustee Chief Executive Officer, YWCA of the U.S.A.;
350 Fifth Avenue, Suite 301 Commissioner, New York City Department for the
New York, NY 10118 Aging; and Member of the Board of Directors,
Metropolitan Transportation Authority of New
York State.
- ---------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (56) Trustee Attorney in private practice in Houston,
6363 Woodway, Suite 825 Texas.
Houston, TX 77057
- ---------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (75) 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 (59) 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 (54) Senior Vice Director, Senior Vice President and Treasurer,
President and A I M Advisors, Inc.; and Vice President and
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. and Fund
Management Company.
- ---------------------------------------------------------------------------------------------------------
GARY T. CRUM (51) Senior Vice Director and President, A I M Capital
President Management, Inc.; Director and Senior Vice
President, A I M Management Group Inc., A I M
Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
- ---------------------------------------------------------------------------------------------------------
</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> 104
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
POSITIONS HELD PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE WITH REGISTRANT AT LEAST THE PAST 5 YEARS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
***CAROL F. RELIHAN (44) Senior Vice Director, Senior Vice President, Secretary and
President and General Counsel, A I M Advisors, Inc.; Vice
Secretary President, General Counsel and Secretary,
A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management
Company; General Counsel and Vice President,
A I M Fund Services, Inc.; and Vice President,
A I M Capital Management, Inc. and A I M
Distributors, Inc.
- ---------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President Vice President and Fund Controller, A I M
and Assistant Advisors, Inc.; and Assistant Vice President
Treasurer and Assistant Treasurer, Fund Management
Company.
- ---------------------------------------------------------------------------------------------------------
MELVILLE B. COX (55) Vice President Vice President and Chief Compliance Officer,
A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Fund Services, Inc.,
A I M Distributors, Inc. and Fund Management
Company.
- ---------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (38) Vice President Senior Vice President, A I M Capital
Management, Inc.; and Vice President, A I M
Advisors, Inc.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
*** Mr. Arthur and Ms. Relihan are married to each other.
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, Dunn, Fields,
Frischling, Pennock, Robinson (Chairman) 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,
Dunn, Fields, Frischling, Pennock, Robinson and Sklar (Chairman). 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
(Chairman), Daly, Dunn, Fields, Pennock, 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 Advisors,
Inc. ("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
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.
4
<PAGE> 105
Set forth below is information regarding compensation paid or accrued for each
trustee of the Trust:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM THE BY ALL FROM ALL
DIRECTOR FUNDS(1) AIM FUNDS(2) AIM FUNDS(3)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Charles T. Bauer $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------
Bruce L. Crockett 1,172 67,774 84,000
- ----------------------------------------------------------------------------------------------------------
Owen Daly II 1,172 103,542 84,000
- ----------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr.(4) 437 0 0
- ----------------------------------------------------------------------------------------------------------
Jack M. Fields 1,164 0 0
- ----------------------------------------------------------------------------------------------------------
Carl Frischling(5) 1,172 96,520 68,000
- ----------------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- ----------------------------------------------------------------------------------------------------------
John F. Kroeger(6) 1,119 94,132 66,000
- ----------------------------------------------------------------------------------------------------------
Prema Mathai-Davis(4) 0 0 0
- ----------------------------------------------------------------------------------------------------------
Lewis F. Pennock 1,172 55,777 67,000
- ----------------------------------------------------------------------------------------------------------
Ian W. Robinson 1,153 85,912 68,000
- ----------------------------------------------------------------------------------------------------------
Louis S. Sklar 1,165 84,370 66,500
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended July 31, 1998, including interest earned
thereon, was $6,426.
(2) During the fiscal year ended July 31, 1998, the total estimated amount of
expenses allocated to Limited Maturity in respect of such retirement
benefits was $2,778. Data reflects compensation estimated for the calendar
year ended December 31, 1997.
(3) Each Trustee serves as a director or trustee of a total of 12 registered
investment companies advised by AIM as of December 31, 1997 (comprised of
over 50 portfolios). Data reflect total compensation earned during the
calendar year ended December 31, 1997.
(4) Mr. Dunn and Ms. Mathai-Davis did not serve as Trustees during the calendar
year ended December 31, 1997.
(5) The Trust paid the law firm of Kramer, Levin, Naftalis & Frankel $4,177
legal fees for services provided to Limited Maturity during the fiscal year
ended July 31, 1998. Mr. Frischling, a trustee of the Trust, is a partner
of such firm.
(6) Mr. Kroeger resigned as a Trustee of the Trust on June 11, 1998 and on that
date became a consultant to the Trust.
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> 106
Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson,
Sklar and Mdm. Mathai-Davis are 11, 11, 0, 1, 21, 20, 16, 11, 8, and 0 years,
respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
- -----------------------------------------------------------
NUMBER OF
YEARS OF
SERVICE WITH
THE AIM ANNUAL RETAINER PAID BY ALL AIM FUNDS
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.
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 (the "Advisory Agreement"). AIM was
organized in 1976, and together with its subsidiaries, advises or manages over
90 investment company portfolios encompassing a broad range of investment
objectives.
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 businesses 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 Trust 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.
6
<PAGE> 107
The Advisory Agreement will continue from year to year 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"), 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, 1998, 1997 and 1996, AIM received
advisory fees of $855,900, $837,760, and $933,207, respectively, pursuant to the
Advisory Agreement. During the fiscal years ended July 31, 1998, 1997 and 1996,
AIM was reimbursed $59,396, $66,785, and $60,857, respectively, pursuant to the
Administrative Services Agreement.
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.
7
<PAGE> 108
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.
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 October 26, 1998, 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
October 26, 1998, 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*
--------------- --------
<S> <C>
Frost National Bank 87.58%**
Muir & Co. c/o Frost
P.O. Box 2479
San Antonio, TX 78298-2479
Esor & Co. 6.03%
Attn: Trust Operations
P.O. Box 19006
Green Bay, WI 54307-9006
</TABLE>
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 October 26,
1998, 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*
--------------- --------
<S> <C>
Merrill Lynch Pierce Fenner & Smith 16.60%
FBO the Sole Benefit of Customers
Mutual Fund Operations
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</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> 109
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 of AIM High Yield Fund II, as of
October 26, 1998 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*
--------------- --------
<S> <C>
Jonathan C. Schoolar 35.69%**
3722 Tartan Lane
Houston, TX 77025
Gary T. Crum 35.69%**
11 Greenway Plaza
Suite 100
Houston, TX 77046
AIM Advisors, Inc. 20.97%
ATTN: David Hessel
11 Greenway Plaza
Suite 100
Houston, TX 77046
</TABLE>
Since Class A and Class C shares of High Yield are not yet available for sale
to the public, AIM, which provided the initial capitalization of High Yield,
currently owns all the Class B and Class C shares of the Fund. High Yield
expects that the sale of Class B and Class C shares to the public will promptly
reduce the percentage of such classes owned by AIM. However, at this time, AIM
owns more than 25% of the Fund's outstanding shares, and therefore may be
presumed to be in "control" of the Fund, as defined in the 1940 Act.
- ---------------
* 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.
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 (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. 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
9
<PAGE> 110
the Trust. Short-term obligations having sixty (60) days or less to maturity are
valued at amortized cost, which approximates market value. (See also "Purchase
of Shares," "Redemption of Shares" and "Net Asset Value" in the Prospectus.)
The Trust agrees to redeem shares of the Fund solely in cash up to the lesser
of $250,000 or 1% of the Fund's net assets during any 90-day period for any one
shareholder. In consideration of the best interests of the remaining
shareholders, the Trust reserves the right to pay any redemption price exceeding
this amount in whole or in part by a distribution in kind of securities held by
the Fund in lieu of cash. It is highly unlikely that shares would ever be
redeemed in kind. If shares are redeemed in kind, however, the redeeming
shareholder should expect to incur transaction costs upon the disposition of the
securities received in the distribution.
THE DISTRIBUTION AGREEMENT
The Trust has entered into a Distribution Agreement with FMC (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 will continue 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-
10
<PAGE> 111
Entry System. Although the securities subject to repurchase agreements might
bear maturities in excess of one year, the Fund will not enter into a repurchase
agreement with an agreed-upon repurchase date in excess of seven calendar days
from the date of acquisition by the Fund, unless the Fund has the right to
require the selling institution to repurchase the underlying securities within
seven days of the date of acquisition.
INVESTMENT RESTRICTIONS
The most significant investment restrictions applicable to the Fund's
investment program are set forth in the Prospectus under "Investment
Program -- Restrictions." Additionally, as a matter of fundamental policy which
may not be changed without a vote of the holders of a majority of the
outstanding shares of beneficial interest of all classes of the Fund, the Fund
will not:
(1) mortgage, pledge or hypothecate any assets except to secure
permitted borrowings of money from banks for temporary or emergency
purposes and then only in amounts not in excess of 33 1/3% of the value of
its total assets at the time of such borrowing;
(2) underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition of such
securities in accordance with the Fund's investment program may be deemed
an underwriting;
(3) invest in real estate;
(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.
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(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 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, 1998 was 5.26%. This distribution rate was
calculated by dividing dividends declared over the thirty days ended July 31,
1998 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.
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HISTORICAL PORTFOLIO RESULTS
The following chart shows the total returns for the Institutional Class for
the twelve months and the five and ten year periods ended July 31, 1998.
<TABLE>
<CAPTION>
AVERAGE
ANNUAL CUMULATIVE
RETURN RETURN
------- ----------
<S> <C> <C>
Twelve months ended 7/31/98.............................. 6.79 % 5.66%
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, 1998 was 4.79%.
A hypothetical investment of $1,000 in the Institutional Class made at the
beginning of the twelve-month period ended July 31, 1998 would have been worth
$1,067.90. During the five-year period ended July 31, 1998, 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, 1998, 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
GENERAL BROKERAGE POLICY
A I M Advisors, Inc. ("AIM") makes decisions to buy and sell securities for
each Fund, selects broker-dealers, effects the Funds' investment portfolio
transactions, allocates brokerage fees in such transactions, and where
applicable, negotiates commissions and spreads on transactions. Since most
purchases and sales of portfolio securities by the Funds are usually principal
transactions, the Funds incur little or no brokerage commissions. AIM's primary
consideration in effecting a security transaction is to obtain the most
favorable execution of the order, which includes the best price on the security
and a low commission rate. While AIM seeks reasonably competitive commission
rates, the Funds may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
In the event a Fund purchases securities traded in the over-the-counter
market, the Fund deals directly with dealers who make markets in the securities
involved, except when better prices are available elsewhere. Portfolio
transactions placed through dealers who are primary market makers are effected
at net prices without commissions, but which include compensation in the form of
a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock markets
outside the United States. Although in recent years many overseas stock markets
have adopted a system of negotiated rates, a number of markets maintain an
established schedule of minimum commission rates.
AIM may determine target levels of commission business with various brokers on
behalf of its clients (including the Funds) over a certain time period. The
target levels will be based upon the following factors, among others: (1) the
execution services provided by the broker; (2) the research services provided by
the broker; and (3) the broker's interest in mutual funds in general and in the
Funds and other mutual funds advised by AIM or A I M Capital Management, Inc.
(collectively, the "AIM Funds") in particular, including sales of the Funds and
of the other AIM Funds. In connection with (3) above, the Funds' trades may be
executed directly by dealers that sell shares of the AIM Funds or by other
broker-dealers with which such dealers have clearing arrangements. AIM will not
use a specific formula in connection with any of these considerations to
determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a Fund any
commissions, fees, brokerage or similar payments paid by the Fund on portfolio
transactions. Normally, the only fees which AIM can recapture are the soliciting
dealer fees on the tender of a Fund's portfolio securities in a tender or
exchange offer.
Under the Investment Company Act of 1940, as amended, (the "1940 Act"),
certain persons affiliated with the Trust are prohibited from dealing with the
Funds as principal in any purchase or sale of securities unless an exemptive
order allowing
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<PAGE> 114
such transactions is obtained from the SEC. The Funds may engage in certain
principal and agency transactions with banks and their affiliates that own 5% or
more of the outstanding voting securities of an AIM Fund, provided the
conditions of an exemptive order received by the AIM Funds from the SEC are met.
In addition, a Fund may purchase or sell a security from or to another AIM Fund
provided the Funds follow procedures adopted by the Boards of Directors/Trustees
of the various AIM Funds, including the Trust. These inter-fund transactions do
not generate brokerage commissions but may result in custodial fees or taxes or
other related expenses.
The 1940 Act also prohibits the Funds from purchasing a security being
publicly underwritten by a syndicate of which certain persons affiliated with
the Trust are members except in accordance with certain conditions.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some of these
accounts may have investment objectives similar to the Funds. Occasionally,
identical securities will be appropriate for investment by one of the Funds and
by another AIM Fund or one or more of these investment accounts. However, the
position of each account in the same securities and the length of time that each
account may hold its investment in the same securities may vary. The timing and
amount of purchase by each account will also be determined by its cash position.
If the purchase or sale of securities is consistent with the investment policies
of the Fund(s) and one or more of these accounts, and is considered at or about
the same time, AIM will fairly allocate transactions in such securities among
the Fund(s) and these accounts. AIM may combine such transactions, in accordance
with applicable laws and regulations, to obtain the most favorable execution.
Simultaneous transactions could, however, adversely affect a Fund's ability to
obtain or dispose of the full amount of a security which it seeks to purchase or
sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under
certain circumstances, lawfully may cause an account to pay a higher commission
than the lowest available. Under Section 28(e), AIM must make a good faith
determination that the commissions paid are "reasonable in relation to the value
of the brokerage and research services provided . . . viewed in terms of either
that particular transaction or [AIM's] overall responsibilities with respect to
the accounts as to which it exercises investment discretion." The services
provided by the broker also must lawfully and appropriately assist AIM in the
performance of its investment decision-making responsibilities. Accordingly, in
recognition of research services provided to it, a Fund may pay a broker higher
commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research
(and the research of its affiliates), and may include the following types of
information: statistical and background information on the U.S. and foreign
economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally or in
written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging of meetings with management of companies,
and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used
by AIM tend to follow a broader universe of securities and other matters than
AIM's staff can follow. In addition, the research provides AIM with a diverse
perspective on financial markets. Research services provided to AIM by
broker-dealers are available for the benefit of all accounts managed or advised
by AIM or by its affiliates. Some broker-dealers may indicate that the provision
of research services is dependent upon the generation of certain specified
levels of commissions and underwriting concessions by AIM's clients, including
the Funds. However, the Funds are not under any obligation to deal with any
broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer
providing them. In other cases, the research services may be obtainable from
alternative sources in return for cash payments. AIM believes that the research
services are
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<PAGE> 115
beneficial in supplementing AIM's research and analysis and that they improve
the quality of AIM's investment advice. The advisory fee paid by the Funds is
not reduced because AIM receives such services. However, to the extent that AIM
would have purchased research services had they not been provided by
broker-dealers, the expenses to AIM could be considered to have been reduced
accordingly.
Limited Maturity paid no brokerage commissions to brokers affiliated with that
Fund during the past three fiscal years of the Fund.
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, 1998, 1997 and 1996, were 132.59%,
129.74%, and 117.09%, 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.
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 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").
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.
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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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 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
(taxable at a maximum rate of 20%), regardless of the length of time the
shareholder has held his shares or whether such gain was recognized by the Fund
prior to the date on which the shareholder acquired his shares. Conversely, if
the Fund elects to retain its net capital gain, the Fund will be taxed thereon
(except to the extent of any available capital loss carryovers) at the 35%
corporate tax rate. If the Fund elects to retain net capital gain, it is
expected that the Fund also will elect to have shareholders treated as if each
received a distribution of its pro rata share of such gain, with the result that
each shareholder will be required to report its pro rata share of such gain on
its tax return as long-term capital gain, will receive a refundable tax credit
for its pro rata share of tax paid by the Fund on the gain, and will increase
the tax basis for its shares by an amount equal to the deemed distribution less
the tax credit.
Distributions by the Fund that do not constitute ordinary income dividends or
capital gain dividends will be treated as a return of capital to the extent of
(and in reduction of) the shareholder's tax basis in his shares; any excess will
be treated as gain from the sale of his shares, as discussed below.
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<PAGE> 117
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 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
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%. 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.
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The tax consequences to a foreign shareholder entitled to claim the benefits
of an applicable tax treaty may be different from those described herein.
Foreign shareholders are urged to consult their own tax advisors with respect to
the particular tax consequences to them of an investment in the Fund, including
the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and regulations issued thereunder as in effect on the date of
this Statement of Additional Information. Future legislative or administrative
changes or court decisions may significantly change the conclusions expressed
herein, and any such changes or decisions may have a retroactive effect with
respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. The tax treatment of foreign
investors may also differ from the treatment for U.S. investors described above.
Shareholders are urged to consult their tax advisors as to the consequences of
these and other state and local tax rules affecting investments in the Fund.
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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 AIM
Limited Maturity Treasury Fund (a portfolio of AIM Investment Securities Funds)
including the schedule of investments, as of July 31, 1998, and the related
statement of operations for the year then ended, the statements 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 four-year period then ended,
the eleven months ended July 31, 1994 and the year 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, 1998, 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
AIM Limited Maturity Treasury Fund as of July 31, 1998, 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 four-year period then ended, the eleven months ended
July 31, 1994 and the year ended August 31, 1993, in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
----------------------------
KPMG Peat Marwick LLP
September 4, 1998
Houston, Texas
FS-1
<PAGE> 120
SCHEDULE OF INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
MATURITY (000S) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. TREASURY NOTES-99.00%
5.875% 08/31/99 $32,250 $ 32,384,160
- -----------------------------------------------------------------------------------------
5.75% 09/30/99 32,045 32,143,378
- -----------------------------------------------------------------------------------------
5.625% 10/31/99 32,275 32,324,058
- -----------------------------------------------------------------------------------------
5.625% 11/30/99 33,400 33,456,446
- -----------------------------------------------------------------------------------------
5.625% 12/31/99 33,000 33,059,400
- -----------------------------------------------------------------------------------------
5.375% 01/31/00 33,075 33,022,742
- -----------------------------------------------------------------------------------------
5.50% 02/29/00 33,000 33,006,930
- -----------------------------------------------------------------------------------------
5.50% 03/31/00 32,000 32,008,320
- -----------------------------------------------------------------------------------------
5.625% 04/30/00 32,300 32,367,184
- -----------------------------------------------------------------------------------------
5.50% 05/31/00 32,500 32,501,300
- -----------------------------------------------------------------------------------------
5.375% 06/30/00 32,840 32,783,515
- -----------------------------------------------------------------------------------------
5.375% 07/31/00 33,000 32,936,930
- -----------------------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost
$391,293,845) 391,994,363
- -----------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.00% 391,994,363
- -----------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.00% 3,970,184
- -----------------------------------------------------------------------------------------
NET ASSETS-100.00% $395,964,547
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-2
<PAGE> 121
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $391,293,845) $ 391,994,363
- ----------------------------------------------------------------------------
Cash 58,653
- ----------------------------------------------------------------------------
Receivables for:
Fund shares sold 1,240,495
- ----------------------------------------------------------------------------
Interest 4,627,571
- ----------------------------------------------------------------------------
Investment in deferred compensation plan 24,994
- ----------------------------------------------------------------------------
Other assets 73,132
- ----------------------------------------------------------------------------
Total assets 398,019,208
- ----------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 1,023,583
- ----------------------------------------------------------------------------
Dividends 599,786
- ----------------------------------------------------------------------------
Deferred compensation 24,994
- ----------------------------------------------------------------------------
Accrued administrative services fees 5,227
- ----------------------------------------------------------------------------
Accrued advisory fees 67,422
- ----------------------------------------------------------------------------
Accrued distribution fees 62,503
- ----------------------------------------------------------------------------
Accrued transfer agent fees 33,450
- ----------------------------------------------------------------------------
Accrued operating expenses 237,696
- ----------------------------------------------------------------------------
Total liabilities 2,054,661
- ----------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 395,964,547
============================================================================
</TABLE>
<TABLE>
<S> <C>
NET ASSETS:
Class A $ 345,355,189
============================================================================
Institutional Class $ 50,609,358
============================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 34,300,002
- ----------------------------------------------------------------------------
Institutional Class 5,026,426
============================================================================
Class A:
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
============================================================================
Institutional Class:
Net asset value and offering price per share $ 10.07
============================================================================
</TABLE>
FS-3
<PAGE> 122
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $24,949,619
- -------------------------------------------------------------------------
EXPENSES:
Advisory fees 855,900
- -------------------------------------------------------------------------
Administrative services fees 59,396
- -------------------------------------------------------------------------
Custodian fees 36,726
- -------------------------------------------------------------------------
Transfer agent fees-Class A 307,594
- -------------------------------------------------------------------------
Transfer agent fees-Institutional Class 45,118
- -------------------------------------------------------------------------
Trustees' fees and expenses 24,508
- -------------------------------------------------------------------------
Distribution fees-Class A (See Note 2) 567,049
- -------------------------------------------------------------------------
Other 298,763
- -------------------------------------------------------------------------
Total expenses 2,195,054
- -------------------------------------------------------------------------
Less: Expenses paid indirectly (4,054)
- -------------------------------------------------------------------------
Net expenses 2,191,000
- -------------------------------------------------------------------------
Net investment income 22,758,619
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES:
Net realized gain from investment securities 1,855,056
- -------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (1,793,413)
- -------------------------------------------------------------------------
Net gain from investment securities 61,643
- -------------------------------------------------------------------------
Net increase in net assets resulting from operations $22,820,262
=========================================================================
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 22,758,619 $ 22,525,910
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities 1,855,056 (328,964)
- --------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (1,793,413) 4,775,213
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 22,820,262 26,972,159
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (20,003,878) (19,613,259)
- --------------------------------------------------------------------------------------------
Institutional Class (2,754,741) (2,912,651)
- --------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (44,498,315) 27,226,897
- --------------------------------------------------------------------------------------------
Institutional Class 1,723,996 (95,511,728)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (42,712,676) (63,838,582)
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 438,677,223 502,515,805
- --------------------------------------------------------------------------------------------
End of period $395,964,547 $ 438,677,223
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $400,652,004 $ 443,515,589
- --------------------------------------------------------------------------------------------
Undistributed net investment income 88,842 --
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (5,476,817) (7,332,297)
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 700,518 2,493,931
- --------------------------------------------------------------------------------------------
$395,964,547 $ 438,677,223
============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE> 123
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998
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 AIM Limited Maturity Treasury Fund (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 Class A shares and the Institutional Class. Matters
affecting each portfolio or class are voted on exclusively by the shareholders
of such portfolio or class. The assets, liabilities and operations of each
portfolio are accounted for separately. Information presented in these financial
statements pertains only to the Fund.
The 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. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
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. On July
31, 1998, undistributed net investment income was increased by $88,842,
undistributed net realized gain (loss) decreased by $424 and paid-in-capital
decreased by $89,266 in order to comply with the requirements of the
American Institute of Certified Public Accountants Statement of Position
93-2. Net assets of the Fund were unaffected by the reclassifications
discussed above.
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 $5,440,638, 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
FS-5
<PAGE> 124
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, 1998, the Fund
reimbursed AIM $59,396 for such services.
The Fund, pursuant to a transfer agent and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. On September 20, 1997, the Board of Trustees
of the Fund approved the appointment of AFS as transfer agent of the
Institutional Class effective December 29, 1997. During the year ended July 31,
1998, AFS was paid $136,066 with respect to Class A shares, and for the period
December 29, 1997 through July 31, 1998, AFS was paid $26,979 with respect to
the Institutional Class. Prior to the effective date of the agreement with AFS,
the Fund paid A I M Institutional Fund Services, Inc. $18,419 pursuant to a
transfer agency and shareholder services agreement with respect to the
Institutional Class for the period August 1, 1997 through December 28, 1997.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and a master distribution agreement with Fund Management Company
("FMC") to serve as the distributor for the Institutional Class. The Trust has
adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan") with
respect to the Class A shares. The Fund pays AIM Distributors compensation at an
annual rate of 0.15% of the average daily net assets attributable to the Class A
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 Class A shares of
the Fund. Any amounts not paid as a service fee under the 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, 1998, the Fund paid AIM Distributors
$567,049 as compensation under the Plan.
AIM Distributors received commissions of $56,989 during the year ended July
31, 1998 from sales of Class A shares. Such commissions are not an expense of
the Fund. They are deducted from, and are not included in, proceeds from sales
of Class A shares. Certain officers and trustees of the Trust are officers and
directors of AIM, AIM Distributors, FMC and AFS.
During the year ended July 31, 1998, the Fund paid legal fees of $4,177 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
The Fund received reductions in transfer agency fees from AFS (an affiliate of
AIM) of $4,054 under an expense offset arrangement which resulted in a reduction
of the Fund's total expenses of $4,054 during the year ended July 31, 1998.
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) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. 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 May 1, 1998, the Fund was limited
to borrowing up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. During the year ended July 31, 1998, 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, 1998 was
$569,622,549 and $612,378,696, respectively.
FS-6
<PAGE> 125
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of July 31, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 692,739
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (17,945)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 674,794
==========================================================================
Cost of investments for tax purposes is $391,319,569.
</TABLE>
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, 1998 and 1997 were
as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 22,832,451 $ 229,871,705 22,795,689 $ 228,371,816
- -------------------------------------------- ------------ ------------- ---------- -------------
Institutional Class 1,450,340 14,604,304 2,663,678 26,662,958
- -------------------------------------------- ------------ ------------- ---------- -------------
Issued as a reinvestment of dividends:
Class A 1,671,295 16,825,885 1,600,608 16,029,270
- -------------------------------------------- ------------ ------------- ---------- -------------
Institutional Class 4,391 44,205 16,172 161,587
- -------------------------------------------- ------------ ------------- ---------- -------------
Reacquired:
Class A (28,922,414) (291,195,905) (21,687,977) (217,174,189)
- -------------------------------------------- ------------ ------------- ---------- -------------
Institutional Class (1,281,958) (12,924,513) (12,215,116) (122,336,273)
- -------------------------------------------- ------------ ------------- ---------- -------------
(4,245,895) $ (42,774,319) (6,826,946) $ (68,284,831)
============================================ ============ ============= ========== =============
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding during each of the years in the four-year period ended July 31,
1998, the eleven months ended July 31, 1994 and the year ended August 31, 1993.
<TABLE>
<CAPTION>
JULY 31,
-------------------------------------------------- AUGUST 31,
1998 1997 1996 1995 1994 1993
------- ------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21
- --------------------------------------------- ------- ------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.56 0.56 0.58 0.57 0.37 0.44
- --------------------------------------------- ------- ------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) -- 0.10 (0.06) 0.07 (0.20) 0.05
- --------------------------------------------- ------- ------- -------- -------- -------- --------
Total from investment operations 0.56 0.66 0.52 0.64 0.17 0.49
- --------------------------------------------- ------- ------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.56) (0.56) (0.58) (0.57) (0.37) (0.44)
- --------------------------------------------- ------- ------- -------- -------- -------- --------
Distributions from net realized gains -- -- -- -- (0.08) (0.02)
- --------------------------------------------- ------- ------- -------- -------- -------- --------
Total distributions (0.56) (0.56) (0.58) (0.57) (0.45) (0.46)
- --------------------------------------------- ------- ------- -------- -------- -------- --------
Net asset value, end of period $ 10.07 $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24
============================================= ======= ======= ======== ======== ======== ========
Total return(a) 5.66% 6.79% 5.27% 6.61% 1.72% 4.88%
============================================= ======= ======= ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $50,609 $48,866 $143,468 $129,530 $134,971 $130,690
============================================= ======= ======= ======== ======== ======== ========
Ratio of expenses to average net assets 0.32%(b) 0.31% 0.27% 0.28% 0.25%(c) 0.24%
============================================= ======= ======= ======== ======== ======== ========
Ratio of net investment income to average net
assets 5.51%(b) 5.56% 5.72% 5.70% 3.98%(c) 4.30%
============================================= ======= ======= ======== ======== ======== ========
Portfolio turnover rate 133% 130% 117% 120% 120% 123%
============================================= ======= ======= ======== ======== ======== ========
</TABLE>
(a) Total returns are not annualized for the periods less than one year.
(b) Ratios are based on average net assets of $49,917,358.
(c) Annualized.
FS-7
<PAGE> 126
PART C
OTHER INFORMATION
Item 24. (a) Financial Statements:
(1) Class A Shares of 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,
1998 (audited)
(3) Statement of Assets and Liabilities as
of July 31, 1998 (audited)
(4) Statement of Operations for the year
ended July 31, 1998 (audited)
(5) Statements of Changes in Net Assets for
the years ended July 31, 1998 and 1997
(6) Footnotes to Financial Statements
(2) Institutional Class of 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,
1998 (audited)
(3) Statement of Assets and Liabilities as
of July 31, 1998
(4) Statement of Operations for the year
ended July 31, 1998
(5) Statements of Changes in Net Assets for
the years ended July 31, 1998 and 1997
(6) Footnotes to Financial Statements
(3) AIM High Yield Fund II
In Part A: None
In Part B: None
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C> <C>
(1) (a) - Agreement and Declaration of Trust of the Registrant was
filed as an Exhibit to Registrant's Post-Effective Amendment
No. 3 on August 16, 1993, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 6 on November 17,
1995.
(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.
</TABLE>
C-1
<PAGE> 127
<TABLE>
<S> <C> <C>
(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.
(d) - Third Amendment to Agreement and Declaration of Trust of
Registrant was filed electronically as an Exhibit to
Post-Effective Amendment No. 8 on November 21, 1997.
(e) - Fourth Amendment to Agreement and Declaration of Trust of
Registrant was filed as an Exhibit to Post-Effective
Amendment No. 9 on July 10, 1998.
(f) - Fifth Amendment to Agreement and Declaration of Trust of
Registrant was filed as an Exhibit to Post-Effective
Amendment No. 9 on July 10, 1998.
(g) - Sixth Amendment to Agreement and Declaration of Trust of
Registrant is filed herewith electronically.
(h) - Amended and Restated 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 were filed as an
Exhibit to Post-Effective Amendment No. 8 on November 21,
1997.
(e) - Amended and Restated Bylaws of Registrant, effective
November 5, 1998, are 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.
</TABLE>
C-2
<PAGE> 128
<TABLE>
<S> <C> <C>
(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.
(d) - 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.
(e) - (1)(i) Master Investment Advisory Agreement, dated February
28, 1997, between Registrant and A I M Advisors, Inc. was
filed electronically as an Exhibit to Post-Effective
Amendment No. 8 on November 21, 1997 and is hereby
incorporated by reference.
(1)(ii) Amendment No. 1 to the Master Investment Advisory
Agreement, dated February 28, 1997, between Registrant and
A I M Advisors, Inc., with respect to AIM High Yield Fund
II, 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.
(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.
</TABLE>
C-3
<PAGE> 129
<TABLE>
<S> <C> <C>
(5) Master Distribution Agreement dated February 28, 1997,
between Registrant and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
8 on November 21, 1997.
(6) Amended and Restated Master Distribution Agreement
between Registrant (on behalf of Registrant's Class A and
Class C shares) and A I M Distributors, Inc. is filed
herewith electronically.
(7) Master Distribution Agreement between Registrant (on
behalf of Registrant's Class B shares) and AIM Distributors,
Inc. is filed herewith electronically.
(8) 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.
(9) Master Distribution Agreement, dated February 28, 1997,
between Registrant (on behalf of the Institutional Shares of
AIM Limited Maturity Treasury Fund) and Fund Management
Company was filed electronically as an Exhibit to
Post-Effective Amendment No. 8 on November 21, 1997 and is
hereby incorporated by reference.
(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
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 Agreement 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.
(e) - Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Trustees as approved March 12, 1997, was
filed as an Exhibit to Post-Effective Amendment No. 9 on
July 10, 1998 and is hereby incorporated by reference.
</TABLE>
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<TABLE>
<S> <C> <C>
(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.
(a)(v) - Custodian Contract, dated September 28, 1998, between
Registrant (on behalf of its High Yield Fund II
portfolio) and State Street Bank and Trust Company is
filed herewith electronically.
(b) - Subcustodian Agreement with Texas Commerce Bank, dated
September 9, 1994, among Texas Commerce Bank National
Association, State Street Bank and Trust Company, A I M
Fund Services, Inc. and Registrant 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.
(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.
</TABLE>
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<TABLE>
<S> <C> <C>
(4)(i) Master Administrative Services Agreement, dated
February 28, 1997, between Registrant and A I M
Advisors, Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 8 on November 21, 1997 and
is hereby incorporated by reference.
(4)(ii) Amendment No. 1 to the Master Administrative
Services Agreement, dated February 28, 1998, 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.
(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.
</TABLE>
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<TABLE>
<S> <C> <C>
(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 was
filed electronically as an Exhibit to Post-Effective
Amendment No. 8 on November 21, 1997 and is hereby
incorporated by reference.
(1)(vii) Exhibit 1, effective as of August 4, 1997, to
the Remote Access and Related Services Agreement, dated
December 23, 1994, between Registrant and First Data
Investor Services Group, Inc. was filed as an Exhibit
to Post-Effective Amendment No. 9 on July 10, 1998 and
is hereby incorporated by reference.
(1)(viii) Amendment No. 4 to Remote Access and Related
Services Agreement, dated June 30, 1998 between
Registrant and First Data Investor Services Group, Inc.
is filed herewith electronically.
(1)(ix) Amendment No. 5 to Remote Access and Related
Services Agreement, dated July 1, 1998 between
Registrant and First Data Investor Services Group, Inc.
is filed herewith electronically.
(2) Preferred Registration Technology Escrow Agreement,
dated September 10, 1997, between Registrant and First
Data Investor Services Group, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 9 on July 10,
1998 and is hereby incorporated by reference.
(3) 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.
(4) 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.
(5) 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.
(5)(i) Amendment No. 1 to Transfer Agency and Service
Agreement, dated July 1, 1996, between Registrant and
A I M Institutional Fund Services, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment
No. 8 on November 21, 1997.
(5)(ii) Amendment No. 2 to Transfer Agency and Service
Agreement, dated July 1, 1997, between Registrant and
A I M Institutional Fund Services, Inc. was filed
electronically as an Exhibit to Post Effective Amendment
No. 8 on November 21, 1997.
(6) Amended and Restated Transfer Agency and Service
Agreement, dated December 29, 1997, between Registrant
and A I M Fund Services, Inc. was filed as an Exhibit
to Post-Effective Amendment No. 9 on July 10, 1998.
</TABLE>
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<PAGE> 133
<TABLE>
<S> <C> <C>
(10) - Consent of Ballard Spahr Andrews & Ingersoll, LLP is
filed herewith electronically.
(11) (a) - Consent of Dechert Price & Rhoads is filed herewith
electronically.
(b) - Consent of KPMG Peat Marwick LLP is filed herewith
electronically.
(c) - (1) Opinion of Dechert Price & Rhoads 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.
(2) Opinion of Dechert Price & Rhoads was filed
electronically as an Exhibit to Post-Effective
Amendment No. 8 on November 21, 1997 and is hereby
incorporated by reference.
(12) - Financial Statements - None.
(13) - Initial Capitalization Agreement of Registrant's AIM
High Yield Fund II is filed herewith electronically.
(14) (a) - (1) Form of the Registrant's IRA documents was filed as
an Exhibit to the Registrant's Post-Effective Amendment
No. 3 on August 16, 1993.
(2) Forms of Registrant's IRA Documents were filed as an
Exhibit to Post-Effective Amendment No. 9 on July 10,
1998 and is hereby incorporated by reference.
(b) - (1) Form of the Registrant's Simplified Employee Pension
- Individual Retirement Accounts Contribution Agreement
was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 3 on August, 1993.
(2) Forms of Registrant's Simplified Employee Pension
Plan and Salary Reduction Simplified Employee Pension
Plan Documents were filed as an Exhibit to
Post-Effective Amendment No. 9 on July 10, 1998 and is
hereby incorporated by reference.
(c) - (1) Form of the Registrant's Combination Profit
Sharing-Money Purchase Plan and Trust was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 3
on August 16, 1993.
(2) Forms of Registrant's Money Purchase Pension and
Profit Sharing Plan Document, Trust Agreement, Adoption
Agreement, Summary Plan Descriptions and Applications
were filed as an Exhibit to Post-Effective Amendment No.
9 on July 10, 1998 and is hereby incorporated by
reference.
(d) - (1) Form of the Registrant's 403(b) Plan was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 3
on August 16, 1993.
</TABLE>
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<PAGE> 134
<TABLE>
<S> <C> <C>
(2) Forms of Registrant's 403(b) Plan Documents were
filed as an Exhibit to Post-Effective Amendment No. 9 on
July 10, 1998 and is hereby incorporated by reference.
(e) - Forms of Registrant's SIMPLE IRA were filed as an
Exhibit to Post-Effective Amendment No. 9 on July 10,
1998 and is hereby incorporated by reference.
(f) - Forms of Registrant's Roth IRA were filed as an Exhibit
to Post-Effective Amendment No. 9 on July 10, 1998 and
is hereby incorporated by reference.
(g) - Forms of Registrant's Education IRA documents are filed
herewith electronically.
(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, was filed electronically as an Exhibit to
Post-Effective Amendment No. 8 on November 21, 1997.
(3) Second Amended and Restated Master Distribution Plan
for Registrant's Class A shares is filed herewith
electronically.
(4) Third Amended and Restated Master Distribution Plan
for Registrant's Class A and Class C shares is filed
herewith electronically.
(5) Master Distribution Plan for Registrant's Class B
shares is filed herewith electronically.
(b) - Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan is
filed herewith electronically.
(c) - Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan is
filed herewith electronically.
(d) - Form of Agency Pricing Agreement (for the Retail
Classes) to be used in connection with Registrant's
Master Distribution Plan is filed herewith
electronically.
(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 Distribution Plan
are filed herewith electronically.
(f) - Form of Variable Group Annuity Contractholder Service
Agreement to be used in connection with Registrant's
Master Distribution Plan is filed herewith
electronically.
(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.
</TABLE>
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<PAGE> 135
<TABLE>
<S> <C> <C>
(b) - Amended and Restated Multiple Class Plan, effective as
of July 1, 1997, was filed electronically as an Exhibit
to Post-Effective Amendment No. 8 on November 21, 1997.
(c) - Second Amended and Restated Multiple Class Plan,
effective September 1, 1997, was filed electronically as
an Exhibit to Post-Effective Amendment No. 8 on November
21, 1997 and is hereby incorporated by reference.
(27) - Financial Data Schedule is filed herewith
electronically.
</TABLE>
Item 25. Persons Controlled by or Under Common Control With Registrant
Furnish a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant and as to each such
person indicate (1) if a company, the state or other sovereign power under the
laws of which it is organized, and (2) the percentage of voting securities owned
or other basis of control by the person, if any, immediately controlling it.
None.
Item 26. Number of Holders of Securities
State in substantially the tabular form indicated, as of a specified
date within 90 days prior to the date of filing, the number of record holders of
each class of securities of the Registrant.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of October 26, 1998
-------------- ------------------------
<S> <C>
AIM Limited Maturity Treasury Fund
Class A Shares 10,172
Institutional Class 15
AIM High Yield Fund II
Class A Shares 22
Class B Shares 2
Class C Shares 2
</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
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<PAGE> 136
of willful misfeasance, bad faith, gross negligence or reckless
disregard involved in the conduct of his office.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
United States Securities and Exchange Commission such indemnification
is against public policy and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a
trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person in connection with the
securities being registered hereby, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy and will be
governed by the final adjudication of such issue.
The Registrant has obtained insurance coverage for its officers and
trustees under a joint Mutual Fund and Investment Advisory Professional
Directors and Officers Liability Policy, issued by ICI Mutual Insurance
Company, with a $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, Class B and Class C 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 Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Portfolios
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
GT Global Floating Rate Fund, Inc.
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<PAGE> 137
(a)(2) Fund Management Company, the Registrant's principal underwriter for
Institutional Class of AIM Limited Maturity Treasury Fund, 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) None.
<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
John Caldwell Senior Vice President None
Marilyn M. Miller Senior Vice President None
James L. Salners Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
B. J. Thompson First Vice President None
John J. Arthur Vice President and Treasurer Senior Vice President
and Treasurer
Melville B. Cox Vice President and Vice President
Chief Compliance Officer
Ofelia M. Mayo General Counsel, Vice President Assistant Secretary
and Assistant Secretary
</TABLE>
- ------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
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<PAGE> 138
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- ---------------------
<S> <C> <C>
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
William H. Kleh Vice President None
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Senior Vice President
and Secretary
Kamala C. Sachidanandan Vice President None
Frank V. Serebrin Vice President None
Christopher T. Simutis Vice President None
Robert D. Van Sant, Jr. Vice President None
Gary K. Wendler Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
David E. Hessel Assistant Vice President, Assistant None
Treasurer and Controller
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
Mary E. Gentempo Assistant Vice President None
Jeffrey L. Horne Assistant Vice President None
</TABLE>
- ------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
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<PAGE> 139
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- ---------------------
<S> <C> <C>
Melissa E. Hudson Assistant Vice President None
Jodie L. Johnson Assistant Vice President None
Kathryn Jordan Assistant Vice President None
Wayne W. LaPlante Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
David B. O'Neil Assistant Vice President None
Patricia M. Shyman Assistant Vice President None
Nicholas D. White Assistant Vice President None
Norman W. Woodson Assistant Vice President None
Nancy L. Martin Assistant General Counsel Assistant Secretary
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
Carol F. Relihan Director, Vice President and Senior Vice President
General Counsel and Secretary
Mark D. Santero Senior Vice President None
William J. Wendel Senior Vice President None
John J. Arthur Vice President and Treasurer Senior Vice President and
Treasurer
</TABLE>
- -------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
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<PAGE> 140
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- ---------------------
<S> <C> <C>
Melville B. Cox Vice President and Vice President
Chief Compliance Officer
Stephen I. Winer Vice President, Assistant General Assistant Secretary
Counsel and Assistant Secretary
James R. Anderson Vice President None
Nancy A. Beck Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
David E. Hessel Assistant Vice President, None
Assistant Treasurer and
Controller
Dana R. Sutton Assistant Vice President Vice President
and Assistant Treasurer and Assistant Treasurer
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.
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<PAGE> 141
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 Custodians, The Bank of New York, 90 Washington Street, 11th Floor,
New York, New York 10286, with respect to AIM Limited Maturity Treasury Fund,
and State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, with respect to AIM High Yield Fund II, and Registrant's
Transfer Agent and Dividend Paying Agent, A I M Fund Services, Inc. (on behalf
of Registrant's AIM Limited Maturity Treasury Fund - Class A shares and
Institutional Class and on behalf of its AIM High Yield Fund II - Class A, Class
B and Class C shares), P.O. Box 4739, Houston, Texas 77210-4739.
Item 31. Management Services
Furnish a summary of the substantive provisions of any management-related
service contract not discussed in Part 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
(c) The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the applicable Fund's latest annual report
to shareholders, upon request and without charge.
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<PAGE> 142
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 18th day of November, 1998.
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 11/18/98
- ---------------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Trustee & President 11/18/98
- --------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Trustee 11/18/98
- ---------------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Trustee 11/18/98
- ---------------------------------
(Owen Daly II)
/s/ EDWARD K. DUNN, JR. Trustee 11/18/98
- ---------------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Trustee 11/18/98
- ---------------------------------
(Jack Fields)
/s/ CARL FRISCHLING Trustee 11/18/98
- ---------------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee 11/18/98
- ---------------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee 11/18/98
- ---------------------------------
(Lewis F. Pennock)
/s/ IAN W. ROBINSON Trustee 11/18/98
- ---------------------------------
(Ian W. Robinson)
/s/ LOUIS S. SKLAR Trustee 11/18/98
- ---------------------------------
(Louis S. Sklar)
/s/ JOHN J. ARTHUR Senior Vice President & 11/18/98
- --------------------------------- Treasurer (Principal Financial
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE> 143
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No.
- -------
<S> <C>
1(g) Sixth Amendment to Agreement and Declaration of Trust of
Registrant
1(h) Amended and Restated Agreement and Declaration of Trust of
Registrant
2(e) Amended and Restated Bylaws of Registrant
5(e)(1)(ii) Amendment No. 1 to the Master Investment Advisory Agreement, dated
February 28, 1997, between Registrant and A I M Advisors, Inc.
6(a)(6) Amended and Restated Master Distribution Agreement, between
Registrant (on behalf of AIM Limited Maturity Treasury Fund's
Class A shares and AIM High Yield Fund II's Class A and Class C
shares) and A I M Distributors, Inc.
6(a)(7) Master Distribution Agreement, between Registrant (on behalf of
the AIM High Yield Fund II's Class B shares) and A I M
Distributors, Inc.
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
8(a)(v) Custodian Contract between Registrant and State Street Bank and
Trust Company
9(a)(4)(ii) Amendment No. 1 to the Master Administrative Services Agreement,
dated February 28, 1998, between Registrant and A I M Advisors,
Inc.
9(b)(1)(viii) Amendment No. 4 to Remote Access and Related Services Agreement,
dated June 30, 1998, between Registrant and First Data Investor
Services Group, Inc.
9(b)(1)(ix) Amendment No. 5 to Remote Access and Related Services Agreement,
dated July 1, 1998, between Registrant and First Data Investor
Services Group, Inc.
10 Consent of Ballard Spahr Andrews & Ingersoll, LLP
11(a) Consent of Dechert Price & Rhoads
11(b) Consent of KPMG Peat Marwick LLP
13 Initial Capitalization Agreement
14(g) Forms of Registrant's Education IRA documents
15(a)(3) Second Amended and Restated Master Distribution Plan for
Registrant's Class A shares
15(a)(4) Third Amended and Restated Master Distribution Plan for
Registrant's Class A and Class C shares
</TABLE>
<PAGE> 144
<TABLE>
<S> <C>
15(a)(5) Master Distribution Plan for Registrant's Class B shares
15(b) Form of Shareholder Service Agreement to be used in connection
with Registrant's Master Distribution Plan
15(c) Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan
15(d) Form of Agency Pricing Agreement (for the Retail Classes) to be
used in connection with Registrant's Master Distribution 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 Distribution Plan
15(f) Form of Variable Group Annuity Contractholder Service Distribution
Agreement to be used in connection with Registrant
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 1(g)
SIXTH AMENDMENT
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM INVESTMENT SECURITIES FUNDS
THIS SIXTH AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF AIM
INVESTMENT SECURITIES FUNDS (the "Amendment") is entered into as of the 26th
day of September, 1998, among Charles T. Bauer, Bruce L. Crockett, Owen Daly
II, Edward K. Dunn, Jr., Jack Fields, Carl Frischling, Robert H. Graham, Prema
Mathai-Davis, 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 26th day of
September 1998, the Trustees have resolved to amend the Agreement as hereinafter
set forth.
NOW, THEREFORE, the Trustees hereby amend the Agreement as hereinafter
set forth:
1. Capitalized terms not specifically defined in this Amendment shall
have the meanings ascribed to them in the Agreement.
2. Section 3.6 of the Agreement is hereby amended to read in its
entirety as follows:
"Section 3.6 Number of Trustees. The number of Trustees shall
initially be three (3), and thereafter shall be such number as shall be fixed
from time to time by resolution adopted by the Board of Trustees; provided,
however, that the number of Trustees shall in no event be less than three (3)
nor more than fifteen (15)."
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 multiple counterparts, each of
which 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 Sixth Amendment to Agreement and Declaration of Trust
of AIM Investment Secutities 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/ EDWARD K. DUNN, JR.
- --------------------------- --------------------------------
Owen Daly II, Trustee Edward K. Dunn, Jr., Trustee
/s/ JACK FIELDS /s/ CARL FRISCHLING
- --------------------------- --------------------------------
Jack Fields, Trustee Carl Frischling, Trustee
/s/ ROBERT H. GRAHAM /s/ PERMA MATHAI-DAVIS
- --------------------------- --------------------------------
Robert H. Graham, Trustee Perma Mathai-Davis, Trustee
/s/ LEWIS F. PENNOCK /s/ IAN W. ROBINSON
- --------------------------- --------------------------------
Lewis F. Pennock, Trustee Ian W. Robinson, Trustee
/s/ LOUIS S. SKLAR
---------------------------
Louis S. Sklar, Trustee
THIS IS THE SIGNATURE PAGE FOR
THE SIXTH AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST
OF AIM INVESTMENT SECURITIES FUNDS
2
<PAGE> 1
EXHIBIT 1(h)
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
OF
AIM INVESTMENT SECURITIES FUNDS
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST of AIM Investment
Securities Funds, dated May 5, 1993, as previously amended, is hereby amended
and restated as of November 5, 1998, among Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack Fields, Carl Frischling, Robert H.
Graham, Prema Mathai-Davis, Lewis F. Pennock, Ian W. Robinson and Louis S.
Sklar, as Trustees, and each person who becomes a Shareholder in accordance with
the terms hereinafter set forth.
NOW, THEREFORE, the Trustees do hereby declare that all money and
property contributed to the trust hereunder shall continue to be held and
managed in trust under this Agreement for the benefit of the Shareholders as
herein set forth below.
ARTICLE I
NAME, DEFINITIONS, PURPOSE AND RESTATED CERTIFICATE OF TRUST
Section 1.1. Name. The name of the business trust continued hereby is
AIM Investment Securities Funds, and the Trustees may transact the Trust's
affairs in that name. The Trust shall constitute a Delaware business trust in
accordance with the Delaware Act.
Section 1.2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "Affiliated Person," "Company," "Person," and "Principal
Underwriter" shall have the meanings given them in the 1940
Act, as modified by or interpreted by any applicable order or
orders of the Commission or any rules or regulations adopted
or interpretive releases of the Commission thereunder. The
term "Commission" shall have the meaning given it in the 1940
Act;
(b) "Agreement" means this Amended and Restated Agreement and
Declaration of Trust, as it may be amended from time to time;
(c) "allocable" has the meaning specified in Section 2.5(d);
(d) "allocated" has the meaning specified in Section 2.5(d);
(e) "Bylaws" means the Bylaws referred to in Section 4.1(e), as
from time to time amended;
(f) "Class" means a portion of Shares of a Portfolio of the Trust
established in accordance with the provisions of Section
2.3(b);
<PAGE> 2
(g) "Class Expenses" means expenses incurred by a particular Class
in connection with a shareholder services arrangement or a
distribution plan that is specific to such Class or any other
differing share of expenses or differing fees, in each case
pursuant to or to the extent permitted by Rule 18f-3 under the
1940 Act.
(h) "Covered Persons" means a person who is or was a Trustee,
officer, employee or agent of the Trust, or is or was serving
at the request of the Trustees as a director, trustee,
partner, officer, employee or agent of a corporation, trust,
partnership, joint venture or other enterprise.
(i) The "Delaware Act" refers to the Delaware Business Trust Act,
12 Del. C. Section 3801 et seq., as such Act may be amended
from time to time;
(j) "Governing Instrument" means collectively this Agreement, the
Bylaws, all amendments to this Agreement and the Bylaws and
every resolution of the Trustees or any committee of the
Trustees that by its terms is incorporated by reference into
this Agreement or stated to constitute part of the Trust's
Governing Instrument;
(k) "Majority Shareholder Vote" means "the vote of a majority of
the outstanding voting securities" (as defined in the 1940
Act) of the Trust, Portfolio, or Class, as applicable;
(l) "Majority Trustee Vote" means the vote of a majority of the
Trustees.
(m) "New Class A Shares" has the meaning specified in
Section 2.6(c);
(n) "New Class B Shares" has the meaning specified in
Section 2.6(c);
(o) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time;
(p) "Outstanding Shares" means Shares shown on the books of the
Trust or its transfer agent as then issued and outstanding,
and includes Shares of one Portfolio that the Trust has
purchased on behalf of another Portfolio, but excludes Shares
of a Portfolio that the Trust has redeemed or repurchased;
(q) "Portfolio" means a series of Shares of the Trust established
in accordance with the provisions of Section 2.3(a);
(r) "Proportionate Interest" has the meaning specified in
Section 2.5(d);
(s) "Purchasing Portfolio" has the meaning specified in
Section 2.10;
2
<PAGE> 3
(t) "Schedule A" has the meaning specified in Section 2.3(a);
(u) "Selling Portfolio" has the meaning specified in Section 2.10;
(v) "Shareholder" means a record owner of Outstanding Shares of
the Trust;
(w) "Shares" means, as to a Portfolio or any Class thereof, the
equal proportionate transferable units of beneficial interest
into which the beneficial interest of such Portfolio of the
Trust or such Class thereof shall be divided and may include
fractions of Shares as well as whole Shares;
(x) The "Trust" means AIM Investment Securities Funds, the
Delaware business trust established hereby, and reference to
the Trust, when applicable to one or more Portfolios, shall
refer to each such Portfolio;
(y) The "Trustees" means the Persons who have signed this
Agreement as trustees so long as they shall continue to serve
as trustees of the Trust in accordance with the terms hereof,
and all other Persons who may from time to time be duly
appointed as Trustee in accordance with the provisions of
Section 3.4, or elected as Trustee by the Shareholders, and
reference herein to a Trustee or to the Trustees shall refer
to such Persons in their capacity as Trustees hereunder; and
(z) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the
account of the Trust or any Portfolio, or by the Trustees on
behalf of the Trust.
Section 1.3. Purpose. The purpose of the Trust is to conduct, operate
and carry on the business of an open-end management investment company
registered under the 1940 Act through one or more Portfolios investing primarily
in securities and to carry on such other business as the Trustees may from time
to time determine pursuant to their authority under this Agreement.
Section 1.4. Restated Certificate of Trust. Immediately upon the
execution of this Agreement, the Trustees shall file a Restated Certificate of
Trust with respect to the Trust in the Office of the Secretary of State of the
State of Delaware pursuant to the Delaware Act.
ARTICLE II
BENEFICIAL INTEREST
Section 2.1. Shares of Beneficial Interest. The beneficial interest in
the Trust shall be divided into an unlimited number of Shares, with par value of
$0.01 per Share. The Trustees may, from time to time, (a) authorize the division
of the Shares into one or more series, each of which constitutes a Portfolio,
and (b) may further authorize the division of the Shares of any Portfolio into
one or more separate and distinct Classes. All Shares issued hereunder,
including without limitation, Shares issued in connection with a dividend or
other distribution in Shares or a split or reverse split of Shares, shall be
fully paid and nonassessable.
3
<PAGE> 4
Section 2.2. Issuance of Shares. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares. The Trustees may from time
to time divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be redeemed as,
whole Shares and/or 1/1,000th of a Share or integral multiples thereof.
Section 2.3. Establishment of Portfolios and Classes.
(a) The Trust shall consist of one or more separate and distinct
Portfolios, each with an unlimited number of Shares unless
otherwise specified. The Trustees hereby establish and
designate the Portfolios listed on Schedule A attached hereto
and made a part hereof ("Schedule A"). Each additional
Portfolio shall be established by the adoption of a resolution
by the Trustees. Each such resolution is hereby incorporated
herein by this reference and made a part of the Trust's
Governing Instrument whether or not expressly stated in such
resolution, and shall be effective upon the occurrence of both
(i) the date stated therein (or, if no such date is stated,
upon the date of such adoption) and (ii) the execution of an
amendment either to this Agreement or to Schedule A hereto
establishing and designating such additional Portfolio or
Portfolios. The Shares of each Portfolio shall have the
relative rights and preferences provided for herein and such
rights and preferences as may be designated by the Trustees in
any amendment or modification to the Trust's Governing
Instrument. The Trust shall maintain separate and distinct
records of each Portfolio and shall hold and account for the
assets belonging thereto separately from the other Trust
Property and the assets belonging to any other Portfolio. Each
Share of a Portfolio shall represent an equal beneficial
interest in the net assets belonging to that Portfolio, except
to the extent of Class Expenses and other expenses separately
allocated to Classes thereof (if any Classes have been
established) as permitted herein.
(b) The Trustees may establish one or more Classes of Shares of
any Portfolio, each with an unlimited number of Shares unless
otherwise specified. Each Class so established and designated
shall represent a Proportionate Interest (as defined in
Section 2.5(d)) in the net assets belonging to that Portfolio
and shall have
4
<PAGE> 5
identical voting, dividend, liquidation, and other rights and
be subject to the same terms and conditions, except that (1)
Class Expenses allocated to a Class for which such expenses
were incurred shall be borne solely by that Class, (2) other
expenses, costs, charges, and reserves allocated to a Class in
accordance with Section 2.5(e) may be borne solely by that
Class, (3) dividends declared and payable to a Class pursuant
to Section 7.1 shall reflect the items separately allocated
thereto pursuant to the preceding clauses, (4) each Class may
have separate rights to convert to another Class, exchange
rights, and similar rights, each as determined by the
Trustees, and (5) subject to Section 2.6(c), each Class may
have exclusive voting rights with respect to matters affecting
only that Class. The Trustees hereby establish for each
Portfolio listed on Schedule A the Classes listed thereon.
Each additional Class for any or all Portfolios shall be
established by the adoption of a resolution by the Trustees,
each of which is hereby incorporated herein by this reference
and made a Governing Instrument whether or not expressly
stated in such resolution, and shall be effective upon the
occurrence of both (i) the date stated therein (or, if no such
date is stated, upon the date of such adoption) and (ii) the
execution of an amendment to this Agreement establishing and
designating such additional Class or Classes.
Section 2.4. Actions Affecting Portfolios and Classes. Subject to the
right of Shareholders, if any, to vote pursuant to Section 6.1, the Trustees
shall have full power and authority, in their sole discretion without obtaining
any prior authorization or vote of the Shareholders of any Portfolio, or Class
thereof, to establish and designate and to change in any manner any Portfolio of
Shares, or any Class or Classes thereof; to fix or change such preferences,
voting powers, rights, and privileges of any Portfolio, or Classes thereof, as
the Trustees may from time to time determine, including any change that may
adversely affect a Shareholder; to divide or combine the Shares of any
Portfolio, or Classes thereof, into a greater or lesser number; to classify or
reclassify or convert any issued Shares of any Portfolio, or Classes thereof,
into one or more Portfolios or Classes of Shares of a Portfolio; and to take
such other action with respect to the Shares as the Trustees may deem desirable.
A Portfolio and any Class thereof may issue any number of Shares but need not
issue any Shares. At any time that there are no Outstanding Shares of any
particular Portfolio or Class previously established and designated, the
Trustees may abolish that Portfolio or Class and the establishment and
designation thereof.
Section 2.5. Relative Rights and Preferences. Unless the establishing
resolution or any other resolution adopted pursuant to Section 2.3 otherwise
provides, Shares of each Portfolio or Class thereof established hereunder shall
have the following relative rights and preferences:
5
<PAGE> 6
(a) Except as set forth in paragraph (e) of this Section 2.5, each
Share of a Portfolio, regardless of Class, shall represent an
equal pro rata interest in the assets belonging to such
Portfolio and shall have identical voting, dividend,
liquidation and other rights, preferences, powers,
restrictions, limitations, qualifications and designations and
terms and conditions with each other Share of such Portfolio.
(b) Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued
by the Trust or the Trustees, whether of the same or other
Portfolio (or Class).
(c) All consideration received by the Trust for the issue or sale
of Shares of a particular Portfolio, together with all assets
in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange, or liquidation of
such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may
be, shall be held and accounted for separately from the other
assets of the Trust and of every other Portfolio and may be
referred to herein as "assets belonging to" that Portfolio.
The assets belonging to a particular Portfolio shall belong to
that Portfolio for all purposes, and to no other Portfolio,
subject only to the rights of creditors of that Portfolio. In
addition, any assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto, which are not
readily identifiable as belonging to any particular Portfolio
shall be allocated by the Trustees between and among one or
more of the Portfolios in such manner as the Trustees, in
their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the
Shareholders of all Portfolios thereof for all purposes, and
such assets, income, earnings, profits, or funds, or payments
and proceeds with respect thereto shall be assets belonging to
that Portfolio.
(d) Each Class of a Portfolio shall have a proportionate undivided
interest (as determined by or at the direction of, or pursuant
to authority granted by, the Trustees, consistent with
industry practice) ("Proportionate Interest") in the net
assets belonging to that Portfolio. References herein to
assets, expenses, charges, costs, and reserves "allocable" or
"allocated" to a particular Class of a Portfolio shall mean
the aggregate amount of such item(s) of the Portfolio
multiplied by the Class's Proportionate Interest.
(e) A particular Portfolio shall be charged with the liabilities
of that Portfolio, and all expenses, costs, charges and
reserves attributable to any particular Portfolio shall be
borne by such Portfolio; provided that the Trustees may, in
their sole discretion, allocate or authorize the allocation of
particular expenses, costs, charges, and/or reserves of a
Portfolio to fewer than all the Classes thereof. Class
Expenses shall, in all cases, be allocated to the Class for
which such Class Expenses were incurred. Any general
liabilities, expenses, costs, charges or reserves of the Trust
(or any Portfolio) that are not readily identifiable as
6
<PAGE> 7
chargeable to or bearable by any particular Portfolio (or any
particular Class) shall be allocated and charged by the Trustees
between or among any one or more of the Portfolios (or Classes) in such
manner as the Trustees in their sole discretion deem fair and
equitable. Each such allocation shall be conclusive and binding upon
the Shareholders of all Portfolios (or Classes) for all purposes.
Without limitation of the foregoing provisions of this Section 2.5(e),
(i) the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular
Portfolio shall be enforceable against the assets of such Portfolio
only, and not against the assets of the Trust generally or assets
belonging to any other Portfolio, and (ii) none of the debts,
liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to the Trust generally that have not
been allocated to a specified Portfolio, or with respect to any other
Portfolio, shall be enforceable against the assets of such specified
Portfolio. Notice of this contractual limitation on inter-Portfolio
liabilities shall be set forth in the Trust's Restated Certificate of
Trust described in Section 1.4, and upon the giving of such notice in
the Restated Certificate of Trust, the statutory provisions of Section
3804 of the Delaware Act relating to limitations on inter-Portfolio
liabilities (and the statutory effect under Section 3804 of setting
forth such notice in the Restated Certificate of Trust) shall become
applicable to the Trust and each Portfolio.
All references to Shares in this Agreement shall be deemed to
be shares of any or all Portfolios, or Classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally to each
Portfolio of the Trust, and each Class thereof, except as the context otherwise
requires.
Section 2.6. Additional Rights and Preferences of Class B Shares. In
addition to the relative rights and preferences set forth in Section 2.5 and all
other provisions of this Agreement relating to Shares of the Trust generally,
any Class of any Portfolio designated as Class B Shares shall have the following
rights and preferences:
(a) Subject to the provisions of paragraph (c) below, all Class B
Shares other than those purchased through the reinvestment of
dividends and distributions shall automatically convert to
Class A Shares eight (8) years after the end of the calendar
month in which a Shareholder's order to purchase such shares
was accepted.
(b) Subject to the provisions of paragraph (c) below, Class B
Shares purchased through the reinvestment of dividends and
distributions paid in respect of Class B Shares will be
considered held in a separate sub-account, and will
automatically convert to Class A Shares in the same proportion
as any Class B Shares (other than those in the sub-account)
convert to Class A Shares. Other than this conversion feature,
the Class B Shares purchased through the reinvestment of
dividends and distributions paid in respect of Class B Shares
shall have all the
7
<PAGE> 8
rights and preferences, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of Class B Shares
generally.
(c) If a Portfolio of the Trust implements any amendment to a Plan
of Distribution adopted under Rule 12b-1 promulgated under the
1940 Act (or, if presented to Shareholders, adopts or
implements a non-Rule 12b-1 shareholder services plan) that
the Trustees determine would materially increase the charges
that may be borne by the Class A Shareholders under such plan,
the Class B Shares will stop converting to the Class A Shares
unless the Class B Shares, voting separately, approve the
amendment or adoption. The Trustees shall have sole discretion
in determining whether such amendment or adoption is submitted
to a vote of the Class B Shareholders. Should such amendment
or adoption not be submitted to a vote of the Class B
Shareholders or, if submitted, should the Class B Shareholders
fail to approve such amendment or adoption, the Trustees shall
take such action as is necessary to: (1) create a new class
(the "New Class A Shares") which shall be identical in all
material respects to the Class A Shares as they existed prior
to the implementation of the amendment or adoption; and (2)
ensure that the existing Class B Shares will be exchanged or
converted into New Class A Shares no later than the date such
Class B Shares were scheduled to convert to Class A Shares. If
deemed advisable by the Trustees to implement the foregoing,
and at the sole discretion of the Trustees, such action may
include the exchange of all Class B Shares for a new class
(the "New Class B Shares"), identical in all material respects
to the Class B Shares except that the New Class B Shares will
automatically convert into the New Class A Shares. Such
exchanges or conversions shall be effected in a manner that
the Trustees reasonably believe will not be subject to federal
taxation.
Section 2.7. Investment in the Trust. Investments may be accepted by
the Trust from such Persons, at such times, on such terms, and for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as the Trustees from time to time may authorize. At the
Trustees" sole discretion, such investments, subject to applicable law, may be
in the form of cash or securities in which the affected Portfolio is authorized
to invest, valued as provided in applicable law. Each such investment shall be
credited to the individual Shareholder's account in the form of full and
fractional Shares of the Trust, in such Portfolio (or Class) as the Shareholder
shall select.
Section 2.8. Personal Liability of Shareholders. As provided by
applicable law, no Shareholder of the Trust shall be personally liable for the
debts, liabilities, obligations and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or any Portfolio (or Class)
thereof. Neither the Trust nor the Trustees, nor any officer, employee, or
8
<PAGE> 9
agent of the Trust shall have any power to bind personally any Shareholder or,
except as provided herein or by applicable law, to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription for
any Shares or otherwise. The Shareholders shall be entitled, to the fullest
extent permitted by applicable law, to the same limitation of personal liability
as is extended under the Delaware General Corporation Law to stockholders of
private corporations for profit. Every note, bond, contract or other undertaking
issued by or on behalf of the Trust or the Trustees relating to the Trust or to
any Portfolio shall include a recitation limiting the obligation represented
thereby to the Trust and its assets or to one or more Portfolios and the assets
belonging thereto (but the omission of such a recitation shall not operate to
bind any Shareholder or Trustee of the Trust).
Section 2.9. Assent to Agreement. Every Shareholder, by virtue of
having purchased a Share, shall be held to have expressly assented to, and
agreed to be bound by, the terms hereof. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to
rights of said decedent under this Trust.
Section 2.10. Purchases of Shares Among Portfolios. The Trust may
purchase, on behalf of any Portfolio (the "Purchasing Portfolio"), Shares of
another Portfolio (the "Selling Portfolio") or any Class thereof. Shares of the
Selling Portfolio so purchased on behalf of the Purchasing Portfolio shall be
Outstanding Shares, and shall have all preferences, voting powers, rights and
privileges established for such Shares.
ARTICLE III
THE TRUSTEES
Section 3.1. Management of the Trust. 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 this Agreement. 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 and all foreign jurisdictions and to do
all such other things and execute all such instruments as they deem necessary,
proper or desirable in order to promote the interests of the Trust although such
things are not herein specifically mentioned. Any determination as to what is in
the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Agreement, the presumption
shall be in favor of a grant of power to the Trustees.
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The enumeration of any specific power in this Agreement shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court or other authority.
Section 3.2. Trustees. The number of Trustees shall be such number as
shall be fixed from time to time by a majority of the Trustees; provided,
however, that the number of Trustees shall in no event be less than three (3)
nor more than fifteen (15). The current Trustees are those first identified
above.
Section 3.3. Terms of Office of Trustees. The Trustees shall hold
office during the lifetime of this Trust, and until its termination as herein
provided; except that (a) 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) 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) 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) a Trustee may be removed at any meeting of the
Shareholders by a vote of the Shareholders owning at least two-thirds of the
Outstanding Shares.
Section 3.4. Vacancies and Appointment of Trustees. 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 Board of 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 two (2) 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 removal of a Trustee, or an increase in number of Trustees
effective at a later date, provided that said appointment shall become effective
only at the time or after the expected vacancy occurs. As soon as any Trustee
appointed pursuant to this Section 3.4 or elected by the Shareholders shall have
accepted the Trust and agreed in writing to be bound by the terms of the
Agreement, 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 3.5. Temporary Absence of Trustee. 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
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Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
Section 3.6. Effect of Death, Resignation, etc. of a Trustee. 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 this
Trust Agreement.
Section 3.7. Ownership of Assets of the Trust. The assets of the Trust
and of each Portfolio thereof shall be held separate and apart from any assets
now or hereafter held in any capacity other than as Trustee hereunder by the
Trustees or any successor Trustees. Legal title in all of the assets of the
Trust and the right to conduct any business shall at all times be considered as
vested in the Trustees on behalf of the Trust, except that the Trustees may
cause legal title to any Trust Property to be held by, or in the name of the
Trust, or in the name of any Person as nominee. No Shareholder shall be deemed
to have a severable ownership in any individual asset of the Trust, or belonging
to any Portfolio, or allocable to any Class thereof, or any right of partition
or possession thereof, but each Shareholder shall have, except as otherwise
provided for herein, a proportionate undivided beneficial interest in the Trust
or in assets belonging to the Portfolio (or allocable to the Class) in which the
Shareholder holds Shares. The Shares shall be personal property giving only the
rights specifically set forth in this Agreement or the Delaware Act.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.1. Powers. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. Without
limiting the foregoing and subject to any applicable limitation in this
Agreement or the Bylaws of the Trust, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold
cash or other property uninvested, without in any event being
bound or limited by any present or future law or custom in
regard to investments by Trustees, and to sell, exchange,
lend, pledge, mortgage, hypothecate, write options on and
lease any or all of the assets of the Trust;
(b) To operate as, and to carry on the business of, an investment
company, and exercise all the powers necessary and appropriate
to the conduct of such operations;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging,
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pledging or otherwise subjecting as security the Trust
Property; to endorse, guarantee, or undertake the performance
of an obligation or engagement of any other Person and to lend
Trust Property;
(d) To provide for the distribution of interests of the Trust
either through a principal underwriter in the manner hereafter
provided for or by the Trust itself, or both, or otherwise
pursuant to a plan of distribution of any kind;
(e) To adopt Bylaws not inconsistent with this Trust Agreement
providing for the conduct of the business of the Trust and to
amend and repeal them to the extent that they do not reserve
such right to the Shareholders; such Bylaws shall be deemed
incorporated and included in this Trust Agreement;
(f) To elect and remove such officers and appoint and terminate
such agents as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that
are members of a national securities exchange or such other
domestic or foreign entities as custodians of any assets of
the Trust subject to any conditions set forth in this
Agreement or in the Bylaws;
(h) To retain one or more transfer agents and shareholder
servicing agents;
(i) To set record dates in the manner provided herein or in the
Bylaws;
(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any investment adviser, manager,
administrator, custodian, underwriter or other agent or
independent contractor;
(k) To sell or exchange any or all of the assets of the Trust,
subject to the right of Shareholders, if any, to vote on such
transaction pursuant to Section 6.1;
(l) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to
execute and deliver proxies and powers of attorney to such
person or persons as the Trustees shall deem proper, granting
to such person or persons such power and discretion with
relation to securities or property as the Trustee shall deem
proper;
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(m) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other
negotiable form; or either in the name of the Trust or of a
Portfolio or a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual
practice of Delaware business trusts or investment companies;
(o) To establish separate and distinct Portfolios with separately
defined investment objectives and policies and distinct
investment purposes in accordance with the provisions of
Article II hereof and to establish Classes of such Portfolios
having relative rights, powers and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act,
to allocate assets, liabilities and expenses of the Trust to a
particular Portfolio or to apportion the same between or among
two or more Portfolios, provided that any liabilities or
expenses incurred by a particular Portfolio shall be payable
solely out of the assets belonging to that Portfolio as
provided for in Article II hereof;
(q) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which is held in the Trust; to
consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor
of or against the Trust or any matter in controversy
including, but not limited to, claims for taxes;
(s) To declare and pay dividends and make distributions of income
and of capital gains and capital to Shareholders in the manner
hereinafter provided;
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Portfolios or
Classes, and to require the redemption of the Shares of any
Shareholder whose investment is less than such minimum upon
giving notice to such Shareholder;
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(u) To establish one or more committees, to delegate any of the
powers of the Trustees to said committees and to adopt a
committee charter providing for such responsibilities,
membership (including Trustees, officers or other agents of
the Trust therein) and any other characteristics of said
committees as the Trustees may deem proper, each of which
committees may consist of less than the whole number of
Trustees then in office, and may be empowered to act for and
bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office;
(v) To interpret the investment policies, practices or limitations
of any Portfolios;
(w) To establish a registered office and have a registered agent
in the State of Delaware; and
(x) In general to carry on any other business in connection with
or incidental to any of the foregoing powers, to do everything
necessary, suitable or proper for the accomplishment of any
purpose or the attainment of any object or the furtherance of
any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing
incidental or appurtenant to or growing out of or connected
with the aforesaid business or purposes, objects or powers.
The foregoing clauses shall be construed both as objects and
powers, and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the Trustees. Any action
by one or more of the Trustees in their capacity as such hereunder shall be
deemed an action on behalf of the Trust or the applicable Portfolio, and not an
action in an individual capacity.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or upon
their order.
Section 4.2. Issuance and Repurchase of Shares. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Articles II and VII hereof, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or any assets belonging to the particular
Portfolio or any assets allocable to the particular Class, with respect to which
such Shares are issued.
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Section 4.3. Action by the Trustees. The Board of Trustees or any
committee thereof shall act by majority vote of those present at a meeting duly
called (including a meeting by telephonic or other electronic means, unless the
1940 Act requires that a particular action be taken only at a meeting of the
Trustees in person) at which a quorum required by the Bylaws is present or by
unanimous written consent of the Trustees or committee, as the case may be,
without a meeting, provided that the writing or writings are filed with the
minutes of proceedings of the Board or committee. Written consents or waivers of
the Trustees may be executed in one or more counterparts. Any written consent or
waiver may be provided and delivered to the Trust by any means by which notice
may be given to a Trustee. Subject to the requirements of the 1940 Act, the
Trustees by Majority Trustee Vote may delegate to any Trustee or Trustees
authority to approve particular matters or take particular actions on behalf of
the Trust.
Section 4.4. Principal Transactions. The Trustees may, on behalf of the
Trust, buy any securities from or sell any securities to, or lend any assets of
the Trust to, any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such dealings
with any investment adviser, distributor, or transfer agent for the Trust or
with any Affiliated Person of such Person; and the Trust may employ any such
Person, or firm or Company in which such Person is an Affiliated Person, as
broker, legal counsel, registrar, investment adviser, distributor,
administrator, transfer agent, dividend disbursing agent, custodian, or in any
capacity upon customary terms, subject in all cases to applicable laws, rules,
and regulations and orders of regulatory authorities.
Section 4.5. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust or any Portfolio, or partly out of the principal and partly out of income,
and to charge or allocate to, between or among such one or more of the
Portfolios (or Classes), as they deem fair, all expenses, fees, charges, taxes
and liabilities incurred or arising in connection with the Trust or Portfolio
(or Class), or in connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser and manager,
administrator, principal underwriter, auditors, counsel, custodian, transfer
agent, Shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur.
Section 4.6. Trustee Compensation. The Trustees as such shall be
entitled to reasonable compensation from the Trust. They may fix the amount of
their compensation. Nothing herein shall in any way prevent the employment of
any Trustee for advisory, management, administrative, legal, accounting,
investment banking, underwriting, brokerage, or investment dealer or other
services and the payment for the same by the Trust.
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ARTICLE V
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
Section 5.1. Investment Adviser. The Trustees may in their discretion,
from time to time, enter into an investment advisory or management contract or
contracts with respect to the Trust or any Portfolio whereby the other party or
parties to such contract or contracts shall undertake to furnish the Trustees
with such management, investment advisory, statistical and research facilities
and services and such other facilities and services, if any, and all upon such
terms and conditions, as the Trustees may in their discretion determine.
The Trustees may authorize the investment adviser to employ,
from time to time, one or more sub-advisers to perform such of the acts and
services of the investment adviser, and upon such terms and conditions, as may
be agreed upon among the Trustees, the investment adviser and sub-adviser. Any
references in this Agreement to the investment adviser shall be deemed to
include such sub-advisers, unless the context otherwise requires.
Section 5.2. Other Service Contracts. The Trustees may authorize the
engagement of a principal underwriter, transfer agent, administrator, custodian,
and similar service providers.
Section 5.3. Parties to Contract. Any contract of the character
described in Sections 5.1 and 5.2 may be entered into with any corporation,
firm, partnership, trust or association, although one or more of the Trustees or
officers of the Trust may be an officer, director, trustee, shareholder, or
member of such other party to the contract.
Section 5.4. Miscellaneous. The fact that (i) any of the Shareholders,
Trustees or officers of the Trust is a shareholder, director, officer, partner,
trustee, employee, manager, adviser, principal underwriter or distributor or
agent of or for any Company or of or for any parent or affiliate of any Company,
with which an advisory or administration contract, or principal underwriter's or
distributor's contract, or transfer, shareholder servicing, custodian or other
agency contract may have been or may hereafter be made, or that any such
Company, or any parent or affiliate thereof, is a Shareholder or has an interest
in the Trust, or that (ii) any Company with which an advisory or administration
contract or principal underwriter's or distributor's contract, or transfer,
shareholder servicing, custodian, or other agency contract may have been or may
hereafter be made also has an advisory or administration contract, or principal
underwriter's or distributor's contract, or transfer, shareholder servicing,
custodian or other agency contract with one or more other companies, or has
other business or interests shall not affect the validity of any such contract
or disqualify any Shareholder, Trustee or officer of the Trust from voting upon
or executing the same or create any liability or accountability to the Trust or
its Shareholders.
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ARTICLE VI
SHAREHOLDERS" VOTING POWERS AND MEETING
Section 6.1. Voting Powers. The Shareholders shall have power to vote
only to: (i) elect Trustees, provided that a meeting of Shareholders has been
called for that purpose; (ii) remove Trustees, provided that a meeting of
Shareholders has been called for that purpose; (iii) approve the termination of
the Trust or any Portfolio or Class, unless, as of the date on which the
Trustees have determined to so terminate the Trust or such Portfolio or Class,
there are fewer than 100 holders of record of the Trust or of such terminating
Portfolio or Class and provided, further, that the Trustees have called a
meeting of the Shareholders for the purpose of approving any such termination;
(iv) approve the sale of all or substantially all the assets of the Trust or any
Portfolio or Class, unless the primary purpose of such sale is to change the
Trust's domicile or form of organization or form of business trust; (v) approve
the merger or consolidation of the Trust or any Portfolio or Class with and into
another Company, unless (A) the primary purpose of such merger or consolidation
is to change the Trust's domicile or form of organization or form of business
trust, or (B) after giving effect to such merger or consolidation, based on the
number of Shares outstanding as of a date selected by the Trustees, the
Shareholders of the Trust or such Portfolio or Class will have a majority of the
outstanding shares of the surviving Company or Portfolio or Class thereof, as
the case may be; (vi) approve any amendment to this Article VI, Section 6.1; and
(vii) approve such additional matters as may be required by law or as the
Trustees, in their sole discretion, shall determine.
Until Shares are issued, the Trustees may exercise all rights
of Shareholders and may take any action required or permitted by law, this Trust
Agreement or any of the Bylaws of the Trust to be taken by Shareholders.
On any matter submitted to a vote of the Shareholders, all
Shares shall be voted together, except when required by applicable law or when
the Trustees have determined that the matter affects the interests of one or
more Portfolios (or Classes), then only the Shareholders of all such Portfolios
(or Classes) shall be entitled to vote thereon. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. The vote
necessary to approve any such matter shall be set forth in the Bylaws.
ARTICLE VII
DISTRIBUTIONS AND REDEMPTIONS
Section 7.1. 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. Dividends and other distributions may be paid pursuant to a standing
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resolution adopted once or more often as the Trustees determine. All dividends
and other distributions on Shares of a particular Portfolio or Class shall be
distributed pro rata to the Shareholders of that Portfolio or Class, as the case
may be, in proportion to the number of Shares of that Portfolio or Class they
held on the record date established for such payment, provided that such
dividends and other distributions on Shares of a Class shall appropriately
reflect Class Expenses and other expenses allocated to that Class. The Trustees
may adopt and offer to Shareholders such dividend reinvestment plans, cash
distribution payment plans, or similar plans as the Trustees deem appropriate.
Section 7.2. 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 such terms and
conditions as are set forth in the registration statement of the Trust 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 Person
in transferring securities selected for delivery as all or part of any payment
in kind.
Section 7.3. Redemption of Shares by Trustees. The Trustees may, at
their option, call for the redemption of the Shares of any Person or 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. To the extent permitted by law, the Trustees may
retain the proceeds of any redemption of Shares required by them for payments of
amounts due and owing by a Shareholder to the Trust or any Portfolio.
Section 7.4. Redemption of De Minimis Accounts. 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), or such greater amount as
the Trustees in their discretion shall have determined in accordance with
Section 4.1(t), after giving effect to such transfer or redemption and upon
giving thirty (30) days' notice to the Shareholder, the Trust may cause the
remaining Shares of such Portfolio in such Shareholder's account to be redeemed,
subject to such terms and conditions as are set forth in the registration
statement of the Trust in effect from time to time.
ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 8.1. Limitation of Liability. A Trustee or officer, when acting
in such capacity, shall not be personally liable to any person for any act,
omission or obligation of the Trust or any Trustee or officer; provided,
however, that nothing contained herein or in the Delaware Act shall protect any
Trustee or officer against any liability to the Trust or to 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 with the Trust.
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Section 8.2. Indemnification of Covered Persons. Every Covered Person
shall be indemnified by the Trust to the fullest extent permitted by the
Delaware Act, the Bylaws and other applicable law.
Section 8.3. Indemnification of Shareholders. In case any Shareholder
or former Shareholder of the Trust shall be held to be personally liable solely
by reason of his being or having been a Shareholder of the Trust or any
Portfolio or Class and not because of his acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or general successor) shall be entitled, out of
the assets belonging to the applicable Portfolio, to be held harmless from and
indemnified against all loss and expense arising from such liability in
accordance with the Bylaws and applicable law. The Trust, on behalf of the
affected Portfolio, shall upon request by the Shareholder, assume the defense of
any such claim made against the Shareholder for any act or obligation of that
Portfolio.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Trust Not a Partnership; Taxation. It is hereby expressly
declared that a trust and not a partnership is created hereby. No Trustee
hereunder shall have any power to bind personally either the Trust's officers or
any Shareholder. All persons extending credit to, contracting with or having any
claim against the Trust or the Trustees shall look only to the assets of the
appropriate Portfolio or, until the Trustees shall have established any separate
Portfolio, of the Trust for payment under such credit, contract or claim; and
neither the Shareholders, the Trustees, nor the Trust's officers nor any of the
agents of the Trustees whether past, present or future, shall be personally
liable therefor.
It is intended that the Trust, or each Portfolio if there is
more than one Portfolio, be classified for income tax purposes as an association
taxable as a corporation, and the Trustees shall do all things that they, in
their sole discretion, determine are necessary to achieve that objective,
including (if they so determine), electing such classifications on Internal
Revenue Form 8832. The Trustees, in their sole discretion and without the vote
or consent of the Shareholders, may amend this Agreement to ensure that this
objective is achieved.
Section 9.2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretion hereunder in
good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
VIII and to Section 9.1, the Trustees shall not be liable for errors of judgment
or mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Agreement, and subject
to the provisions of Article VIII and Section 9.1, shall be under no liability
for any act or omission in accordance with such advice or for failing to follow
such advice. The Trustees shall not be required to give any bond as such, nor
any surety if a bond is obtained.
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Section 9.3. Termination of Trust or Portfolio or Class.
(a) Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any
time by the Trustees by written notice to the Shareholders,
subject to the right of Shareholders, if any, to vote pursuant
to Section 6.1. Any Portfolio or Class may be terminated at
any time by the Trustees by written notice to the Shareholders
of that Portfolio or Class, subject to the right of
Shareholders, if any, to vote pursuant to Section 6.1.
(b) On termination of the Trust or any Portfolio pursuant to
paragraph (a) above,
(1) the Trust or that Portfolio thereafter shall carry on
no business except for the purpose of winding up its
affairs,
(2) the Trustees shall (i) proceed to wind up the affairs
of the Trust or that Portfolio, and all powers of the
Trustees under this Agreement with respect thereto
shall continue until such affairs have been wound up,
including the powers to fulfill or discharge the
contracts of the Trust or that Portfolio, (ii)
collect its assets or the assets belonging thereto,
(iii) sell, convey, assign, exchange, or otherwise
dispose of all or any part of those assets to one or
more persons at public or private sale for
consideration that may consist in whole or in part of
cash, securities, or other property of any kind, (iv)
discharge or pay its liabilities, and (v) do all
other acts appropriate to liquidate its business, and
(3) after paying or adequately providing for the payment
of all liabilities, and upon receipt of such
releases, indemnities, and refunding agreements as
they deem necessary for their protection, the
Trustees shall distribute the remaining assets
ratably among the Shareholders of the Trust or that
Portfolio.
(c) On termination of any Class pursuant to paragraph (a) above,
(1) the Trust thereafter shall no longer issue Shares of
that Class,
(2) the Trustees shall do all other acts appropriate to
terminate the Class, and
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(3) the Trustees shall distribute ratably among the
Shareholders of that Class, in cash or in kind, an
amount equal to the Proportionate Interest of that
Class in the net assets of the Portfolio (after
taking into account any Class Expenses or other fees,
expenses, or charges allocable thereto), and in
connection with any such distribution in cash the
Trustees are authorized to sell, convey, assign,
exchange or otherwise dispose of such assets of the
Portfolio of which that Class is a part as they deem
necessary.
(d) On completion of distribution of the remaining assets pursuant
to paragraph (b)(3) above, the Trust or the affected Portfolio
shall terminate and the Trustees and the Trust shall be
discharged from all further liabilities and duties hereunder
with respect thereto and the rights and interests of all
parties therein shall be cancelled and discharged. On
termination of the Trust, following completion of winding up
of its business, the Trustees shall cause a Certificate of
Cancellation of the Trust's Certificate of Trust to be filed
in accordance with the Delaware Act, which Certificate may be
signed by any one Trustee.
Section 9.4. Sale of Assets; Merger and Consolidation. Subject to right
of Shareholders, if any, to vote pursuant to Section 6.1, the Trustees may cause
(i) the Trust or one or more of its Portfolios to the extent consistent with
applicable law to sell all or substantially all of its assets to, or be merged
into or consolidated with, another Portfolio, business trust (or series thereof)
or Company (or series thereof), (ii) the Shares of the Trust or any Portfolio
(or Class) to be converted into beneficial interests in another business trust
(or series thereof) created pursuant to this Section 9.4, or (iii) the Shares to
be exchanged under or pursuant to any state or federal statute to the extent
permitted by law. In all respects not governed by statute or applicable law, the
Trustees shall have power to prescribe the procedure necessary or appropriate to
accomplish a sale of assets, merger or consolidation including the power to
create one or more separate business trusts to which all or any part of the
assets, liabilities, profits or losses of the Trust may be transferred and to
provide for the conversion of Shares of the Trust or any Portfolio (or Class)
into beneficial interests in such separate business trust or trusts (or series
or class thereof).
Section 9.5. Filing of Copies, References, Headings. The original or a
copy of this Agreement or any amendment hereto or any supplemental agreement
shall be kept at the office of the Trust where it may be inspected by any
Shareholder. In this Agreement or in any such amendment or supplemental
agreement, references to this Agreement, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to this Agreement as amended
or affected by any such supplemental agreement. All expressions like "his,"
"he," and "him," shall be deemed to include the feminine and neuter, as well as
masculine, genders. Headings are placed herein for convenience of reference only
and in case of any conflict, the text of this Agreement, rather than the
headings, shall control. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original.
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<PAGE> 22
Section 9.6. Governing Law. The Trust and this Agreement, and the
rights, obligations and remedies of the Trustees and Shareholders hereunder, are
to be governed by and construed and administered according to the Delaware Act
and the other laws of the State of Delaware; provided, however, that there shall
not be applicable to the Trust, the Trustees, the Shareholders or this Trust
Agreement (a) the provisions of Section 3540 of Title 12 of the Delaware Code or
(b) any provisions of the laws (statutory or common) of the State of Delaware
(other than the Delaware Act) pertaining to trusts which relate to or regulate
(i) the filing with any court or governmental body or agency of trustee accounts
or schedules of trustee fees and charges, (ii) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards or responsibilities or limitations on the indemnification, acts
or powers of trustees or other Persons, which are inconsistent with the
limitations or liabilities or authorities and powers of the Trustees or officers
of the Trust set forth or referenced in this Agreement.
The Trust shall be of the type commonly called a "business
trust," and without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions; provided, however, that the exercise of
any such power, privilege or action shall not otherwise violate applicable law.
Section 9.7. Amendments. Except as specifically provided in Section
6.1, the Trustees may, without any Shareholder vote, amend this Agreement by
making an amendment to this Agreement or to Schedule A, an agreement
supplemental hereto, or an amended and restated trust instrument. Any such
amendment, having been approved by a Majority Trustee Vote, shall become
effective, unless otherwise provided by such Trustees, upon being executed by a
duly authorized officer of the Trust. Any amendment submitted to Shareholders
that the Trustees determine would affect the Shareholders of fewer than all
Portfolios (or fewer than all Classes thereof) shall be authorized by a vote of
only the Shareholders of the affected Portfolio(s) (or Class(es)), and no vote
shall be required of Shareholders of any Portfolio (or Class) that is not
affected. Notwithstanding anything else herein to the contrary, any amendment to
Article VIII that would have the effect of reducing the indemnification provided
thereby to Covered Persons or to Shareholders or former Shareholders, and any
repeal or amendment of this sentence shall each require the affirmative vote of
Shareholders owning at least two-thirds of the Outstanding Shares entitled to
vote thereon. A certification signed by a duly authorized officer of the Trust
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<PAGE> 23
setting forth an amendment to this Agreement and reciting that it was duly
adopted by the Shareholders or by the Trustees as aforesaid, or a copy of this
Agreement, as amended, executed by a majority of the Trustees, or a duly
authorized officer of the Trust, shall be conclusive evidence of such amendment
when lodged among the records of the Trust.
Section 9.8. Provisions in Conflict with Law. The provisions of this
Agreement are severable, and if the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with applicable law the
conflicting provision shall be deemed never to have constituted a part of this
Agreement; provided, however, that such determination shall not affect any of
the remaining provisions of this Agreement or render invalid or improper any
action taken or omitted prior to such determination. If any provision of this
Agreement shall be held invalid or enforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any other
jurisdiction or any other provision of this Agreement in any jurisdiction.
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
Portfolio and 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.
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<PAGE> 24
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument this 5th day of November, 1998.
/s/ CHARLES T. BAUER
----------------------------
Charles T. Bauer
/s/ BRUCE L. CROCKETT
----------------------------
Bruce L. Crockett
/s/ OWEN DALY II
----------------------------
Owen Daly II
/s/ EDWARD K. DUNN, JR.
----------------------------
Edward K. Dunn, Jr.
/s/ JACK FIELDS
----------------------------
Jack Fields
/s/ CARL FRISCHLING
----------------------------
Carl Frischling
/s/ ROBERT H. GRAHAM
----------------------------
Robert H. Graham
/s/ PREMA MATHAI-DAVIS
----------------------------
Prema Mathai-Davis
/s/ LEWIS F. PENNOCK
----------------------------
Lewis F. Pennock
/s/ IAN W. ROBINSON
----------------------------
Ian W. Robinson
/s/ LOUIS S. SKLAR
----------------------------
Louis S. Sklar
24
<PAGE> 25
SCHEDULE A
AIM INVESTMENT SECURITIES FUNDS
PORTFOLIOS AND CLASSES THEREOF
AIM High Yield Fund II
----------------------
Class A Shares
Class B Shares
Class C Shares
AIM Limited Maturity Treasury Fund
----------------------------------
Class A Shares
Institutional Class
25
<PAGE> 1
EXHIBIT 2(e)
AMENDED AND RESTATED BYLAWS
OF
AIM INVESTMENT SECURITIES FUNDS,
A DELAWARE BUSINESS TRUST
Adopted effective November 5, 1998.
Capitalized terms not specifically defined herein
shall have the meanings ascribed to them in the
Trust's Amended and Restated Agreement and Declaration of
Trust (the "Agreement").
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of AIM
Investment Securities Funds (the "Trust") shall be at the offices of The
Corporation Trust Company 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. Meetings of the Trustees. The Trustees of the Trust may hold
meetings, both regular and special, either within or without the State of
Delaware. Meetings of the Trustees may be called orally or in writing by the
President of the Trust or by any two Trustees.
Section 2. 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 3. Notice of Meetings. Notice of the time, date, and place of
all meetings of the Trustees shall be given to each Trustee (i) by telephone,
telex, telegram, facsimile, electronic-mail, or other electronic mechanism sent
to his or her home or business address at least twenty-four hours in advance of
the meeting or (ii) in person at another meeting of the Trustees or (iii) by
written notice mailed or sent via overnight courier to his or her home or
business address at least seventy-two hours in advance of the meeting. Notice
need not be given to any Trustee who attends the meeting without objecting to
the lack of notice or who signs a waiver of notice either before or after the
meeting.
<PAGE> 2
Section 4. 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 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 5. 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 two or more of the Trustees
of the Trust. The Board may designate one or more Trustees as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of such committee. 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 6. Minutes of Committee. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Trustees
when required.
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.
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<PAGE> 3
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. The Trustees may delegate this power to
the President (without supervision by the Trustees) with respect to any other
officer. Such removal shall be without prejudice to the contract rights, if any,
of the person so removed. Any officer may resign from office at any time by
delivering a written resignation to the Trustees or the President. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
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. Chairman; Vice Presidents. The Chairman of the Board or one
or more Vice Presidents shall have and exercise such powers and duties of the
President in the absence or inability to act of the President, as may be
assigned to them, respectively, by the Board of Trustees or, to the extent not
so assigned, by the President. In the absence or inability to act of the
President, the powers and duties of the President not otherwise assigned by the
Board of Trustees or the President shall devolve upon the Chairman of the Board,
or in the Chairman's absence, the Vice Presidents in the order of their
election.
Section 6. Secretary. The Secretary shall (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, the 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
series and class of any Shares held by them, respectively, and the dates when
they became the record owners thereof.
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
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<PAGE> 4
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.
Section 8. Assistant Officers. Assistant officers, which may include
one or more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers, shall perform such functions and have such responsibilities as the
Board of Trustees may determine.
Section 9. Surety Bond. The Trustees may require any officer or agent
of the Trust to execute a bond (including, without limitation, any bond required
by the Investment Company Act of 1940, as amended ( the "1940 Act") and the
rules and regulations of the Securities and Exchange Commission (the
"Commission") to the Trust in such sum and with such surety or sureties as the
Trustees may determine, conditioned upon the faithful performance of his or her
duties to the Trust, including responsibility for negligence and for the
accounting of any of the Trust's property, funds, or securities that may come
into his or her hands.
Section 10. Authorized Signatories. Unless a specific officer is
otherwise designated in a resolution adopted by the Board of Trustees, the
proper officers of the Trust for executing agreements, documents and instruments
other than Internal Revenue Service forms shall be the President, any Vice
President, the Secretary or any Assistant Secretary. Unless a specific officer
is otherwise designated in a resolution adopted by the Board of Trustees, the
proper officers of the Trust for executing any and all Internal Revenue Service
forms shall be the President, any Vice President, the Secretary, any Assistant
Secretary, or the Treasurer.
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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<PAGE> 5
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 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 Meetings. 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. Special Meetings. Special meetings of the Shareholders, for
any purpose or purposes, unless otherwise prescribed by applicable law or by the
Agreement, 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 6. Notice of Special Meeting. Written notice of a special
meeting stating the place, date, and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less than ten days
before the date of the meeting, to each Shareholder entitled to vote at such
meeting.
Section 7. Conduct of Special Meeting. Business transacted at
any special meeting of Shareholders shall be limited to the purpose stated in
the notice.
Section 8. Quorum. The holders of one-third of the Outstanding Shares
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. 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.
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<PAGE> 6
Section 9. 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 10. 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, these Bylaws, or applicable
contract, a different vote is required, in which case such express provision
shall govern and control the decision of such question.
Section 11. 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 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 12. Action Without Meeting. Unless otherwise provided in the
Agreement or applicable law, any action required to be taken at any meeting of
the Shareholders, or any action which may be taken at any meeting of the
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
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<PAGE> 7
meeting by less than unanimous written consent shall be given to those
Shareholders who have not consented in writing.
Section 13. Broker Non-Votes. At any meeting of Shareholders the Trust
will consider broker non-votes as present for purposes of determining whether a
quorum is present at the meeting. Broker non-votes will not count as votes cast.
ARTICLE V
NOTICES
Section 1. Methods of Giving Notice. Whenever, under the provisions of
applicable law or of the Agreement 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 at his or her last given address or to such
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, facsimile,
electronic-mail or via overnight courier. If sent by telex or facsimile, 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; if sent by electronic-mail, notice to a Trustee or member of
a committee shall be deemed to be given and shall be presumed valid when the
Trust's electronic-mail server reflects the electronic-mail message as having
been sent; 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 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.
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, the President, certifying the number of Shares owned by him in the Trust.
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<PAGE> 8
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 President 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 theretofore issued by the Trust alleged to have been lost, stolen
or destroyed, upon the making of an affidavit of the fact by the person claiming
the certificate 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.
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 shall not be
bound to recognize any equitable or other claim of interest in such Share or
Shares on the part of any other person, whether or not it shall have express or
other notice hereof.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. 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 may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced. Any officer or Trustee of the
Trust shall have authority to affix the seal of the Trust to any document
requiring the same.
Section 2. Severability. The provisions of these Bylaws are severable.
If any provision hereof shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to such
provision only in such jurisdiction and shall not affect any other provision of
these Bylaws.
Section 3. Headings. Headings are placed in these Bylaws for
convenience of reference only and in case of any conflict, the text of these
Bylaws rather than the headings shall control.
ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification. For the purpose of this Section 1, "Trust"
includes any domestic or foreign predecessor entity of this Trust in a merger,
consolidation, or other transaction in which the predecessor's existence ceased
upon consummation of the transaction; "proceeding" means any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative; and "expenses" includes without limitation
attorney's fees and any expenses of establishing a right to indemnification
under this Section 1.
(a) The Trust shall indemnify any person who was
or is a party or is threatened to be made a party
to any proceeding (other than an action by or in
the right of the Trust) by reason of the fact that
such person is or was a Covered Person, against
expenses, judgments, fines and amounts paid in
settlements actually and reasonably incurred by
such person in connection with such proceeding, if
it is determined that person acted in good faith
and reasonably believed: (a) in the case of
conduct in his official capacity as a Covered
Person, that his conduct was in the Trust's best
interests and (b) in all other cases, that his
conduct was at least not opposed to the Trust's
best interests and (c) in the case of a criminal
proceeding, that he had no reasonable cause to
believe that his conduct
9
<PAGE> 10
was unlawful. The termination of any proceeding by
judgment, order or settlement shall not, of
itself, create a presumption that the person did
not meet the requisite standard of conduct set
forth in this Section 1. The termination of any
proceeding by conviction, or a plea of nolo
contendere or its equivalent, or an entry of an
order of probation prior to judgment, creates a
rebuttable presumption that the person did not
meet the requisite standard of conduct set forth
in this Section 1.
(b) The Trust shall indemnify any person who was
or is a party or is threatened to be made a party
to any proceeding by or in the right of the Trust
to procure a judgment in its favor by reason of
the fact that person is or was a Covered Person,
against expenses actually and reasonably incurred
by that person in connection with the defense or
settlement of such action or suit if that person
acted in good faith, in a manner that person
believed to be in the best interests of the Trust
and with such care, including reasonable inquiry,
as an ordinarily prudent person in a like position
would use under similar circumstances.
(c) Notwithstanding any provision to the
contrary contained herein, there shall be no right
to indemnification for any liability arising by
reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the
duties involved in the conduct of the Covered
Person's office with the Trust.
Section 2. Advance Payments of Indemnifiable Expenses. To the maximum
extent permitted by law, the Trust or applicable Portfolio may advance to a
Covered Person, in connection with the preparation and presentation of a defense
to any claim, action, suit, or proceeding, expenses for which the Covered Person
would ultimately be entitled to indemnification; provided that the Trust or
applicable Portfolio has received an undertaking by or on behalf of such Covered
Person that such amount will be paid over by him to the Trust or applicable
Portfolio if it is ultimately determined that he is not entitled to
indemnification for such expenses, and further provided that (i) such Covered
Person shall have provided appropriate security for such undertaking, (ii) the
Trust is insured against losses arising out of any such advance payments, or
(iii) either a majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Trust nor parties to the matter, or independent
legal counsel in a written opinion shall have determined, based upon a review of
readily available facts (as opposed to a full trial-type inquiry) that there is
reason to believe that such Covered Person will not be disqualified from
indemnification for such expenses.
10
<PAGE> 11
ARTICLE IX
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 repealed at any special meeting of the
Shareholders, but only if the Board of Trustees resolves to put a proposed
alteration or repealer to the vote of the Shareholders and notice of such
alteration or repealer is contained in a notice of the special meeting being
held for such purpose.
11
<PAGE> 1
EXHIBIT 5(e)(1)(ii)
AMENDMENT NO. 1
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This Amendment dated as of September 28, 1998, amends the Master
Investment Advisory Agreement (the "Agreement"), dated February 28, 1997,
between AIM Investment Securities Funds, a Delaware business trust, and A I M
Advisors, Inc., a Delaware corporation. Terms not otherwise defined herein
shall have the meanings ascribed them in the Agreement.
W I T N E S S E T H:
WHEREAS, the parties desire to amend the Agreement to add a new
portfolio, namely AIM High Yield Fund II;
NOW, THEREFORE, the parties agree as follows:
Appendix A to the Agreement is hereby deleted in its entirety and
replaced with the following:
"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 fee 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.
AIM HIGH YIELD FUND II
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $500 million.............................................. 0.625%
Over $500 million up to and including $1 billion................ 0.55%
Over $1 billion................................................. 0.50%
AIM LIMITED MATURITY TREASURY FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
First $500 million.............................................. 0.20%
Over $500 million............................................... 0.175%"
</TABLE>
<PAGE> 2
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
AIM INVESTMENT SECURITIES FUNDS
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
---------------------------- --------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
---------------------------- --------------------------
Assistant Secretary President
(SEAL)
2
<PAGE> 1
EXHIBIT 6(a)(6)
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT SECURITIES FUNDS
(CLASS A AND C SHARES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT made as of the 28th day of September, 1998, by and
between AIM INVESTMENT SECURITIES FUNDS, a Delaware business trust (the
"Company"), with respect to the series of shares of its common stock set forth
on Appendix A to this Agreement (the "Portfolios") and the shares, other than
the Class B shares, representing the Portfolios (hereinafter referred to as the
"Class A and Class C Shares") 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 on behalf of the Class A and Class C Shares hereby
appoints the Distributor as its exclusive agent for the sale of the Class A and
Class C Shares 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 current prospectuses applicable to the
Portfolios.
SECOND: The Company shall not sell any Class A and Class C 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 Class A and Class C 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 Class A and Class C Shares 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 applicable Class A
and Class C Shares.
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the Class A and Class C Shares and agrees that it will use its
best efforts to sell such shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf of
the Class A and Class C Shares shall, suspend its efforts to effectuate such
sales at any time when, in the
<PAGE> 2
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 Class A and Class C
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 Class A and Class C Shares. The Company shall have the
right to specify minimum amounts for initial and subsequent orders for the
purchase of Class A and Class C Shares.
FOURTH:
(A) The public offering price of Class A Shares (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
Portfolios. The sales charge shall be established by the Distributor. The
Distributor may establish a schedule of contingent deferred sales charges to be
imposed at the time of redemption of certain Class A Shares and such schedule of
contingent deferred sales charges shall be disclosed in the current prospectus
or statement of additional information for each Portfolio. The sales charges and
contingent deferred sales charges may reflect scheduled variations in, or the
elimination of, sales charges on sales of Class A Shares or redemption of Class
A 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 Portfolios. The Distributor shall apply any
scheduled variation in, or elimination of, the selling commission or contingent
deferred sales charge uniformly to all offerees in the class specified.
The public offering price of the Class C shares shall be the net asset
value per share of the applicable Class C shares. Net asset value per share
shall be determined in accordance with the provisions of the then current
prospectus and statement of additional information of the applicable Portfolio.
The Distributor may establish a schedule of contingent deferred sales charges to
be imposed at the time of redemption of the Shares, and such schedule shall be
disclosed in the current prospectus or statement of additional information of
each Portfolio. Such schedule of contingent deferred sales charges may reflect
variations in or waivers of such charges on redemptions of Class C shares,
either generally to the public or to any specified class of shareholders and/or
in connection with any specified class of transactions, in accordance with
applicable rules and regulations and exemptive relief granted by the Securities
and Exchange Commission, and as set forth in the Portfolios' current
prospectus(es) or statement(s) of additional information. The Distributor and
the Company shall apply any then applicable scheduled variation in or waiver of
contingent deferred sales charges uniformly to all shareholders and/or all
transactions belonging to a specified class.
(B) The Portfolios shall allow directly to investment dealers and other
financial institutions through whom Class A Shares 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.
2
<PAGE> 3
The Distributor may pay to investment dealers and other financial
institutions through whom Class C shares are sold, such sales commission as the
Distributor may specify from time to time. Payment of any such sales commissions
shall be the sole obligation of the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by a Portfolio to the Distributor or by a Portfolio 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 Portfolio pursuant to Rule 12b-1 under the 1940 Act.
(D) The Company shall redeem Class A and Class C Shares from
shareholders in accordance with the terms set forth from time to time in the
current prospectus and statement of additional information of each Portfolio.
The price to be paid to a shareholder to redeem Class A and Class C Shares shall
be equal to the net asset value of the Class A and Class C Shares being
redeemed, less any applicable contingent deferred sales charge. The Distributor
shall be entitled to receive the amount of any applicable contingent deferred
sales charge that has been subtracted from gross redemption proceeds. The
Company shall pay or cause the Company's transfer agent to pay the applicable
contingent deferred sales charge to the Distributor on the date net redemption
proceeds are payable to the redeeming shareholder.
FIFTH: The Distributor shall act as agent of the Company on behalf of
each Portfolio in connection with the sale and repurchase of Class A and Class C
Shares. Except with respect to such sales and repurchases, the Distributor shall
act as principal in all matters relating to the promotion or the sale of Class A
and Class C Shares and shall enter into all of its own engagements, agreements
and contracts as principal on its own account. The Distributor shall enter into
agreements with investment dealers and financial institutions selected by the
Distributor, authorizing such investment dealers and financial institutions to
offer and sell Class A and Class C Shares to the public upon the terms and
conditions set forth therein, which shall not be inconsistent with the
provisions of this Agreement. Each agreement shall provide that the investment
dealer and financial institution shall act as a principal, and not as an agent,
of the Company on behalf of the Portfolios. The Distributor or such other
investment dealers or financial institutions will be deemed to have performed
all services required to be performed in order to be entitled to receive the
asset based sales charge portion of any amounts payable with respect to Class C
Shares to the Distributor pursuant to a distribution plan adopted by the Company
on behalf of each Portfolio pursuant to Rule 12b-1 under the 1940 Act upon the
settlement of each sale of a Class C Share (or a share of another portfolio from
which the Class C Share derives).
SIXTH: The Portfolios shall bear:
(A) the expenses of qualification of Class A and Class C Shares for
sale in connection with such public offerings in such states as shall be
selected by the Distributor, and of continuing the qualification therein until
the Distributor notifies the Company that it does not wish such qualification
continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the final
proof and distributing the Portfolios' prospectuses and statements of additional
information (including supplements thereto)
3
<PAGE> 4
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
Portfolio), 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 Portfolios pursuant to Rule 12b-1 under the 1940 Act.
EIGHTH: The Distributor will accept orders for the purchase of Class A
and Class C 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.
NINTH: The Company, on behalf of the Portfolios, 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 Class A and Class C Shares.
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 Portfolios 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
Portfolios, 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 Portfolio in connection therewith by or on behalf of
the Distributor. The Distributor agrees to indemnify the Company and the
Portfolios against any and all claims, demands, liabilities and expenses which
the Company or the Portfolios 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 Portfolios in its prospectus or in this
Agreement.
(B) The Distributor agrees to indemnify the Company and the Portfolios
against any and all claims, demands, liabilities and expenses which the Company
or the Portfolios 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
Portfolios, 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 Portfolios 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 Portfolios' transfer
agent(s), or for any failure of any such transfer agent to perform its duties.
4
<PAGE> 5
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 June 30, 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 Portfolios' 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 Portfolio, 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 11 Greenway Plaza, Suite 100, Houston,
Texas 77046.
FIFTEENTH: 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.
SIXTEENTH: This Agreement shall be governed by and construed in
accordance with the laws (without reference to conflicts of law provisions) of
the State of Delaware.
5
<PAGE> 6
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
Attest:
By: /s/ ROBERT H. GRAHAM
---------------------------------
/s/ SAMUEL D. SIRKO Name: Robert H. Graham
- ------------------------------- Title: President
Name: SAMUEL D. SIRKO
Title: ASSISTANT SECRETARY
A I M DISTRIBUTORS, INC.
Attest:
By: /s/ MICHAEL J. CEMO
---------------------------------
/s/ SAMUEL D. SIRKO Name: Michael J. Cemo
- ------------------------------- Title: President
Name: SAMUEL D. SIRKO
Title: ASSISTANT SECRETARY
6
<PAGE> 7
APPENDIX A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM INVESTMENT SECURITIES FUNDS
CLASS A SHARES
- --------------
AIM Limited Maturity Treasury Fund
AIM High Yield Fund II
CLASS C SHARES
- --------------
AIM High Yield Fund II
7
<PAGE> 1
EXHIBIT 6(a)(7)
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT SECURITIES FUNDS
(CLASS B SHARES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT made as of the 28th day of September, 1998, by and
between AIM INVESTMENT SECURITIES FUNDS, a Delaware business trust (the
"Company"), with respect to each of the Class B shares (the "Shares") of each
series of shares of common stock set forth on Schedule A to this Agreement (the
"Portfolios"), and A I M DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:
FIRST: The Company hereby appoints the Distributor as its exclusive
agent for the sale of the Shares to the public directly and through investment
dealers in the United States and throughout the world. If subsequent to the
termination of the Distributor's services to the Company pursuant to this
Agreement, the Company retains the services of another distributor, the
distribution agreement with such distributor shall contain provisions comparable
to Clauses FOURTH and SEVENTH hereof and Exhibit A hereto, and without limiting
the generality of the foregoing, will require such distributor to maintain and
make available to the Distributor records regarding sales, redemptions and
reinvestments of Shares necessary to implement the terms of Clauses FOURTH,
SEVENTH and EIGHTH hereof.
SECOND: The Company shall not sell any Shares except through the
Distributor and under the terms and conditions set forth in paragraph FOURTH
below. Notwithstanding the provisions of the foregoing sentence, however:
(A) the Company may issue Shares to any other investment company or
personal holding company, or to the shareholders thereof, in exchange for all or
a majority of the shares or assets of any such company;
(B) the Company may issue Shares at their net asset value in
connection with certain classes of transactions or to certain classes of
persons, in accordance with Rule 22d-1 under the Investment Company Act of 1940,
as amended (the "1940 Act"), provided that any such class is specified in the
then current prospectus of the applicable Shares; and
(C) the Company shall have the right to specify minimum amounts for
initial and subsequent orders for the purchase of Shares.
1
<PAGE> 2
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the Shares and agrees that it will use its best efforts to sell
such Shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf
of the Shares shall, suspend its efforts to effectuate such sales at any time
when, in the opinion of the Distributor or of the Company, no sales should be
made because of market or other economic considerations or abnormal
circumstances of any kind;
(B) the Company may withdraw the offering of the Shares (i) at any
time with the consent of the Distributor, or (ii) without such consent when so
required by the provisions of any statute or of any order, rule or regulation of
any governmental body having jurisdiction; and
(C) the Distributor, as agent, does not undertake to sell any
specific amount of the Shares.
FOURTH:
(A) The public offering price of the Shares shall be the net asset
value per share of the applicable Shares. Net asset value per share shall be
determined in accordance with the provisions of the then current prospectus and
statement of additional information of the applicable Portfolio. The Distributor
may establish a schedule of contingent deferred sales charges to be imposed at
the time of redemption of the Shares, and such schedule shall be disclosed in
the current prospectus or statement of additional information of each Portfolio.
Such schedule of contingent deferred sales charges may reflect variations in or
waivers of such charges on redemptions of Shares, either generally to the public
or to any specified class of shareholders and/or in connection with any
specified class of transactions, in accordance with applicable rules and
regulations and exemptive relief granted by the Securities and Exchange
Commission, and as set forth in the Portfolios' current prospectus(es) or
statement(s) of additional information. The Distributor and the Company shall
apply any then applicable scheduled variation in or waiver of contingent
deferred sales charges uniformly to all shareholders and/or all transactions
belonging to a specified class.
(B) The Distributor may pay to investment dealers and other financial
institutions through whom Shares are sold, such sales commission as the
Distributor may specify from time to time. Payment of any such sales commissions
shall be the sole obligation of the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by the Company to the Distributor or by the Company or the Distributor
to investment dealers, financial institutions and 401(k) plan service providers
where such payments are made under a distribution plan adopted by the Company
pursuant to Rule 12b-1 under the 1940 Act.
(D) The Company shall redeem the Shares from shareholders in
accordance with the terms set forth from time to time in the current prospectus
and statement of additional information of each Portfolio. The price to be paid
to a shareholder to redeem the Shares shall be equal to the net asset value of
the Shares being redeemed ("gross redemption proceeds"), less any applicable
contingent deferred sales charge, calculated pursuant to the then applicable
schedule of contingent deferred sales charges ("net redemption proceeds"). The
Distributor shall be entitled to receive the amount of the contingent deferred
sales charge that has been subtracted from gross redemption proceeds (the
"CDSC"), provided that the Shares being redeemed were (i) issued by a Portfolio
during the term of this Agreement and any predecessor Agreement between the
Company and the Distributor or (ii) issued by a Portfolio during or after the
term of this Agreement or any predecessor
2
<PAGE> 3
Agreement between the Company and the Distributor in one or a series of free
exchanges of Shares for Class B shares of another portfolio, which can be traced
to Shares or Class B shares of another portfolio initially issued by a Portfolio
or such other portfolio during the term of this Agreement, any predecessor
Agreement or any other distribution agreement with the Distributor with respect
to such other portfolio (the "Distributor's Earned CDSC"). The Company shall pay
or cause the Company's transfer agent to pay the Distributor's Earned CDSC to
the Distributor on the date net redemption proceeds are payable to the redeeming
shareholder.
(E) The Distributor shall maintain adequate books and records to
identify Shares (i) issued by a Portfolio during the term of this Agreement and
any predecessor Agreement between the Company and the Distributor or (ii) issued
by a Portfolio during or after the term of this Agreement or any predecessor
Agreement between the Company and the Distributor in one or a series of free
exchanges of Shares for Class B shares of another portfolio, which can be traced
to Shares or Class B shares of another portfolio initially issued by a Portfolio
or such other portfolio during the term of this Agreement, any predecessor
Agreement or any other distribution agreement with the Distributor with respect
to such other portfolio and shall calculate the Distributor's Earned CDSC, if
any, with respect to such Shares, upon their redemption. The Company shall be
entitled to rely on Distributor's books, records and calculations with respect
to Distributor's Earned CDSC.
FIFTH: The Distributor shall act as an agent of the Company in
connection with the sale and redemption of Shares. Except with respect to such
sales and redemptions, the Distributor shall act as principal in all matters
relating to the promotion of the sale of Shares and shall enter into all of its
own engagements, agreements and contracts as principal on its own account. The
Distributor shall enter into agreements with investment dealers and financial
institutions selected by the Distributor, authorizing such investment dealers
and financial institutions to offer and sell the Shares to the public upon the
terms and conditions set forth therein, which shall not be inconsistent with the
provisions of this Agreement. Each agreement shall provide that the investment
dealer or financial institution shall act as a principal, and not as an agent,
of the Company.
SIXTH: The Shares shall bear:
(A) the expenses of qualification of Shares for sale in connection
with such public offerings in such states as shall be selected by the
Distributor, and of continuing the qualification therein until the Distributor
notifies the Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the
final proof and distributing the prospectuses and statements of additional
information for the Shares (including supplements thereto) relating to public
offerings made by the Company pursuant to such prospectuses (which shall not
include those prospectuses and statements of additional information, and
supplements thereto, to be distributed to existing shareholders of the Shares),
and any other promotional or sales literature used by the Distributor or
furnished by the Distributor to dealers in connection with such public
offerings, and expenses of advertising in connection with such public offerings.
(B) Subject to the limitations, if any, of applicable law including
the NASD Conduct Rules (formerly, the NASD Rules of Fair Practice) regarding
asset-based sales charges, the Company shall
3
<PAGE> 4
pay to the Distributor as a reimbursement for all or a portion of such expenses,
or as reasonable compensation for distribution of the Shares, an asset-based
sales charge in an amount equal to 0.75% per annum of the average daily net
asset value of the Shares of each Portfolio from time to time (the
"Distributor's 12b-1 Share"), such sales charge to be payable pursuant to the
distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (the
"Plan"). The Distributor's 12b-1 Share shall be a percentage, which shall be
recomputed periodically (but not less than monthly) in accordance with Exhibit A
to this Agreement. The Distributor's 12b-1 Share shall accrue daily and be paid
to the Distributor as soon as practicable after the end of each calendar month
within which it accrues but in any event within 10 business days after the end
of each such calendar month (unless the Distributor shall specify a later date
in written instructions to the Company) provided, however, that any notices and
calculation required by Section EIGHTH: (B) and (C) have been received by the
Company.
(C) The Distributor shall maintain adequate books and records to
permit calculations periodically (but not less than monthly) of, and shall
calculate on a monthly basis, the Distributor's 12b-1 Share to be paid to the
Distributor. The Company shall be entitled to rely on Distributor's books,
records and calculations relating to Distributor's 12b-1 Share.
EIGHTH:
(A) The Distributor may, from time to time, assign, transfer or
pledge ("Transfer") to one or more designees (each an "Assignee"), its rights to
all or a designated portion of (i) the Distributor's 12b-1 Share (but not the
Distributor's duties and obligations pursuant hereto or pursuant to the Plan),
and (ii) the Distributor's Earned CDSC, free and clear of any offsets or claims
the Company may have against the Distributor. Each such Assignee's ownership
interest in a Transfer of a designated portion of a Distributor's 12b-1 Share
and a Distributor's Earned CDSC is hereinafter referred to as an "Assignee's
12b-1 Portion" and an "Assignee's CDSC Portion," respectively. A Transfer
pursuant to this Section EIGHTH: (A) shall not reduce or extinguish any claim of
the Company against the Distributor.
(B) The Distributor shall promptly notify the Company in writing of
each Transfer pursuant to Section EIGHTH: (A) by providing the Company with the
name and address of each such Assignee.
(C) The Distributor may direct the Company to pay directly to an
Assignee such Assignee's 12b-1 Portion and Assignee's CDSC Portion. In such
event, Distributor shall provide the Company with a monthly calculation of (i)
the Distributor's Earned CDSC and Distributor's 12b-1 Share and (ii) each
Assignee's 12b-1 Portion and Assignee's CDSC Portion, if any, for such month
(the "Monthly Calculation"). The Monthly Calculation shall be provided to the
Company by the Distributor promptly after the close of each month or such other
time as agreed to by the Company and the Distributor which allows timely payment
of the Distributor's 12b-1 Share and Distributor's Earned CDSC and/or the
Assignee's 12b-1 Portion and Assignee's CDSC Portion. The Company shall not be
liable for any interest on such payments occasioned by delayed delivery of the
Monthly Calculation by the Distributor. In such event following receipt from the
Distributor of (i) notice of Transfer referred to in Section EIGHTH: (B) and
(ii) each Monthly Calculation, the Company shall make all payments directly to
the Assignee or Assignees in accordance with the information provided in such
notice and Monthly Calculation, on the same terms and conditions as if such
payments were to be paid directly to the Distributor. The Company shall be
entitled to rely on Distributor's notices, and Monthly Calculations in respect
of amounts to be paid pursuant to this Section EIGHTH: (B).
4
<PAGE> 5
(D) Alternatively, in connection with a Transfer the Distributor may
direct the Company to pay all of such Distributor's 12b-1 Share and
Distributor's Earned CDSC from time to time to a depository or collection agent
designated by any Assignee, which depository or collection agent may be
delegated the duty of dividing such Distributor's 12b-1 Share and Distributor's
Earned CDSC between the Assignee's 12b-1 Portion and Assignee's CDSC Portion and
the balance of the Distributor's 12b-1 Share (such balance, when distributed to
the Distributor by the depository or collection agent, the "Distributor's 12b-1
Portion") and of the Distributor's Earned CDSC (such balance, when distributed
to the Distributor by the depository or collection agent, the "Distributor's
Earned CDSC Portion"), in which case only the Distributor's 12b-1 Portion and
Distributor's Earned CDSC Portion may be subject to offsets or claims the
Company may have against the Distributor.
(E) The Company shall not amend the Plan to reduce the amount payable
to the Distributor or any Assignee under Section SEVENTH: (B) hereof with
respect to the Shares for any Shares which have been issued prior to the date of
such amendment.
NINTH: The Distributor will accept orders for the purchase of Shares
only to the extent of purchase orders actually received and not in excess of
such orders, and it will not avail itself of any opportunity of making a profit
by expediting or withholding orders.
TENTH:
(A) Pursuant to the Plan and this Agreement, the Distributor shall
enter into Shareholder Service Agreements with investment dealers, financial
institutions and certain 401(K) plan service providers (collectively "Service
Providers") selected by the Distributor for the provision of certain continuing
personal services to customers of such Service Providers who have purchased
Shares. Such agreements shall authorize Service Providers to provide continuing
personal shareholder services to their customers upon the terms and conditions
set forth therein, which shall not be inconsistent with the provisions of this
Agreement. Each Shareholder Service Agreement shall provide that the Service
Provider shall act as principal, and not as an agent of the Company.
(B) Shareholder Service Agreements may provide that the Service
Providers may receive a service fee in the amount of .25% of the average daily
net assets of the Shares held by customers of such Service Providers provided
that such Service Providers furnish continuing personal shareholder services to
their customers in respect of such Shares. The continuing personal services to
be rendered by Service Providers under the Shareholder Service Agreements may
include, but shall not be limited to, some or all of the following: distributing
sales literature; answering routine customer inquiries concerning the Company;
assisting customers in changing dividend elections, options, account
designations and addresses, and in enrolling in any of several special
investment plans offered in connection with the purchase of Shares; assisting in
the establishment and maintenance of or establishing and maintaining customer
accounts and records and the processing of purchase and redemption transactions;
performing subaccounting; investing dividends and any capital gains
distributions automatically in the Company's shares; providing periodic
statements showing a customer's account balance and the integration of such
statements with those of other transactions and balances in the customer's
account serviced by the Service Provider; forwarding applicable prospectus,
proxy statements, reports and notices to customers who hold Shares and providing
such other information and services as the Company or the customers may
reasonably request.
(C) The Distributor may advance service fees payable to Service
Providers pursuant to the Plan or any other distribution plan adopted by the
Company with respect to Shares of one or
5
<PAGE> 6
more of the Portfolios pursuant to Rule 12b-1 under the 1940 Act; and thereafter
the Distributor may be reimbursed for such advances through retention of service
fee payments during the period for which the service fees were advanced.
ELEVENTH: The Company and the Distributor shall each comply with all
applicable provisions of the 1940 Act, the Securities Act of 1933, as amended,
and of all other federal and state laws, rules and regulations governing the
issuance and sale of the Shares.
TWELFTH:
(A) In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Distributor, the Company shall indemnify the Distributor against any and
all claims, demands, liabilities and expenses which the Distributor may incur
under the Securities Act of 1933, or common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in any
registration statement or prospectus of the Shares, or any omission to state a
material fact therein, the omission of which makes any statement contained
therein misleading, unless such statement or omission was made in reliance upon,
and in conformity with, information furnished to the Company in connection
therewith by or on behalf of the Distributor. The Distributor shall indemnify
the Company and the Shares against any and all claims, demands, liabilities and
expenses which the Company or the Shares may incur arising out of or based upon
(i) any act or deed of the Distributor or its sales representatives which has
not been authorized by the Company in its prospectus or in this Agreement and
(ii) the Company's reliance on the Distributor's books, records, calculations
and notices in Sections FOURTH: (E), SEVENTH: (C), EIGHTH: (B), EIGHTH: (C) and
EIGHTH: (D).
(B) The Distributor shall indemnify the Company and the Shares
against any and all claims, demands, liabilities and expenses which the Company
or the Shares may incur under the Securities Act of 1933, as amended, or common
law or otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of the
Shares, or any omission to state a material fact therein if such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company in connection therewith by or on behalf of the
Distributor.
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the transfer agent(s) of the
Shares, or for any failure of any such transfer agent to perform its duties.
THIRTEENTH: Nothing herein contained shall require the Company to take
any action contrary to any provision of its Agreement and Declaration of Trust
or to any applicable statute or regulation.
FOURTEENTH: This Agreement shall become effective with respect to the
Shares of each Portfolio upon its approval by the Board of Trustees of the
Company and by vote of a majority of the Company's trustees who are not
interested parties to this Agreement or "interested persons" (as defined in
Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast in person
at a meeting called for such purpose, shall continue in force and effect until
June 30, 1999, and from year to year thereafter, provided, that such continuance
is specifically approved with respect to the Shares of each Portfolio at least
annually (a)(i) by the Board of Trustees of the Company or (ii) by the vote of a
majority of the outstanding Shares of such class of such Portfolio, and (b) by
vote of a majority of the Company's trustees who are not parties to this
Agreement or "interested persons" (as defined
6
<PAGE> 7
in Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast in
person at a meeting called for such purpose.
FIFTEENTH:
(A) This Agreement may be terminated with respect to the Shares of
any Portfolio, at any time, without the payment of any penalty, by vote of the
Board of Trustees of the Company or by vote of a majority of the outstanding
Shares of such Portfolio, or by the Distributor, on sixty (60) days' written
notice to the other party; and
(B) This Agreement shall also automatically terminate in the event of
its assignment, the term "assignment" having the meaning set forth in Section
2(a)(4) of the 1940 Act; provided, that, subject to the provisions of the
following sentence, if this Agreement is terminated for any reason, the
obligations of the Company and the Distributor pursuant to Sections FOURTH: (D),
FOURTH: (E), SEVENTH: (B), SEVENTH: (C), EIGHTH: (A) through (E) and TWELFTH:
(A) of this Agreement will continue and survive any such termination.
Notwithstanding the foregoing, upon Complete Termination of the Plan (as such
term is defined in Section 8 of the Plan in effect at the date of this
Agreement), the obligations of the Company pursuant to the terms of Sections
SEVENTH: (B), EIGHTH: (A), EIGHTH: (C), EIGHTH: (D) and EIGHTH: (E) (with
respect to payments of Distributor's 12b-1 Share and Assignee's 12b-1 Portion)
of this Agreement shall terminate. A termination of the Plan with respect to any
or all Shares of any or all Portfolios shall not affect the obligations of the
Company pursuant to Sections FOURTH: (D), EIGHTH: (A), EIGHTH: (C), EIGHTH: (D)
and EIGHTH: (E) (with respect to payments of Distributor's Earned CDSC or
Assignee's CDSC Portion) hereof or of the obligations of the Distributor
pursuant to Section FOURTH: (E) or EIGHTH: (B) hereof.
(C) The Transfer of the Distributor's rights to Distributor's 12b-1
Share or Distributor's Earned CDSC shall not cause a termination of this
Agreement or be deemed to be an assignment for purposes of Section FIFTEENTH:
(B) above.
SIXTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, the addresses of both the Company and the
Distributor shall be 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
SEVENTEENTH: 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.
EIGHTEENTH: This Agreement shall be governed by and construed in
accordance with the laws (without reference to conflicts of law provisions) of
the State of Delaware.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
AIM INVESTMENT SECURITIES FUNDS
By: /s/ ROBERT H. GRAHAM
------------------------------
Name: Robert H. Graham
Title: President
Attest:
/s/ SAMUEL D. SIRKO
- ----------------------------------
Name: SAMUEL D. SIRKO
Title: ASSISTANT SECRETARY
A I M DISTRIBUTORS, INC.
By: /s/ MICHAEL J. CEMO
------------------------------
Name: Michael J. Cemo
Title: President
Attest:
/s/ SAMUEL D. SIRKO
- ----------------------------------
Name: SAMUEL D. SIRKO
Title: ASSISTANT SECRETARY
8
<PAGE> 9
SCHEDULE A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM INVESTMENT SECURITIES FUNDS
CLASS B SHARES
AIM High Yield Fund II
9
<PAGE> 10
Revised as of June 30, 1998
EXHIBIT A
The Distributor's 12b-1 Share in respect of each Portfolio shall be 100
percent until such time as the Distributor shall cease to serve as exclusive
distributor of the Shares of such Portfolio and thereafter shall be a
percentage, recomputed first on the date of any termination of the Distributor's
services as exclusive distributor of Shares of any Portfolio and thereafter
periodically (but not less than monthly), representing the percentage of Shares
of such Portfolio outstanding on each such computation date allocated to the
Distributor in accordance with the following rules:
1. DEFINITIONS. For purposes of this Exhibit A defined terms used herein
shall have the meaning assigned to such terms in the Distribution Agreement and
the following terms shall have the following meanings:
"Commission Shares" shall mean shares of the Portfolio or another
portfolio the redemption of which would, in the absence of the application of
some standard waiver provision, give rise to the payment of a CDSC and shall
include Commission Shares which due to the expiration of the CDSC period no
longer bear a CDSC.
"Distributor" shall mean the Distributor.
"Other Distributor" shall mean each person appointed as the exclusive
distributor for the Shares of the Portfolio after the Distributor ceases to
serve in that capacity.
2. ALLOCATION RULES. In determining the Distributor's 12b-1 Share in
respect of a particular Portfolio:
(a) There shall be allocated to the Distributor and each Other
Distributor all Commission Shares of such Portfolio which were sold while such
Distributor or such Other Distributor, as the case may be, was the exclusive
distributor for the Shares of the Portfolio, determined in accordance with the
transfer records maintained for such Portfolio.
(b) Reinvested Shares: On the date that any Shares are issued by a
Portfolio as a result of the reinvestment of dividends or other distributions,
whether ordinary income, capital gains or exempt-interest dividends or
distributions ("Reinvested Shares"), Reinvested Shares shall be allocated to the
Distributor and each Other Distributor in a number obtained by multiplying the
total number of Reinvested Shares issued on such date by a fraction, the
numerator of which is the total number of all Shares outstanding in such
Portfolio as of the opening of business on such date and allocated to the
Distributor or Other Distributor as of such date of determination pursuant to
these allocation procedures and the denominator is the total number of Shares
outstanding as of the opening of business on such date.
<PAGE> 11
(c) Exchange Shares: There shall be allocated to the Distributor and
each Other Distributor, as the case may be, all Commission Shares of such
Portfolio which were issued during or after the period referred to in (a) as a
consequence of one or more free exchanges of Commission Shares of the Portfolio
or of another portfolio (other than Free Appreciation Shares) (the "Exchange
Shares"), which in accordance with the transfer records maintained for such
Portfolio can be traced to Commission Shares of the Portfolio or another
portfolio initially issued by the Company or such other portfolio during the
time the Distributor or such Other Distributor, as the case may be, was the
exclusive distributor for the Shares of the Portfolio or such other portfolio.
(d) Free Appreciation Shares: Shares (other than Exchange Shares) that
were acquired by the holders of such Shares in a free exchange of Shares of any
other Portfolio, which represent the appreciated value of the Shares of the
exiting portfolio over the initial purchase price paid for the Shares being
redeemed and exchanged and for which the original purchase date and the original
purchase price are not identified on an on-going basis, shall be allocated to
the Distributor and each Other Distributor ("Free Appreciation Shares") daily in
a number obtained by multiplying the total number of Free Appreciation Shares
issued by the exiting portfolio on such date by a fraction, the numerator of
which is the total number of all Shares outstanding as of the opening of
business on such date allocated to the Distributor or such Other Distributor as
of such date of determination pursuant to these allocation procedures and the
denominator is the total number of Shares outstanding as of the opening of
business on such date.
(e) Redeemed Shares: Shares (other than Reinvested Shares and Free
Appreciation Shares) that are redeemed will be allocated to the Distributor and
each Other Distributor to the extent such Share was previously allocated to the
Distributor or such Other Distributor in accordance with the rules set forth in
2(a) or (c) above. Reinvested Shares and Free Appreciation Shares that are
redeemed will be allocated to the Distributor and each Other Distributor daily
in a number obtained by multiplying the total number of Free Appreciation Shares
and Reinvested Shares being redeemed by such Portfolio on such date by a
fraction, the numerator of which is the total number of all Free Appreciation
Shares and Reinvested Shares of such Portfolio outstanding as of the opening of
business on such date allocated to the Distributor or such Other Distributor as
of such date of determination pursuant to these allocation procedures and the
denominator is the total number of Free Appreciation Shares and Reinvested
Shares of such Portfolio outstanding as of the opening of business on such date.
The Company shall use its best efforts to assure that the transfer agents
and sub-transfer agents for each Portfolio maintain the data necessary to
implement the foregoing rules. If, notwithstanding the foregoing, the transfer
agents or sub-transfer agents for such Portfolio are unable to maintain the data
necessary to implement the foregoing rules as written, or if the Distributor
shall cease to serve as exclusive distributor of the Shares of the Portfolio,
the Distributor and the Portfolio agree to negotiate in good faith with each
other, with the transfer agents and sub-transfer agents for such Portfolio and
with any third party that has obtained an interest in the Distributor's 12b-1
Share in respect of such Portfolio with a view to arriving at mutually
satisfactory modifications to the foregoing rules designed to accomplish
substantially identical results on the basis of data which can be made
available.
<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 (the
"Shares") of the registered investment companies for which we now or in the
future act as underwriter, as disclosed in each Fund's prospectus, 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 (the "Sales Charge")), as determined in accordance with the
then effective prospectus or Statement of Additional Information used in
connection with the offer and sale of Shares (collectively, the
"Prospectus"), which public offering price may reflect scheduled variations
in, or the elimination of, the Sales Charge on sales of the Funds' Shares
either generally to the public or in connection with special purchase plans,
as described in the Prospectus. You agree that you will apply any scheduled
variation in, or elimination of, the Sales Charge uniformly to all offerees
in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
Prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole discretion to reject any order.
4 With respect to the Funds the Shares of which are indicated in that Fund's
Prospectus 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 and/or periodic instruction from us. With respect to the
Funds, the Shares of which are indicated in that Fund's Prospectus as being
sold with a contingent deferred sales charge or early withdrawal charge (the
"CDSC Funds"), you will be paid a commission or concession as disclosed in
the CDSC Fund's Prospectus and/or periodic instructions from us. With
respect to the Funds whose Shares are indicated 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 term Dealer Commission means commissions or concessions
payable to you as disclosed in the Fund's Prospectuses and the terms "Sales
Charge" and "Dealer Commission" apply only to the Load Funds and the CDSC
Funds. All Dealer Commissions 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 or where
applicable, through tender offers. 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.
5/98
<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 Commission
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 Dealer Commission plus interest thereon.
9 You and we agree to abide by the Conduct Rules 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 Dealer Commission 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.
5/98
<PAGE> 3
16 We will supply you with copies of the Prospectuses 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 within the time dictated by
regulatory requirements, as they may be amended from time to time.
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
5/98
<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 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 for which we now or in the future act as
underwriter, as disclosed in each Fund's prospectus, 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 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 or Statement of Additional Information, (collectively, the
"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 in the Fund's Prospectus 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 and/or periodic instructions
from us. 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 or
early withdrawal 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.
5/98
<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 100, 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
5/98
<PAGE> 1
EXHIBIT 8(a)(v)
CUSTODIAN CONTRACT
This Contract between AIM Investment Securities Funds, a business trust
organized and existing under the laws of Delaware with its principal place of
business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046 (the "Fund"), and
STATE STREET BANK and TRUST COMPANY, a Massachusetts trust company with its
principal place of business at 225 Franklin Street, Boston, Massachusetts 02110
(the "Custodian"),
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends that this Contract be applicable to (1) one
series, AIM HIGH YIELD FUND II (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with Section 18, being referred to herein as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Agreement and
Declaration of Trust. The Fund on behalf of the Portfolio(s) agrees to deliver
to the Custodian all securities and cash of the Portfolios, and all payments of
income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (as such term is defined in
Section 6 hereof), the Custodian shall on behalf of the applicable Portfolio(s)
from time to time employ one or more sub-custodians located in the United
States, but only in accordance with an applicable vote by the Board of Trustees
of the Fund (the "Board") on behalf of the applicable Portfolio(s), and provided
that the Custodian shall have no more or less responsibility or liability to the
Fund on account of any actions or omissions of any sub-custodian so employed
than any such sub-custodian has to the Custodian. The Custodian may employ as
sub-custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedules A and B hereto but only in accordance with
the applicable provisions of Sections 3 and 4.
<PAGE> 2
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to Section
2.10 in a clearing agency registered with the United States Securities and
Exchange Commission (the "SEC") under Section 17A of the Exchange Act, which
acts as a securities depository or in a book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively referred
to herein as "U.S. Securities System" in accordance with applicable Federal
Reserve Board and SEC rules and regulations if any, and (b) commercial paper of
an issuer for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian (the "Direct Paper System") pursuant to Section
2.11.
SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.10
hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.9 or into the name
or nominee name of any sub-custodian appointed pursuant to
Section 1; or for
2
<PAGE> 3
exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowing by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or
3
<PAGE> 4
organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a futures commission merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission ("CFTC")
and/or any contract market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent for the
Fund (the "Transfer Agent") for delivery to such Transfer
Agent or to the holders of Shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund related to the Portfolio
(the "Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund on behalf
of the applicable Portfolio, a certified copy of a resolution
of the Board or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio
or of any nominee of the Custodian which nominee shall be assigned exclusively
to the Portfolio, unless the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment companies having
the same investment adviser as the Portfolio, or in the name or nominee name of
any agent appointed pursuant to Section 2.9 or in the name or nominee name of
any sub-custodian appointed pursuant to Section 1. All securities accepted by
the Custodian on behalf of the Portfolio under the terms of this Contract shall
be in "street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain a
separate bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract,
4
<PAGE> 5
and shall hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Portfolio, other than
cash maintained by the Portfolio in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"). Funds held by the Custodian for a Portfolio may be deposited
by it to its credit as Custodian in the Banking Department of the Custodian or
in such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the 1940 Act and that each such
bank or trust company and the funds to be deposited with each such bank or trust
company shall on behalf of each applicable Portfolio be approved by vote of a
majority of the Board. Such funds shall be deposited by the Custodian in its
capacity as Custodian and shall be withdrawable by the Custodian only in that
capacity.
SECTION 2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund on behalf of each applicable Portfolio and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the Fund on behalf
of a Portfolio, make federal funds available to such Portfolio as of specified
times agreed upon from time to time by the Fund and the Custodian in the amount
of checks received in payment for Shares which are deposited into the
Portfolio's account.
SECTION 2.6 COLLECTION OF INCOME. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and other
payments with respect to bearer domestic securities if, on the date of payment
by the issuer, such securities are held by the Custodian or its agent thereof
and shall credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the responsibility of
the Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as may
be necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
SECTION 2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions
from the Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall pay out
monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or
5
<PAGE> 6
trust company doing business in the United States or abroad
which is qualified under the 1940 Act to act as a custodian
and has been designated by the Custodian as its agent for this
purpose) registered in the name of the Portfolio or in the
name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a
purchase effected through a U.S. Securities System, in
accordance with the conditions set forth in Section 2.10
hereof; (c) in the case of a purchase involving the Direct
Paper System, in accordance with the conditions set forth in
Section 2.11; (d) in the case of repurchase agreements entered
into between the Fund on behalf of the Portfolio and the
Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either
in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Portfolio of securities owned by the Custodian
along with written evidence of the agreement by the Custodian
to repurchase such securities from the Portfolio or (e) for
transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the Fund
as defined in Section 6;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued as set forth
in Section 5 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares declared pursuant
to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution of the Board of
the Executive Committee of the Fund signed by an officer of
the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting
forth the purpose for which such
6
<PAGE> 7
payment is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom such payment
is to be made.
SECTION 2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES
PURCHASED. Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the account of
a Portfolio is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the Fund on
behalf of such Portfolio to so pay in advance, the Custodian shall be absolutely
liable to the Fund for such securities to the same extent as if the securities
had been received by the Custodian.
SECTION 2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this Section 2 as
the Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder.
SECTION 2.10 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities owned by a Portfolio in a U.S.
Securities System, subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are
represented in an account of the Custodian in the U.S.
Securities System (the "U.S. Securities System Account") which
account shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System
shall identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
U.S. Securities System that such securities have been
transferred to the U.S. Securities System Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the
Portfolio. The Custodian shall transfer securities sold for
the account of the Portfolio upon (i) receipt of advice from
the U.S. Securities System that payment for such securities
has been transferred to the U.S. Securities System Account,
and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account
of the Portfolio. Copies of all advices from the U.S.
Securities System of transfers of securities for the account
of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by the Custodian and be provided to the Fund
at its request. Upon request, the Custodian shall furnish the
Fund on behalf of the
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Portfolio confirmation of each transfer to or from the account
of the Portfolio in the form of a written advice or notice and
shall furnish to the Fund on behalf of the Portfolio copies of
daily transaction sheets reflecting each day's transactions in
the U.S. Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the U.S. Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the U.S.
Securities System;
5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial or annual certificate, as the case
may be, required by Section 15 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the U.S. Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
Portfolio has not been made whole for any such loss or damage.
SECTION 2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.
The Custodian may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
the Direct Paper System Account, which account shall not
include any assets of the Custodian other than assets held as
a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The
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Custodian shall transfer securities sold for the account of
the Portfolio upon the making of an entry on the records of
the Custodian to reflect such transfer and receipt of payment
for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Direct Paper System for the account
of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control as the Fund may reasonably request from time to time.
SECTION 2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Proper Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on behalf of
each such Portfolio, into which account or accounts may be transferred cash
and/or securities, including securities maintained in an account by the
Custodian pursuant to Section 2.10 hereof, (i) in accordance with the provisions
of any agreement among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the CFTC or any registered
contract market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the Portfolio,
(ii) for purposes of segregating cash or government securities in connection
with options purchased, sold or written by the Portfolio or commodity futures
contracts or options thereon purchased or sold by the Portfolio, (iii) for the
purposes of compliance by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release of the SEC,
or interpretative opinion of the staff of the SEC, relating to the maintenance
of segregated accounts by registered investment companies and (iv) for other
proper corporate purposes, but only, in the case of clause (iv), upon receipt
of, in addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board or of the Executive
Committee signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purpose(s) to be a proper corporate purpose.
SECTION 2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with receipt of income or other payments
with respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
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SECTION 2.14 PROXIES. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting materials
and all notices relating to such securities.
SECTION 2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject
to the provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations of
rights in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With respect to tender
or exchange offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Portfolio desires to take action with respect
to any tender offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian at least three business days prior to the
date on which the Custodian is to take such action.
SECTION 3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
SECTION 3.1 DEFINITIONS. Capitalized terms in this Section 3 of the
Contract shall have the following meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastructure
(including any Mandatory Securities Depositories operating in the country);
prevailing or developing custody and settlement practices; laws and regulations
applicable to the safekeeping and recovery of Foreign Assets held in custody in
that country; and factors comprising the "prevailing country risk", including
the effects of foreign law on the safekeeping of Portfolio assets, the
likelihood of expropriation, nationalization, freezing, or confiscation of a
Portfolio's assets and any reasonably foreseeable difficulties in repatriating a
Portfolio's assets.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5)
of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of
the 1940 Act, except that the term does not include Mandatory Securities
Depositories.
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"Foreign Assets" means any of the Portfolio's investments (including foreign
currencies) for which the primary market is outside the United States, currency
contracts that are settled outside the United States and such cash and cash
equivalents as are reasonably necessary to effect the Portfolio's transactions
in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if the
Fund determines to place Foreign Assets in a country outside the United States
(i) because required by law or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or clearing agency; or (iii)
because maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with prevailing or
developing custodial or market practices.
SECTION 3.2 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. The
Fund, by resolution adopted by its Board, hereby delegates to the Custodian,
subject to Section (b) of Rule 17f-5, the responsibilities set forth in this
Section 3 with respect to Foreign Assets held outside the United States, and the
Custodian hereby accepts such delegation, as Foreign Custody Manager of each
Portfolio.
SECTION 3.3 COUNTRIES COVERED. The Foreign Custody Manager shall be
responsible for performing the delegated responsibilities defined below only
with respect to (a) the countries listed on Schedule A hereto as approved by the
Board, which list of Board-approved countries may be amended from time to time
by the Fund with the agreement of the Foreign Custody Manager, and (b) the
custody arrangements set forth on such Schedule A. The Foreign Custody Manager
shall list on Schedule A the Eligible Foreign Custodians selected by the Foreign
Custody Manager to maintain the assets of each Portfolio, which list of Eligible
Foreign Custodians may be amended from time to time in the sole discretion of
the Foreign Custody Manager. Mandatory Securities Depositories are listed on
Schedule B to this Contract, which Schedule B may be amended from time to time
by the Foreign Custody Manager. The Foreign Custody Manager will provide amended
versions of Schedules A and B in accordance with Section 3.7 of this Section 3.
Upon the receipt by the Foreign Custody Manager of Proper Instructions
to open an account, or to place or maintain Foreign Assets, in a country listed
on Schedule A, and the fulfillment by the Fund of the account opening
requirements for such country (if any), the Foreign Custody Manager shall be
deemed to have been appointed by the Board as Foreign Custody Manager with
respect to that country and to have accepted the delegation. Execution of this
Contract by the Fund shall be deemed to be a Proper Instruction to open an
account, or to place or maintain Foreign Assets, in each Board-approved country
listed on Schedule A in which the Custodian has previously placed or currently
maintains Foreign Assets pursuant to the terms of this Contract. Following the
receipt of Proper Instructions directing the Foreign
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Custody Manager to close the account of a Portfolio with the Eligible Foreign
Custodian selected by the Foreign Custody Manager in a designated country, the
delegation by the Board to the Custodian as Foreign Custody Manager for that
country shall be deemed to have been withdrawn and the Custodian shall
immediately cease to be the Foreign Custody Manager of the Portfolio with
respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to a Portfolio with respect
to the country as to which the Custodian s acceptance of delegation is
withdrawn.
SECTION 3.4 SCOPE OF DELEGATED RESPONSIBILITIES.
3.4.1 SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the
provisions of this Section 3, the Foreign Custody Manager may place and maintain
the Foreign Assets in the care of the Eligible Foreign Custodians selected by
the Foreign Custody Manager in each country listed as "approved" on Schedule A,
as such Schedule is amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager
to place or maintain the Foreign Assets with an Eligible Foreign Custodian, the
Foreign Custody Manager shall determine that the Foreign Assets will be subject
to reasonable care, based on the standards applicable to custodians in the
country in which the Foreign Assets will be held by that Eligible Foreign
Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation, the factors specified in Rule
17f-5(c)(1).
3.4.2 CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody
Manager shall determine that the contract (or the rules or established practices
or procedures in the case of an Eligible Foreign Custodian that is a foreign
securities depository or clearing agency) governing the foreign custody
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
3.4.3 MONITORING. In each case in which the Foreign Custody Manager
maintains Foreign Assets with an Eligible Foreign Custodian, selected by the
Foreign Custody Manager, the Foreign Custody Manager shall maintain a system to
monitor (i) the appropriateness of maintaining the Foreign Assets with such
Eligible Foreign Custodian, and (ii) the contract governing the custody
arrangements established by the Foreign Custody Manager with the Eligible
Foreign Custodian (or the rules or established practices and procedures in the
case of an Eligible Foreign Custodian selected by the Foreign Custody Manager
which is a foreign securities depository or clearing agency that is not a
Mandatory Securities Depository). The Foreign Custody Manager shall provide the
Board with information at least annually as to the factors used in such
monitoring system. In the event the Foreign Custody Manager determines that the
custody arrangements with an Eligible Foreign Custodian that it has selected are
no
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longer appropriate, the Foreign Custody Manager shall promptly transfer the
Fund's Foreign Assets to another Eligible Foreign Custodian in the market and
shall notify the Board in accordance with Section 3.7 hereunder.
SECTION 3.5 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For
purposes of this Section 3, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and maintaining
the Foreign Assets in each country for which the Custodian is serving as Foreign
Custody Manager of a Portfolio, and the Board shall be deemed to be monitoring
on a continuing basis such Country Risk to the extent that the Board considers
necessary or appropriate.
Notwithstanding any provision of this Contract to the contrary, the
Fund on behalf of the Portfolios and the Custodian expressly acknowledge and
agree that the Foreign Custody Manager shall not be delegated any
responsibilities under this Section 3 with respect to Mandatory Securities
Depositories, and that the determination by or on behalf of the Board to place
the Foreign Assets in a particular country shall be deemed to include the
determination to place such Foreign Assets eligible for any Mandatory Securities
Depository with such Mandatory Securities Depository, whether the Mandatory
Securities Depository exists at the time the Foreign Assets are acquired, or
after the acquisition thereof.
SECTION 3.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO.
In performing the responsibilities delegated to it, the Foreign Custody Manager
shall exercise reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of assets of management investment companies
registered under the 1940 Act would exercise.
SECTION 3.7 REPORTING REQUIREMENTS. The Foreign Custody Manager shall
report at least quarterly on the Foreign Assets held with each Eligible Foreign
Custodian and in connection therewith if applicable, provide to the Board
amended Schedules A or B at the end of the calendar quarter in which an
amendment to either Schedule has occurred. The Foreign Custody Manager will make
written reports notifying the Board of any other material change in the foreign
custody arrangements of the Portfolios described in this Section 3 promptly
after the occurrence of the material change.
SECTION 3.8 REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign
Custody Manager represents to the Fund that it is a U.S. Bank as defined in
section (a)(7) of Rule 17f-5.
The Fund represents to the Custodian that the Board has determined that
it is reasonable for the Board to rely on the Custodian to perform the
responsibilities delegated pursuant to this Contract to the Custodian as the
Foreign Custody Manager of each Portfolio.
SECTION 3.9 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN
CUSTODY MANAGER. The Board's delegation to the Custodian as Foreign Custody
Manager of a
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Portfolio shall be effective as of the date hereof and shall remain in effect
until terminated at any time, without penalty, by written notice from the
terminating party to the non-terminating party. Termination will become
effective thirty days after receipt by the non-terminating party of such notice.
The provisions of Section 3.3 hereof shall govern the delegation to and
termination of the Custodian as Foreign Custody Manager of the Fund with respect
to designated countries.
SECTION 3.10 FUTURE NEGOTIATIONS. If at any time prior to termination
of this Contract the Custodian as a matter of standard business practice,
accepts delegation as Foreign Custody Manager for its U.S. mutual fund clients
on terms materially different than set forth in this Contract, the Custodian
hereby agrees to negotiate with the Fund in good faith with respect thereto.
SECTION 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS
HELD OUTSIDE THE UNITED STATES.
SECTION 4.1 DEFINITIONS. Terms used in this Section 4 which are not
otherwise defined herein shall have the following meanings:
"Foreign Securities System" means either a clearing agency or a securities
depository which is listed on Schedule A hereto or a Mandatory Securities
Depository.
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
SECTION 4.2 HOLDING SECURITIES. The Custodian shall identify on its
books as belonging to the Portfolios the foreign securities held by each Foreign
Sub-Custodian or Foreign Securities System. The Custodian may hold foreign
securities for all of its customers, including the Portfolios, with any Foreign
Sub-Custodian in an account that is identified as belonging to the Custodian for
the benefit of its customers, provided however, that (i) the records of the
Custodian with respect to foreign securities of the Portfolios which are
maintained in such account shall identify those securities as belonging to the
Portfolios and (ii), to the extent permitted and customary in the market in
which the account is maintained, the Custodian shall require that securities so
held by the Foreign Sub-Custodian be held separately from any assets of such
Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.
SECTION 4.3 FOREIGN SECURITIES SYSTEMS. Foreign securities shall be
maintained in a Foreign Securities System in a designated country only through
arrangements implemented by the Foreign Sub-Custodian in such country pursuant
to the terms of this Contract.
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SECTION 4.4 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1 DELIVERY OF FOREIGN ASSETS. The Custodian or a Foreign
Sub-Custodian shall release and deliver foreign securities of a Portfolio held
by such Foreign Sub-Custodian, or in a Foreign Securities System account, only
upon receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:
(i) upon sale of such foreign securities for the Portfolio in
accordance with reasonable market practice in the country
where such Foreign Assets are held or traded, including,
without limitation: (A) delivery against expectation of
receiving later payment; or (B), in the case of a sale
effected through a Foreign Securities System, in accordance
with the rules governing the operation of the Foreign
Securities System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other
similar offers for foreign securities of the Portfolio;
(iv) to the issuer thereof or its agent when such foreign
securities are called, redeemed, retired or otherwise become
payable;
(v) to the issuer thereof, or its agent, for transfer into the
name of the Custodian (or the name of the respective Foreign
Sub-Custodian or of any nominee of the Custodian (or such
Foreign Sub-Custodian)) or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with reasonable
market practices in the country where such securities are held
or traded; provided that in any such case the Sub-Custodian
shall have no responsibility or liability for any loss arising
from the delivery of such securities prior to receiving
payment for such securities except as may arise from the
Sub-Custodian's own negligence or willful misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities,
the surrender thereof in the exercise of such warrants, rights
or similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
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(ix) for delivery as security in connection with any borrowing by
the Fund requiring a pledge of assets by the Portfolio;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions, a certified copy of a
resolution of the Board or of an Executive Committee of the
Board so authorized by the Board, signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary
that the resolution was duly adopted and is in full force and
effect (a "Certified Resolution"), specifying the Foreign
Assets to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such Foreign Assets shall be made.
4.4.2 PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the
respective Foreign Securities System to pay out, moneys of a Portfolio in the
following cases only:
(i) upon the purchase of foreign securities for the Portfolio,
unless otherwise directed by Proper Instructions, in
accordance with reasonable market settlement practice in the
country where such foreign securities are held or traded,
including, without limitation: (A) delivering money to the
seller thereof or to a dealer therefor (or an agent for such
seller or dealer) against expectation of receiving later
delivery of such foreign securities; or (B) in the case of a
purchase effected through a Foreign Securities System, in
accordance with the rules governing the operation of such
Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of
foreign securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees
under this Contract, legal fees, accounting fees, and other
operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign
exchange contracts for the Portfolio, including transactions
executed with or through the Custodian or its Foreign
Sub-Custodians;
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(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign
securities; and
(viii) for any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a Certified Resolution,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
4.4.3 MARKET CONDITIONS; MARKET INFORMATION. Notwithstanding any
provision of this Contract to the contrary, settlement and payment for Foreign
Assets received for the account of a Portfolio and delivery of Foreign Assets
maintained for the account of a Portfolio may be effected in accordance with the
customary established securities trading or processing practices and procedures
in the country or market in which the transaction occurs generally accepted by
Institutional Clients, including, without limitation, delivering Foreign Assets
to the purchaser thereof or to a dealer therefor (or an agent for such purchaser
or dealer) against a receipt with the expectation of receiving later payment for
such Foreign Assets from such purchaser or dealer. For purposes of this
Contract, "Institutional Clients" means U.S. registered investment companies or
major U.S. based commercial banks, insurance companies, pension funds or
substantially similar institutions which, as a part of their ordinary business
operations, purchase or sell securities and make use of global custody services.
The Custodian shall provide to the Board the information with respect
to custody and settlement practices in countries in which the Custodian employs
a Foreign Sub-Custodian, including without limitation information relating to
Foreign Securities Systems, described on Schedule C hereto at the time or times
set forth on such Schedule. The Custodian may revise Schedule C from time to
time, provided that no such revision shall result in the Board being provided
with substantively less information than had been previously provided hereunder
and, provided further, that the Custodian shall in any event provide to the
Board and to A I M Advisors, Inc. annually the following information and
opinions with respect to the Board-approved countries listed on Schedule A:
(i) legal opinions relating to whether local law restricts with
respect to U.S. registered mutual funds (a) access of a fund's
independent public accountants to books and records of a
Foreign Sub-Custodian or Foreign Securities System, (b) a
fund's ability to recover in the event of bankruptcy or
insolvency of a Foreign Sub-Custodian or Foreign Securities
System, (c) a fund's ability to recover in the event of a loss
by a Foreign Sub-Custodian or Foreign Securities System, and
(d) the ability of a foreign investor to convert cash and cash
equivalents to U.S. dollars;
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(ii) summary of information regarding Foreign Securities Systems;
and
(iii) country profile information containing market practice for (a)
delivery versus payment, (b) settlement method, (c) currency
restrictions, (d) buy-in practices, (e) foreign ownership
limits, and (f) unique market arrangements.
SECTION 4.5 REGISTRATION OF FOREIGN SECURITIES. The foreign securities
maintained in the custody of a Foreign Custodian (other than bearer securities)
shall be registered in the name of the Fund (on behalf of the applicable
Portfolio) or in the name of the Custodian or in the name of any Foreign
Sub-Custodian or in the name of any nominee of the foregoing, and the Fund
agrees to hold any such nominee harmless from any liability as a holder of
record of such foreign securities, except to the extent that the Fund incurs
loss or damage due to failure of such nominee to meet its standard of care as
set forth in this Contract. The Custodian or a Foreign Sub-Custodian shall not
be obligated to accept securities on behalf of the Fund (on behalf of the
applicable Portfolio) under the terms of this Contract unless the form of such
securities and the manner in which they are delivered are in accordance with
reasonable market practice.
SECTION 4.6 BANK ACCOUNTS. The Custodian shall identify on its books as
belonging to a Portfolio cash (including cash denominated in foreign currencies)
deposited with the Custodian. Where the Custodian is unable to maintain, or
market practice does not facilitate the maintenance of, cash on the books of the
Custodian, a bank account or bank accounts opened and maintained outside the
United States on behalf of a Portfolio with a Foreign Sub-Custodian shall be
subject only to draft or order by the Custodian or such Foreign Sub-Custodian,
acting pursuant to the terms of this Contract to hold cash received by or from
or for the account of the Portfolio.
SECTION 4.7 COLLECTION OF INCOME. The Custodian shall use reasonable
commercial efforts to collect all dividends, income and other payments with
respect to the Foreign Assets held hereunder to which a Portfolio shall be
entitled and shall credit such income, as collected, to the Portfolio. In the
event the Custodian or a Foreign Sub-Custodian must use measures beyond those
which are customary in a particular country to collect such payments, the Fund
and the Custodian shall consult as to such measures and as to the compensation
and expenses of the Custodian attendant thereto.
SECTION 4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities
held under this Section 4, the Custodian will use commercially reasonable
efforts to facilitate the exercise by the Fund on behalf of the Portfolios of
voting and other shareholder rights, subject always to the laws, regulations and
practical constraints that may obtain in the country where such securities are
issued. The Fund acknowledges that local conditions, including lack of
regulation, onerous procedural obligations, lack of notice and other factors may
have the effect of severely limiting the ability of the Fund to exercise
shareholder rights.
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SECTION 4.9 COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The
Custodian shall transmit promptly to the Fund written information (including,
without limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith) received by the Custodian via the
Foreign Sub-Custodians from issuers of the foreign securities being held for the
account of a Portfolio. With respect to tender or exchange offers, the Custodian
shall transmit promptly to the Fund written information so received by the
Custodian from issuers of the foreign securities whose tender or exchange is
sought or from the party (or its agents) making the tender or exchange offer.
Subject to the standard of care to which the Custodian is held under this
Contract, the Custodian shall not be liable for any untimely exercise of any
tender, exchange or other right or power in connection with foreign securities
or other property of the Portfolio at any time held by it unless (i) the
Custodian or the respective Foreign Sub-Custodian is in actual possession of
such foreign securities or property and (ii) the Custodian receives Proper
Instructions with regard to the exercise of any such right or power, and both
(i) and (ii) occur at least two New York business days prior to the date on
which the Custodian is to take action to exercise such right or power.
SECTION 4.10 LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN SECURITIES
SYSTEMS. Each agreement pursuant to which the Custodian employs a Foreign
Sub-Custodian shall, to the extent possible consistent with prevailing market
practice, require the Foreign Sub-Custodian to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the Custodian
from and against any loss, damage, cost, expense, liability or claim arising out
of or in connection with such Foreign Sub-Custodian's performance of such
obligations. At the election of the Fund, the Fund shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims against a
Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund and any applicable
Portfolio has not been made whole for any such loss, damage, cost, expense,
liability or claim.
SECTION 4.11 TAX LAW. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed on the Fund or the
Custodian as custodian of the Portfolios by the tax law of the United States or
of any state or political subdivision thereof. With respect to jurisdictions
other than the United States, the sole responsibility of the Custodian with
regard to the tax law of any such jurisdiction shall be to use reasonable
efforts to (a) notify the Fund of the obligations imposed on the Fund with
respect to the Portfolios or the Custodian as custodian of such Portfolios by
the tax law of such jurisdictions, including responsibility for withholding and
other taxes, assessment or other governmental charges, certifications and
government reporting and (b) perform such ministerial steps as are required to
collect any tax refund, to ascertain the appropriate rate of tax withholding and
to provide such documents as may be required to enable the Fund to receive
appropriate tax treatment under applicable tax laws and any applicable treaty
provisions. The Custodian, in performance of its duties under this Section,
shall be entitled to treat the Fund as a Delaware business trust which is a
"registered investment company" under the laws of the United States, and it
shall be the duty of the Fund to inform the Custodian of any change in the
organization, domicile or, to the extent within the knowledge of the Fund, other
relevant facts concerning tax treatment of
19
<PAGE> 20
the Fund and further to inform the Custodian if the Fund is or becomes the
beneficiary of any special ruling or treatment not applicable to the general
nationality and category of entity of which the Fund is a part under general
laws and treaty provisions. The Custodian shall be entitled to rely on any
information supplied by the Fund. The Custodian may engage reasonable
professional advisors disclosed to the Fund by the Custodian, which may include
attorneys, accountants or financial institutions in the regular business of
investment administration and may rely upon advice received therefrom.
SECTION 4.12 LIABILITY OF CUSTODIAN. Except as may arise from the
Custodian's own negligence or willful misconduct or the negligence or willful
misconduct of a Sub-Custodian, the Custodian shall be without liability to the
Fund for any loss, liability, claim or expense resulting from or caused by
Country Risk (as such term is defined in Section 3 hereof), regardless of
whether assets are maintained in the custody of a Foreign Sub-Custodian or a
Foreign Securities Depository, the Custodian shall be without liability for any
loss, damage, cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism, or any other
similar loss beyond the reasonable control of the Custodian or the
Sub-Custodian.
The Custodian shall be liable to the Fund on account of any actions or
omissions of any Foreign Sub-Custodian to the same extent as such Foreign
Sub-Custodian shall be liable to the Custodian.
SECTION 4.13 USE OF TERM "FUND"; ASSETS AND LIABILITIES. All references
in this Section 4 or in Section 3 of this Contract to "Fund" shall mean the
Fund, or a Portfolio of the Fund, as the context requires or as applicable.
The Custodian shall maintain separate and distinct records for each
Portfolio and the assets allocated solely with such Portfolio shall be held and
accounted for separately from the assets of the Fund associated solely with any
other Portfolio. The debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Portfolio
shall be enforceable against the assets of such Portfolio only, and not against
the assets of the Fund generally or the assets of any other Portfolio.
SECTION 5. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares thereof issued or sold from
time to time by the Fund. The Custodian will provide timely notification to the
Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by
it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Agreement and Declaration of Trust and any applicable votes
of the Board pursuant thereto,
20
<PAGE> 21
the Custodian shall, upon receipt of instructions from the Transfer Agent, make
funds available for payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire funds to
or through a commercial bank designated by the redeeming shareholders. In
connection with the redemption or repurchase of Shares, the Custodian shall
honor checks drawn on the Custodian by a holder of Shares, which checks have
been furnished by the Fund to the holder of Shares, when presented to the
Custodian in accordance with such procedures and controls as are mutually agreed
upon from time to time between the Fund and the Custodian.
SECTION 6. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract includes the
following:
(a) a writing signed or initialed by one or more person or persons as
the Board of Trustees shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type or transaction involved,
including a specific statement of the purpose for which such action is
requested;
(b) communications effected directly between electro-mechanical or
electronic devices provided that the Fund and the Custodian agree to securities
procedures, including but not limited to, the security procedures listed on the
Funds Transfer Addendum hereto;
(c) oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund shall
cause all oral instructions to be confirmed in writing or through
electro-mechanical or electronic devices; or
(d) Proper Instructions in connection with a segregated asset account
which has been established pursuant to Section 2.12, hereof, shall include
instructions received by the Custodian in accordance with the provisions of any
three-party agreement, to which the Fund and the Custodian are each a party,
governing such account or accounts.
SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Fund on behalf of the Portfolio;
21
<PAGE> 22
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Portfolio
except as otherwise directed by the Board.
SECTION 8. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a copy of a Certified Resolution as conclusive
evidence (a) of the authority of any person to act in accordance with such
resolution or (b) of any determination or of any action by the Board pursuant to
the Agreement and Declaration of Trust as described in such resolution, and such
resolution may be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.
SECTION 9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board to keep the books of account of each
Portfolio and/or compute the net asset value per Share of the outstanding Shares
or, if directed in writing to do so by the Fund on behalf of the Portfolio,
shall itself keep such books of account and/or compute such net asset value per
Share. If so directed, the Custodian shall also calculate daily the net income
of the Portfolio as described in the Prospectus and shall advise the Fund and
the Transfer Agent daily of the total amounts of such net income and, if
instructed in writing by an officer of the Fund to do so, shall advise the
Transfer Agent periodically of the division of such net income among its various
components. The calculations of the net asset value per Share and the daily
income of each Portfolio shall be made at the time or times described from time
to time in the Prospectus.
SECTION 10. RECORDS
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1
22
<PAGE> 23
and 31a-2 thereunder. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the SEC. The Custodian shall, at the Fund's request,
supply the Fund with a tabulation of securities owned by each Portfolio and held
by the Custodian and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
SECTION 11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the SEC and with respect to any
other requirements thereof.
SECTION 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a U.S. Securities
System or a Foreign Securities System, relating to the services provided by the
Custodian under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so state.
SECTION 13. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.
SECTION 14. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by
23
<PAGE> 24
it to be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical failures or
interruptions, communications disruptions, acts of war or terrorism, riots,
revolutions, work stoppages, natural disasters, or other similar events or acts;
(ii) errors by the Fund or the Investment Advisor in their instructions to the
Custodian provided such instructions have been in accordance with this Contract;
(iii) the insolvency of or acts or omissions by a Securities System; (iv) any
delay or failure of any broker, agent or intermediary, central bank or other
commercially prevalent payment or clearing system that is not an affiliate of
the Custodian to deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with securities
sold; (v) any delay or failure of any company, corporation, or other body in
charge of registering or transferring securities in the name of the Custodian,
the Fund, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth
with respect to sub-custodians generally in this Contract.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
24
<PAGE> 25
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) for
the benefit of a Portfolio or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except such as
may arise from its or its nominee's own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the account of the
applicable Portfolio shall be security therefor and should the Fund fail to
repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of such Portfolio's assets to the extent necessary
to obtain reimbursement.
SECTION 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board has approved the initial use of a particular
Securities System by such Portfolio, as required by Rule 17f-4 under the 1940
Act and that the Custodian shall not with respect to a Portfolio act under
Section 2.11 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board has approved the initial use
of the Direct Paper System by such Portfolio; provided further, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Fund's
Agreement and Declaration of Trust and further provided, that the Fund on behalf
of one or more of the Portfolios may at any time by action of its Board (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of this Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
25
<PAGE> 26
SECTION 16. SUCCESSOR CUSTODIAN
If a successor custodian for one or more Portfolios shall be appointed by
the Board, the Custodian shall, upon termination; (i) deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities of each applicable Portfolio then held by it hereunder;
(ii) shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System; and (iii)
transfer to the successor custodian all records created and maintained by the
Custodian with respect to each such Portfolio pursuant to Section 9.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a Certified Resolution, deliver at the office of
the Custodian and transfer such securities, funds and other properties in
accordance with such resolution.
In the event that no written order designating a successor custodian or
Certified Resolution shall have been delivered to the Custodian on or before the
date when such termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of each
applicable Portfolio and all instruments held by the Custodian relative thereto
and all other property held by it under this Contract on behalf of each
applicable Portfolio, and to transfer to an account of such successor custodian
all of the securities of each such Portfolio held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the Certified Resolution to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Contract relating to the duties
and obligations of the Custodian shall remain in full force and effect.
SECTION 17. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Fund's Agreement and Declaration of
Trust. No interpretive or additional
26
<PAGE> 27
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
SECTION 18. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to AIM HIGH YIELD FUND II with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
SECTION 19. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
SECTION 20. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all prior
Contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
SECTION 21. NOTICES.
Any notice, instruction or other instrument required to be given
hereunder may be delivered in person to the offices of the parties as set forth
herein during normal business hours or delivered prepaid registered mail or by
telex, cable or telecopy to the parties at the following addresses or such other
addresses as may be notified by any party from time to time.
To the Fund: AIM INVESTMENT SECURITIES FUNDS
11 Greenway Plaza
Suite 100
Houston, Texas 77046
Attention: Carol F. Relihan, General Counsel
Telephone: 713-626-1919
Telecopy: 713-993-9185
To the Custodian: STATE STREET BANK AND TRUST COMPANY
1776 Heritage Drive
27
<PAGE> 28
JAB/4W
North Quincy, Massachusetts 02171
Attention: Nancy Grady, Vice President
Telephone: 617-985-6188
Telecopy: 617-537-6321
Such notice, instruction or other instrument shall be deemed to have
been served in the case of a registered letter at the expiration of five
business days after posting, in the case of cable twenty-four hours after
dispatch and, in the case of telex or telecopy, immediately on dispatch and if
delivered outside normal business hours it shall be deemed to have been received
at the next time after delivery when normal business hours commence and in the
case of cable, telex or telecopy on the business day after the receipt thereof.
Evidence that the notice was properly addressed, stamped and put into the post
shall be conclusive evidence of posting.
SECTION 22. REPRODUCTION OF DOCUMENTS
This Contract and all schedules, addenda, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 23. SHAREHOLDER COMMUNICATIONS ELECTION
SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held by
the bank unless the beneficial owner has expressly objected to disclosure of
this information. In order to comply with the rule, the Custodian needs the Fund
to indicate whether it authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose securities the Fund
owns. If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian "yes" or
does not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
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<PAGE> 29
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [X] The Custodian is not authorized to release the Fund's name,
address, and share positions.
SECTION 24. DATA ACCESS SERVICES ADDENDUM
The Custodian and the Fund agree to be bound by the terms of the Data
Access Services Addendum attached hereto.
29
<PAGE> 30
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of September 28, 1998.
AIM INVESTMENT SECURITIES FUNDS FUND SIGNATURE ATTESTED TO BY:
By: /s/ ROBERT H. GRAHAM By: /s/ SAMUEL D. SIRKO
---------------------------- ----------------------------
Name: Robert H. Graham Name: Samuel D. Sirko
-------------------------- --------------------------
Title: President Title: Assistant Secretary
-------------------------- --------------------------
STATE STREET BANK AND TRUST COMPANY SIGNATURE ATTESTED TO BY:
By: /s/ RONALD E. LOGUE By: /s/ MARC L. PARSONS
---------------------------- ----------------------------
Name: Ronald E. Logue Name: Marc L. Parsons
-------------------------- --------------------------
Title: Executive Vice President Title: Associate Counsel
-------------------------- --------------------------
30
<PAGE> 31
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale de Banque --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano S.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada Canada Trustco Mortgage Company --
Chile Citibank, N.A. --
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
8/13/98
</TABLE>
1
<PAGE> 32
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Croatia Privredna Banka Zagreb d.d --
Cyprus Barclays Bank Plc. --
Cyprus Offshore Banking Unit
Czech Republic Ceskoslovenska Obchodni --
Banka, A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Merita Bank Limited --
France Banque Paribas --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A. The Bank of Greece,
System for Monitoring Transactions in
Securities in Book-Entry Form
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
Iceland Icebank Ltd.
8/13/98
</TABLE>
2
<PAGE> 33
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
India Deutsche Bank AG --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and Merchant --
Bank Ltd.
Japan The Daiwa Bank, Limited Japan Securities Depository
Center
The Fuji Bank, Limited
Jordan British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Korea The Hongkong and Shanghai Banking
Corporation Limited
Latvia JSC Hansabank-Latvija --
Lebanon British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
8/13/98
</TABLE>
3
<PAGE> 34
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa -
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse
Oman British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
Poland Citibank (Poland) S.A. --
Bank Polska Kasa Opieki S.A.
Portugal Banco Comercial Portugues --
8/13/98
</TABLE>
4
<PAGE> 35
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Romania ING Bank N.V. --
Russia Credit Suisse First Boston AO, Moscow --
(as delegate of Credit Suisse
First Boston, Zurich)
Singapore The Development Bank --
of Singapore Limited
Slovak Republic Ceskoslovenska Obchodna --
Banka, A.S.
Slovenia Banka Creditanstalt d.d. --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland UBS AG --
Taiwan - R.O.C. Central Trust of China --
Thailand Standard Chartered Bank --
Trinidad & Tobago Republic Bank Limited --
Tunisia Banque Internationale Arabe de Tunisie --
8/13/98
</TABLE>
5
<PAGE> 36
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Turkey Citibank, N.A. --
Ottoman Bank
Ukraine ING Bank, Ukraine --
United Kingdom State Street Bank and Trust Company, --
London Branch
Uruguay Citibank, N.A. --
Venezuela Citibank, N.A. --
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
Euroclear (The Euroclear System)/State Street London Limited
Cedel, S.A. (Cedel Bank, societe anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
8/13/98
</TABLE>
6
<PAGE> 37
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Reserve Bank Information and
Transfer System
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium Caisse
Interprofessionnelle
de Depot et de
Virement de Titres S.A.
Banque Nationale de Belgique
Brazil Companhia Brasileira de Liquidacao e
Custodia (CBLC)
Bolsa de Valores de Rio de Janeiro
All SSB clients presently use CBLC
Central de Custodia e de Liquidacao Financeira
de Titulos
Banco Central do Brasil,
Sistema Especial de Liquidacao de
Custodia
Bulgaria Central Depository AD
Bulgarian National Bank
Canada The Canadian Depository
for Securities Limited
People's Republic Shanghai Securities Central Clearing and
of China Registration Corporation
Shenzhen Securities Central Clearing
Co., Ltd.
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98
1
<PAGE> 38
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Croatia Ministry of Finance
National Bank of Croatia
Czech Republic Stredisko cennych papiru
Czech National Bank
Denmark Vaerdipapircentralen (the Danish
Securities Center)
Egypt Misr Company for Clearing, Settlement,
and Central Depository
Estonia Eesti Vaartpaberite Keskdepositoorium
Finland The Finnish Central Securities
Depository
France Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM)
Germany Deutsche Borse Clearing AG
Greece The Central Securities Depository
(Apothetirion Titlon AE)
Hong Kong The Central Clearing and
Settlement System
Central Money Markets Unit
Hungary The Central Depository and Clearing
House (Budapest) Ltd. (KELER)
[Mandatory for Gov't Bonds only;
SSB does not use for other securities]
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98
2
<PAGE> 39
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
India The National Securities Depository Limited
Indonesia Bank Indonesia
Ireland Central Bank of Ireland
Securities Settlement Office
Israel The Tel Aviv Stock Exchange Clearing
House Ltd.
Bank of Israel
Italy Monte Titoli S.p.A.
Banca d'Italia
Jamaica The Jamaican Central Securities Depository
Japan Bank of Japan Net System
Kenya Central Bank of Kenya
Republic of Korea Korea Securities Depository Corporation
Latvia The Latvian Central Depository
Lebanon The Custodian and Clearing Center of
Financial Instruments for Lebanon
and the Middle East (MIDCLEAR) S.A.L.
The Central Bank of Lebanon
Lithuania The Central Securities Depository of Lithuania
Malaysia The Malaysian Central Depository Sdn. Bhd.
Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98
3
<PAGE> 40
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Mauritius The Central Depository & Settlement
Co. Ltd.
Mexico S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores)
Morocco Maroclear
(pending publication of enabling legislation
in the Moroccan government Gazette)
The Netherlands Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. (NECIGEF)
De Nederlandsche Bank N.V.
New Zealand New Zealand Central Securities
Depository Limited
Norway Verdipapirsentralen (the Norwegian
Registry of Securities)
Oman Muscat Securities Market
Pakistan Central Depository Company of Pakistan Limited
Peru Caja de Valores y Liquidaciones S.A.
(CAVALI)
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98
4
<PAGE> 41
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Philippines The Philippines Central Depository, Inc.
The Registry of Scripless Securities
(ROSS) of the Bureau of the Treasury
Poland The National Depository of Securities
(Krajowy Depozyt Papierow Wartosciowych)
Central Treasury Bills Registrar
Portugal Central de Valores Mobiliarios (Central)
Romania National Securities Clearing, Settlement and
Depository Co.
Bucharest Stock Exchange Registry Division
Singapore The Central Depository (Pte)
Limited
Monetary Authority of Singapore
Slovak Republic Stredisko Cennych Papierov
National Bank of Slovakia
Slovenia Klirinsko Depotna Druzba d.d.
South Africa The Central Depository Limited
Spain Servicio de Compensacion y
Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
Sri Lanka Central Depository System
(Pvt) Limited
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98
5
<PAGE> 42
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
(Pvt) Limited
Sweden Vardepapperscentralen AB
(the Swedish Central Securities Depository)
Switzerland Schweizerische Effekten - Giro AG
INTERSETTLE
Taiwan - R.O.C. The Taiwan Securities Central
Depository Co., Ltd.
Thailand Thailand Securities Depository
Company Limited
Tunisia Societe Tunisienne Interprofessionelle de
Compensation et de Depot de
Valeurs Mobilieres
Central Bank of Tunisia
Tunisian Treasury
Turkey Takas ve Saklama Bankasi A.S.
(TAKASBANK)
Central Bank of Turkey
Ukraine The National Bank of Ukraine
United Kingdom The Bank of England,
The Central Gilts Office and
The Central Moneymarkets Office
Uruguay Central Bank of Uruguay
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98
6
<PAGE> 43
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Venezuela Central Bank of Venezuela
Zambia Lusaka Central Depository Limited
Bank of Zambia
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98
7
<PAGE> 44
SCHEDULE C
MARKET INFORMATION
<TABLE>
<CAPTION>
PUBLICATION/TYPE OF INFORMATION BRIEF DESCRIPTION
- ------------------------------- -----------------
(FREQUENCY)
<S> <C>
The Guide to Custody in World Markets An overview of safekeeping and
(annually) settlement practices and procedures
in each market in which State Street
Bank and Trust Company offers
custodial services.
Global Custody Network Review Information relating to the
(annually) operating history and structure of
depositories and subcustodians
located in the markets in which
State Street Bank and Trust Company
offers custodial services, including
transnational depositories.
Global Legal Survey With respect to each market in which
(annually) State Street Bank and Trust Company
offers custodial services, opinions
relating to whether local law
restricts (i) access of a fund's
independent public accountants to
books and records of a Foreign
Sub-Custodian or Foreign Securities
System, (ii) the Fund's ability to
recover in the event of bankruptcy
or insolvency of a Foreign
Sub-Custodian or Foreign Securities
System, (iii) the Fund's ability to
recover in the event of a loss by a
Foreign Sub-Custodian or Foreign
Securities System, and (iv) the
ability of a foreign investor to
convert cash and cash equivalents to
U.S. dollars.
Subcustodian Agreements Copies of the subcustodian contracts
(annually) State Street Bank and Trust Company
has entered into with each
subcustodian in the markets in which
State Street Bank and Trust Company
offers subcustody services to its US
mutual fund clients.
Network Bulletins (weekly): Developments of interest to
investors in the markets in which
State Street Bank and Trust Company
offers custodial services.
Foreign Custody Advisories (as
necessary): With respect to markets in which
State Street Bank and Trust Company
offers custodial services which
exhibit special custody risks,
developments which may impact State
Street's ability to deliver expected
levels of service.
</TABLE>
<PAGE> 45
DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
AGREEMENT between AIM Investment Securities Funds (the "Customer") and
State Street Bank and Trust Company ("State Street").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain assets
of the Customer pursuant to a certain Custodian Agreement (the "Custodian
Agreement") dated as of September 28 1998;
WHEREAS, State Street has developed and utilizes proprietary accounting
and other systems, including State Street's proprietary Multicurrency
HORIZON(SM) Accounting System, in its role as custodian of the Customer, and
maintains certain Customer-related data ("Customer Data") in databases under the
control and ownership of State Street (the "Data Access Services"); and
WHEREAS, State Street makes available to the Customer certain Data
Access Services solely for the benefit of the Customer, and intends to provide
additional services, consistent with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the parties
agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
(a) System. Subject to the terms and conditions of this Agreement,
State Street hereby agrees to provide the Customer with access to State Street's
Multicurrency HORIZON(SM) Accounting System and the other information systems
(collectively, the "System") as described in Attachment A, on a remote basis for
the purpose of obtaining reports and information, solely on computer hardware,
system software and telecommunication links as listed in Attachment B (the
"Designated Configuration") of the Customer, or certain third parties approved
by State Street that serve as independent auditors, investment advisors or
investment managers ("Investment Advisor"), or in other service capacities, of
the Customer or other third parties such as the Customer's independent auditors,
solely with respect to the Customer or on any designated substitute or back-up
equipment configuration with State Street's written consent, such consent not to
be unreasonably withheld.
(b) Data Access Services. State Street agrees to make available to the
Customer the Data Access Services subject to the terms and conditions of this
Agreement and data access operating standards and procedures as may be issued by
State Street from time to time. The ability of the Customer to originate
electronic instructions to State Street on behalf of the Customer in order to
(i) effect the transfer or movement of cash or securities held under custody by
State Street or (ii) transmit accounting or other information (such transactions
are referred to herein as "Client Originated Electronic Financial
Instructions"), and (iii) access data for the purpose of reporting and analysis,
shall be deemed to be Data Access Services for purposes of this Agreement.
(c) Additional Services. State Street may from time to time agree to
make available to the Customer additional Systems that are not described in the
attachments to this Agreement. In the absence of any other written agreement
concerning such additional systems, the term "System" shall include, and this
Agreement shall govern, the Customer's access to and use of any additional
System made available by State Street and/or accessed by the Customer.
2. NO USE OF THIRD PARTY SYSTEMS-LEVEL SOFTWARE
State Street and the Customer acknowledge that in connection with the
Data Access Services provided under this Agreement, the Customer will have
access, through the Data Access Services, to Customer Data and to functions of
State Street's proprietary systems; provided, however that in no event will the
Customer have direct access to any third party systems-level software that
retrieves data for, stores data from, or otherwise supports the System.
3. LIMITATION ON SCOPE OF USE
a. Designated Equipment; Designated Location. The System and the Data
Access Services shall be used and accessed solely on and through the Designated
Configuration at the offices of the Customer or the Investment Advisor located
in Houston, Texas ("Designated Location").
b. Designated Configuration; Trained Personnel. State Street shall be
responsible for supplying, installing and maintaining the Designated
Configuration at the Designated Location. State Street and the Customer agree
that each will engage or retain the services of trained personnel to enable both
parties to perform their respective obligations under this Agreement. State
Street agrees to use commercially reasonable efforts to maintain the System so
that it remains serviceable, provided, however, that State Street does not
guarantee or assure uninterrupted remote access use of the System.
c. Scope of Use. The Customer will use the System and the Data Access
Services only for the processing of securities transactions, the keeping of
books of account for the Customer and accessing data for purposes of reporting
and analysis. The Customer shall not, and shall cause its employees and agents
not to (i) permit any third party to use the System or the Data Access Services,
(ii) sell, rent, license or otherwise use the System or the Data Access Services
in the operation of a
<PAGE> 46
service bureau or for any purpose other than as expressly authorized under this
Agreement, (iii) use the System or the Data Access Services for any fund, trust
or other investment vehicle without the prior written consent of State Street,
(iv) allow access to the System or the Data Access Services through terminals or
any other computer or telecommunications facilities located outside the
Designated Locations, (v) allow or cause any information (other than portfolio
holdings, valuations of portfolio holdings, and other information reasonably
necessary for the management or distribution of the assets of the Customer)
transmitted from State Street's databases, including data from third party
sources, available through use of the System or the Data Access Services to be
redistributed or retransmitted to another computer, terminal or other device for
other than use for or on behalf of the Customer or (vi) modify the System in any
way, including without limitation, developing any software for or attaching any
devices or computer programs to any equipment, system, software or database
which forms a part of or is resident on the Designated Configuration.
d. Other Locations. Except in the event of an emergency or of a planned
System shutdown, the Customer's access to services performed by the System or to
Data Access Services at the Designated Location may be transferred to a
different location only upon the prior written consent of State Street. In the
event of an emergency or System shutdown, the Customer may use any back-up site
included in the Designated Configuration or any other back-up site agreed to by
State Street, which agreement will not be unreasonably withheld. The Customer
may secure from State Street the right to access the System or the Data Access
Services through computer and telecommunications facilities or devices complying
with the Designated Configuration at additional locations only upon the prior
written consent of State Street and on terms to be mutually agreed upon by the
parties.
e. Title. Title and all ownership and proprietary rights to the System,
including any enhancements or modifications thereto, whether or not made by
State Street, are and shall remain with State Street.
f. No Modification. Without the prior written consent of State Street,
the Customer shall not modify, enhance or otherwise create derivative works
based upon the System, nor shall the Customer reverse engineer, decompile or
otherwise attempt to secure the source code for all or any part of the System.
g. Security Procedures. The Customer shall comply with data access
operating standards and procedures and with user identification or other
password control requirements and other security procedures as may be issued
from time to time by State Street for use of the System on a remote basis and to
access the Data Access Services. The Customer shall have access only to the
Customer Data and authorized transactions agreed upon from time to time by State
Street and, upon notice from State Street, the Customer shall discontinue remote
use of the System and access to Data Access Services for any security reasons
cited by State Street; provided, that, in such event, State Street shall, for a
period not less than 180 days (or such other shorter period specified by the
Customer) after such discontinuance, assume responsibility to provide accounting
services under the terms of the Custodian Agreement.
h. Inspections. State Street shall have the right to inspect the use of
the System and the Data Access Services by the Customer and the Investment
Advisor to ensure compliance with this Agreement. The on-site inspections shall
be upon prior written notice to the Customer and the Investment Advisor and at
reasonably convenient times and frequencies so as not to result in an
unreasonable disruption of the Customer's or the Investment Advisor's business.
4. PROPRIETARY INFORMATION
a. Proprietary Information. The Customer acknowledges and State Street
represents that the System and the databases, computer programs, screen formats,
report formats, interactive design techniques, documentation and other
information made available to the Customer by State Street as part of the Data
Access Services and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to the Customer shall be
deemed proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The Customer agrees that it will hold such
Proprietary Information in the strictest confidence and secure and protect it in
a manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder. The Customer further
acknowledges that State Street shall not be required to provide the Investment
Advisor with access to the System unless it has first received from the
Investment Advisor an undertaking with respect to State Street's Proprietary
Information in the form of Attachment C to this Agreement. The Customer shall
use all commercially reasonable efforts to assist State Street in identifying
and preventing any unauthorized use, copying or disclosure of the Proprietary
Information or any portions thereof or any of the logic, formats or designs
contained therein.
b. Cooperation. Without limitation of the foregoing, the Customer shall
advise State Street immediately in the event the Customer learns or has reason
to believe that any person to whom the Customer has given access to the
Proprietary Information, or any portion thereof, has violated or intends to
violate the terms of this Agreement, and the Customer will, at its expense,
co-operate with State Street in seeking injunctive or other equitable relief in
the name of the Customer or State Street against any such person.
c. Injunctive Relief. The Customer acknowledges that the disclosure of
any Proprietary Information, or of any information which at law or equity ought
to remain confidential, will immediately give rise to continuing irreparable
injury to State Street inadequately compensable in damages at law. In addition,
State Street shall be entitled to obtain immediate injunctive
<PAGE> 47
relief against the breach or threatened breach of any of the foregoing
undertakings, in addition to any other legal remedies which may be available.
d. Survival. The provisions of this Section 4 shall survive the
termination of this Agreement.
5. LIMITATION ON LIABILITY
a. Limitation on Amount and Time for Bringing Action. The Customer
agrees that any liability of State Street to the Customer or any third party
arising out of State Street's provision of Data Access Services or the System
under this Agreement shall be limited to the amount paid by the Customer for the
preceding 24 months for such services. In no event shall State Street be liable
to the Customer or any other party for any special, indirect, punitive or
consequential damages even if advised of the possibility of such damages. No
action, regardless of form, arising out of this Agreement may be brought by the
Customer more than two years after the Customer has knowledge that the cause of
action has arisen.
b. Limited Warranties. NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, ARE MADE BY STATE STREET.
c. Third-Party Data. Organizations from which State Street may obtain
certain data included in the System or the Data Access Services are solely
responsible for the contents of such data, and State Street shall have no
liability for claims arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof.
d. Regulatory Requirements. As between State Street and the Customer,
the Customer shall be solely responsible for the accuracy of any accounting
statements or reports produced using the Data Access Services and the System and
the conformity thereof with any requirements of law.
e. Force Majeure. Neither party shall be liable for any costs or
damages due to delay or nonperformance under this Agreement arising out of any
cause or event beyond such party's control, including without limitation,
cessation of services hereunder or any damages resulting therefrom to the other
party, or the Customer as a result of work stoppage, power or other mechanical
failure, computer virus, natural disaster, governmental action, or communication
disruption.
6. INDEMNIFICATION
The Customer agrees to indemnify and hold State Street harmless from
any loss, damage or expense including reasonable attorney's fees, (a "loss")
suffered by State Street arising from (i) the negligence or willful misconduct
in the use by the Customer of the Data Access Services or the System, including
any loss incurred by State Street resulting from a security breach at the
Designated Location or committed by the Customer's employees or agents or the
Investment Advisor and (ii) any loss resulting from incorrect Client Originated
Electronic Financial Instructions. State Street shall be entitled to rely on the
validity and authenticity of Client Originated Electronic Financial Instructions
without undertaking any further inquiry as long as such instruction is
undertaken in conformity with security procedures established by State Street
from time to time.
7. FEES
Fees and charges for the use of the System and the Data Access Services
and related payment terms shall be as set forth in the Custody Fee Schedule in
effect from time to time between the parties (the "Fee Schedule"). Any tariffs,
duties or taxes imposed or levied by any government or governmental agency by
reason of the transactions contemplated by this Agreement, including, without
limitation, federal, state and local taxes, use, value added and personal
property taxes (other than income, franchise or similar taxes which may be
imposed or assessed against State Street) shall be borne by the Customer. Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.
8. TRAINING, IMPLEMENTATION AND CONVERSION
a. Training. State Street agrees to provide training, at a designated
State Street training facility or at the Designated Location, to the Customer's
personnel in connection with the use of the System on the Designated
Configuration. The Customer agrees that it will set aside, during regular
business hours or at other times agreed upon by both parties, sufficient time to
enable all operators of the System and the Data Access Services, designated by
the Customer, to receive the training offered by State Street pursuant to this
Agreement.
b. Installation and Conversion. State Street shall be responsible for
the technical installation and conversion ("Installation and Conversion") of the
Designated Configuration. The Customer shall have the following responsibilities
in connection with Installation and Conversion of the System:
(i) The Customer shall be solely responsible for the timely
acquisition and maintenance of the hardware and software that
attach to the Designated Configuration in order to use the
Data Access Services at the Designated Location.
<PAGE> 48
(ii) State Street and the Customer each agree that they will assign
qualified personnel to actively participate during the
Installation and Conversion phase of the System implementation
to enable both parties to perform their respective obligations
under this Agreement.
9. SUPPORT
During the term of this Agreement, State Street agrees to provide the
support services set out in Attachment D to this Agreement.
10. TERM OF AGREEMENT
a. Term of Agreement. This Agreement shall become effective on the date
of its execution by State Street and shall remain in full force and effect until
terminated as herein provided.
b. Termination of Agreement. Either party may terminate this Agreement
(i) for any reason by giving the other party at least one-hundred and eighty
days' prior written notice in the case of notice of termination by State Street
to the Customer or thirty days' notice in the case of notice from the Customer
to State Street of termination; or (ii) immediately for failure of the other
party to comply with any material term and condition of the Agreement by giving
the other party written notice of termination. In the event the Customer shall
cease doing business, shall become subject to proceedings under the bankruptcy
laws (other than a petition for reorganization or similar proceeding) or shall
be adjudicated bankrupt, this Agreement and the rights granted hereunder shall,
at the option of State Street, immediately terminate with notice to the
Customer. This Agreement shall in any event terminate as to any Customer within
90 days after the termination of the Custodian Agreement applicable to such
Customer.
c. Termination of the Right to Use. Upon termination of this Agreement
for any reason, any right to use the System and access to the Data Access
Services shall terminate and the Customer shall immediately cease use of the
System and the Data Access Services. Immediately upon termination of this
Agreement for any reason, the Customer shall return to State Street all copies
of documentation and other Proprietary Information in its possession; provided,
however, that in the event that either party terminates this Agreement or the
Custodian Agreement for any reason other than the Customer's breach, State
Street shall provide the Data Access Services for a period of time and at a
price to be agreed upon by the parties.
11. MISCELLANEOUS
a. Assignment; Successors. This Agreement and the rights and
obligations of the Customer and State Street hereunder shall not be assigned by
either party without the prior written consent of the other party, except that
State Street may assign this Agreement to a successor of all or a substantial
portion of its business, or to a party controlling, controlled by, or under
common control with State Street.
b. Survival. All provisions regarding indemnification, warranty,
liability and limits thereon, and confidentiality and/or protection of
proprietary rights and trade secrets shall survive the termination of this
Agreement.
c. Entire Agreement. This Agreement and the attachments hereto
constitute the entire understanding of the parties hereto with respect to the
Data Access Services and the use of the System and supersedes any and all prior
or contemporaneous representations or agreements, whether oral or written,
between the parties as such may relate to the Data Access Services or the
System, and cannot be modified or altered except in a writing duly executed by
the parties. This Agreement is not intended to supersede or modify the duties
and liabilities of the parties hereto under the Custodian Agreement or any other
agreement between the parties hereto except to the extent that any such
agreement specifically refers to the Data Access Services or the System. No
single waiver of any right hereunder shall be deemed to be a continuing waiver.
d. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, unlawful, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired.
e. Governing Law. This Agreement shall be interpreted and construed in
accordance with the internal laws of The Commonwealth of Massachusetts without
regard to the conflict of laws provisions thereof.
<PAGE> 49
ATTACHMENT A
Multicurrency HORIZON(SM) Accounting System
System Product Description
I. The Multicurrency HORIZON(SM) Accounting System is designed to provide lot
level portfolio and general ledger accounting for SEC and ERISA type
requirements and includes the following services: 1) recording of general ledger
entries; 2) calculation of daily income and expense; 3) reconciliation of daily
activity with the trial balance, and 4) appropriate automated feeding mechanisms
to (i) domestic and international settlement systems, (ii) daily, weekly and
monthly evaluation services, (iii) portfolio performance and analytic services,
(iv) customer's internal computing systems and (v) various State Street provided
information services products.
II. GlobalQuest--Registered Trademark-- is designed to provide customer access
to the following information maintained on The Multicurrency HORIZON(SM)
Accounting System: 1) cash transactions and balances; 2) purchases and sales; 3)
income receivables; 4) tax refund receivables; 5) daily priced positions; 6)
open trades; 7) settlement status; 8) foreign exchange transactions; 9) trade
history, and 10) daily, weekly and monthly evaluation services.
III. HORIZON--Registered Trademark-- Gateway. HORIZON--Registered Trademark--
Gateway provides customers with the ability to (i) generate reports using
information maintained on the Multicurrency HORIZON--Registered Trademark--
Accounting System which may be viewed or printed at the customer's location;
(ii) extract and download data from the Multicurrency HORIZON--Registered
Trademark-- Accounting System; and (iii) access previous day and historical
data. The following information which may be accessed for these purposes: 1)
holdings; 2) holdings pricing; 3) transactions, 4) open trades; 5) income; 6)
general ledger and 7) cash.
IV. SaFiRe(SM). SaFiRe(SM) is designed to provide the customer with the ability
to prepare its own financial reports by permitting the customer to access
customer information maintained on the Multicurrency HORIZON--Registered
Trademark-- Accounting System, to organize such information in a flexible
reporting format and to have such reports printed on the customer's desktop or
by its printing provider.
V. State Street Interchange. State Street Interchange is an open information
delivery architecture wherein proprietary communication products, data formats
and workstation tools are replaced by industry standards and is designed to
enable the connection of State Street's network to customer networks, thereby
facilitating the sharing of information.
<PAGE> 50
ATTACHMENT B
Advisor/Subadvisor
[Graphic of Computer]
STATE STREET
BANK AND
TRUST COMPANY
Multicurrency Horizon--Registered Trademark--
Global Quest--Registered Trademark--
Horizon--Registered Trademark-- Gateway,
InSight--Registered Trademark--
and SaFire(sm)
Software is installed for access,
Click on icon for access.
DIAL UP ACCESS
CONFIGURATION
<PAGE> 51
ATTACHMENT C
UNDERTAKING
The undersigned understands that in the course of its employment as
Investment Advisor to AIM Investment Securities Funds (the "Customer") it will
have access to State Street Bank and Trust Company's ("State Street")
Multicurrency HORIZON(SM) Accounting System and other information systems
(collectively, the "System").
The undersigned acknowledges that the System and the databases,
computer programs, screen formats, report formats, interactive design
techniques, documentation and other information made available to the
undersigned by State Street as part of the Data Access Services provided to the
Customer and through the use of the System constitute copyrighted, trade secret,
or other proprietary information of substantial value to State Street. Any and
all such information provided by State Street to the Undersigned shall be deemed
proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The undersigned agrees that it will hold such
Proprietary Information in confidence and secure and protect it in a manner
consistent with its own procedures for the protection of its own confidential
information and to take appropriate action by instruction or agreement with its
employees who are permitted access to the Proprietary Information to satisfy its
obligations hereunder.
The undersigned will not attempt to intercept data, gain access to data
in transmission, or attempt entry into any system or files for which it is not
authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the System
and access to the Data Access Services shall terminate and the undersigned shall
immediately cease use of the System and the Data Access Services. Immediately
upon notice by State Street for any reason, the undersigned shall return to
State Street all copies of documentation and other Proprietary Information in
its possession.
AIM ADVISORS, INC.
By: /s/ SAMUEL D. SIRKO
-----------------------------
Title: Vice President
--------------------------
Date: 9/30/98
---------------------------
<PAGE> 52
ATTACHMENT D
SUPPORT
During the term of this Agreement, State Street agrees to provide the
following on-going support services:
a. Telephone Support. The Customer Designated Persons may contact State
Street's Multicurrency HORIZON(SM) Help Desk and Customer Assistance Center
between the hours of 8 a.m. and 6 p.m. (Eastern time) on all business days for
the purpose of obtaining answers to questions about the use of the System, or to
report apparent problems with the System. From time to time, the Customer shall
provide to State Street a list of persons, not to exceed five in number, who
shall be permitted to contact State Street for assistance (such persons being
referred to as "the Customer Designated Persons").
b. Technical Support. State Street will provide technical support to
assist the Customer in using the System and the Data Access Services. The total
amount of technical support provided by State Street shall not exceed 10
resource days per year. State Street shall provide such additional technical
support as is expressly set forth in the fee schedule in effect from time to
time between the parties (the "Fee Schedule"). Technical support, including
during installation and testing, is subject to the fees and other terms set
forth in the Fee Schedule.
c. Maintenance Support. State Street shall use commercially reasonable
efforts to correct system functions that do not work according to the System
Product Description as set forth on Attachment A in priority order in the next
scheduled delivery release or otherwise as soon as is practicable.
d. System Enhancements. State Street will provide to the Customer any
enhancements to the System developed by State Street and made a part of the
System; provided that, sixty (60) days prior to installing any such enhancement,
State Street shall notify the Customer and shall offer the Customer reasonable
training on the enhancement. Charges for system enhancements shall be as
provided in the Fee Schedule. State Street retains the right to charge for
related systems or products that may be developed and separately made available
for use other than through the System.
e. Custom Modifications. In the event the Customer desires custom
modifications in connection with its use of the System, the Customer shall make
a written request to State Street providing specifications for the desired
modification. Any custom modifications may be undertaken by State Street in its
sole discretion in accordance with the Fee Schedule.
f. Limitation on Support. State Street shall have no obligation to
support the Customer's use of the System: (i) for use on any computer equipment
or telecommunication facilities which does not conform to the Designated
Configuration or (ii) in the event the Customer has modified the System in
breach of this Agreement.
<PAGE> 53
FUNDS TRANSFER ADDENDUM
[STATE STREET LOGO]
OPERATING GUIDELINES
1. OBLIGATION OF THE SENDER: State Street is authorized to promptly debit
Client's (as named below) account(s) upon the receipt of a payment order in
compliance with the selected Security Procedure chosen for funds transfer and in
the amount of money that State Street has been instructed to transfer. State
Street shall execute payment orders in compliance with the Security Procedure
and with the Client's instructions on the execution date provided that such
payment order is received by the customary deadline for processing such a
request, unless the payment order specifies a later time. All payment orders and
communications received after this time will be deemed to have been received on
the next business day.
2. SECURITY PROCEDURE: The Client acknowledges that the Security Procedure it
has designated on the Selection Form was selected by the Client from Security
Procedures offered by State Street. The Client shall restrict access to
confidential information relating to the Security Procedure to authorized
persons as communicated in writing to State Street. The Client must notify State
Street immediately if it has reason to believe unauthorized persons may have
obtained access to such information or of any change in the Client's authorized
personnel. State Street shall verify the authenticity of all instructions
according to the Security Procedure.
3. ACCOUNT NUMBERS: State Street shall process all payment orders on the basis
of the account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the account
number, the account number shall take precedence and govern.
4. REJECTION: State Street reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of State Street's receipt of such payment
order; (b) if initiating such payment order would cause State Street, in State
Street's sole judgment, to exceed any volume, aggregate dollar, network, time,
credit or similar limits upon wire transfers which are applicable to State
Street; or (c) if State Street, in good faith, is unable to satisfy itself that
the transaction has been properly authorized.
5. CANCELLATION OR AMENDMENT: State Street shall use reasonable efforts to act
on all authorized requests to cancel or amend payment orders received in
compliance with the Security Procedure provided that such requests are received
in a timely manner affording State Street reasonable opportunity to act.
However, State Street assumes no liability if the request for amendment or
cancellation cannot be satisfied.
6. ERRORS: State Street shall assume no responsibility for failure to detect any
erroneous payment order provided that State Street complies with the payment
order instructions as received and State Street complies with the Security
Procedure. The Security Procedure is established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
7. INTEREST AND LIABILITY LIMITS: State Street shall assume no responsibility
for lost interest with respect to the refundable amount of any unauthorized
payment order, unless State Street is notified of the unauthorized payment order
within thirty (30) days of notification by State Street of the acceptance of
such payment order. In no event shall State Street be liable for special,
indirect or consequential damages, even if advised of the possibility of such
damages and even for failure to execute a payment order.
8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When a
Client initiates or receives ACH credit and debit entries pursuant to these
Guidelines and the rules of the National Automated Clearing House Association
and the New England Clearing House Association, State Street will act as an
Originating Depository Financial Institution and/or Receiving Depository
Institution, as the case may be, with respect to such entries. Credits given by
State Street with respect to an ACH credit entry are provisional until State
Street receives final settlement for such entry from the Federal Reserve Bank.
If State Street does not receive such final settlement, the Client agrees that
State Street shall receive a refund of the amount credited to the Client in
connection with such entry, and the party making payment to the Client via such
entry shall not be deemed to have paid the amount of the entry.
9. CONFIRMATION STATEMENTS: Confirmation of State Street's execution of payment
orders shall ordinarily be provided within 24 hours notice which may be
delivered through State Street's proprietary information systems, such as, but
not limited to Horizon and GlobalQuest--Registered Trademark--, or by facsimile
or callback. The Client must report any objections to the execution of a payment
order within 30 days.
<PAGE> 54
FUNDS TRANSFER ADDENDUM
[STATE STREET LOGO]
Selection Form
Please select one or more of the funds transfer security procedures indicated
below.
[ ] SWIFT
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a
cooperative society owned and operated by member financial institutions that
provides telecommunication services for its membership. Participation is limited
to securities brokers and dealers, clearing and depository institutions,
recognized exchanges for securities, and investment management institutions.
SWIFT provides a number of security features through encryption and
authentication to protect against unauthorized access, loss or wrong delivery of
messages, transmission errors, loss of confidentiality and fraudulent changes to
messages. SWIFT is considered to be one of the most secure and efficient
networks for the delivery of funds transfer instructions.
Selection of this security procedure would be most appropriate for existing
SWIFT members.
[X] STANDING INSTRUCTIONS
Standing Instructions may be used where funds are transferred to a broker on the
Client's established list of brokers with which it engages in foreign exchange
transactions. Only the date, the currency and the currency amount are variable.
In order to establish this procedure, State Street will send to the Client a
list of the brokers that State Street has determined are used by the Client. The
Client will confirm the list in writing, and State Street will verify the
written confirmation by telephone. Standing Instructions will be subject to a
mutually agreed upon limit. If the payment order exceeds the established limit,
the Standing Instruction will be confirmed by telephone prior to execution.
[ ] REMOTE BATCH TRANSMISSION
Wire transfer instructions are delivered via Computer-to-Computer (CPU-CPU) data
communications between the Client and State Street. Security procedures include
encryption and or the use of a test key by those individuals authorized as
Automated Batch Verifiers.
Clients selecting this option should have an existing facility for completing
CPU-CPU transmissions. This delivery mechanism is typically used for high-volume
business.
[ ] GLOBAL HORIZON INTERCHANGE(SM) FUNDS TRANSFER SERVICE
Global Horizon Interchange Funds Transfer Service (FTS) is a State Street
proprietary microcomputer-based wire initiation system. FTS enables Clients to
electronically transmit authenticated Fedwire, CHIPS or internal book transfer
instructions to State Street.
This delivery mechanism is most appropriate for Clients with a low-to-medium
number of transactions (5-75 per day), allowing Clients to enter, batch, and
review wire transfer instructions on their PC prior to release to State Street.
[X] TELEPHONE CONFIRMATION (CALLBACK)
Telephone confirmation will be used to verify all non-repetitive funds transfer
instructions received via untested facsimile or phone. This procedure requires
Clients to designate individuals as authorized initiators and authorized
verifiers. State Street will verify that the instruction contains the signature
of an authorized person and prior to execution, will contact someone other than
the originator at the Client's location to authenticate the instruction.
Selection of this alternative is appropriate for Clients who do not have the
capability to use other security procedures.
[X] REPETITIVE WIRES
For situations where funds are transferred periodically (minimum of one
instruction per calendar quarter) from an existing authorized account to the
same payee (destination bank and account number) and only the date and currency
amount are variable, a repetitive wire may be implemented. Repetitive wires will
be subject to a mutually agreed upon limit. If the payment order exceeds the
established limit, the instruction will be confirmed by telephone prior to
execution. Telephone confirmation is used to establish this process. Repetitive
wire instructions must be reconfirmed annually.
This alternative is recommended whenever funds are frequently transferred
between the same two accounts.
[X] TRANSFERS INITIATED BY FACSIMILE
The Client faxes wire transfer instructions directly to State Street Mutual Fund
Services. Standard security procedure requires the use of a random number test
key for all transfers. Every six months the Client receives test key logs from
State Street. The test key contains alpha-numeric characters, which the Client
puts on each document faxed to State Street. This procedure ensures all wire
instructions received via fax are authorized by the Client.
We provide this option for Clients who wish to batch wire instructions and
transmit these as a group to State Street Mutual Fund Services once or several
times a day.
[ ] AUTOMATED CLEARING HOUSE (ACH)
State Street receives an automated transmission or a magnetic tape from a Client
for the initiation of payment (credit) or collection (debit) transactions
through the ACH network. The transactions contained on each transmission or tape
must be authenticated by the Client. Clients using ACH must select one or more
of the following delivery options:
<PAGE> 55
FUND TRANSFER ADDENDUM [STATE STREET LOGO]
[ ] GLOBAL HORIZON INTERCHANGE AUTOMATED CLEARING HOUSE SERVICE
Transactions are created on a microcomputer, assembled into batches and
delivered to State Street via fully authenticated electronic transmissions in
standard NACHA formats.
[ ] Transmission from Client PC to State Street Mainframe with Telephone
Callback
[ ] Transmission from Client Mainframe to State Street Mainframe with Telephone
Callback
[ ] Transmission from DST Systems to State Street Mainframe with Encryption
[ ] Magnetic Tape Delivered to State Street with Telephone Callback
State Street is hereby instructed to accept funds transfer instructions only via
the delivery methods and security procedures indicated. The selected delivery
methods and security procedure(s) will be effective September 28, 1998 for
payment orders initiated by our organization.
Key Contact Information
Whom shall we contact to implement your selection(s)?
<TABLE>
<CAPTION>
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
<S> <C>
Sharon A. Lester Brian Smith
- ---------------------------------- ----------------------------------
Name Name
11 Greenway Plaza, Suite 100 11 Greenway Plaza, Suite 100
- ---------------------------------- ----------------------------------
Address Address
Houston, Texas 77046 Houston, Texas 77046
- ---------------------------------- ----------------------------------
City/State/Zip Code City/State/Zip Code
713-214-1738 713-214-1841
- ---------------------------------- ----------------------------------
Telephone Number Telephone Number
713-623-0832 713-623-0832
- ---------------------------------- ----------------------------------
Facsimile Number Facsimile Number
- ----------------------------------
SWIFT Number
- ----------------------------------
Telex Number
</TABLE>
<PAGE> 56
FUNDS TRANSFER ADDENDUM
TELEPHONE CONFIRMATION [STATE STREET LOGO]
CLIENT AIM Investment Securities Funds
---------------------------------------------------------
INVESTMENT MANAGER AIM Advisors, Inc.
--------------------------------------------
AUTHORIZED INITIATORS
Please Type or Print
Please provide a listing of your staff members who are currently authorized to
INITIATE wire transfer instructions to State Street:
<TABLE>
<CAPTION>
NAME TITLE (Specify whether SPECIMEN SIGNATURE
position is with Client
or Investment Manager)
<S> <C> <C>
PLEASE SEE ATTACHED LIST OF AUTHORIZED SIGNERS.
- ----------------------- -------------------------- ---------------------
- ----------------------- -------------------------- ---------------------
- ----------------------- -------------------------- ---------------------
- ----------------------- -------------------------- ---------------------
- ----------------------- -------------------------- ---------------------
</TABLE>
AUTHORIZED VERIFIERS
Please Type or Print
Please provide a listing of your staff members who will be CALLED BACK to verify
the initiation of repetitive wires of $10 million or more and all non repetitive
wire instructions:
<TABLE>
<CAPTION>
NAME CALLBACK PHONE NUMBER DOLLAR LIMITATION (IF ANY)
<S> <C> <C>
Sharon A. Lester 713-214-1738
- ----------------------- -------------------------- ---------------------
Brian Smith 713-214-1841
- ----------------------- -------------------------- ---------------------
Michelle Harrison 713-214-1163
- ----------------------- -------------------------- ---------------------
Stacey Frakes 713-214-1319
- ----------------------- -------------------------- ---------------------
</TABLE>
<PAGE> 57
- --------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
- --------------------------------------------------------------------------------
GLOBAL CUSTODY FEE SCHEDULE
AIM INVESTMENT SECURITIES FUNDS
AIM HIGH YIELD FUND II
- --------------------------------------------------------------------------------
I. ADMINISTRATION
- --------------------------------------------------------------------------------
Custody Service--Maintain custody of fund assets. Settle portfolio purchases
and sales. Report buy and sell fails. Determine and collect portfolio income.
Make cash disbursements and report cash transactions. Monitor corporate
actions. Withhold foreign taxes. File foreign tax reclaims.
The administration fee shown below is an annual charge, billed and payable
monthly, based on average monthly net assets. Fees in basis points per
portfolio.
ANNUAL FEES PER PORTFOLIO
<TABLE>
<CAPTION>
Fund Net Assets Custody Only
--------------- -----------
<S> <C>
First $50 Million 1/30 of 1%
Next $50 Million 1/60 of 1%
Next $175 Million 1/100 of 1%
Next $1,725 Million 1/150 of 1%
Over $2,000 Million 1/250 of 1%
</TABLE>
- --------------------------------------------------------------------------------
II. PORTFOLIO TRADES - FOR EACH LINE ITEM PROCESSED (DOMESTIC)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
State Street Bank Repos $7.00
DTC or Fed Book Entry $7.00
New York Physical Settlements $16.00
PTC Purchase, Sale, Deposit or Withdrawal $6.00
</TABLE>
1
<PAGE> 58
- --------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
- --------------------------------------------------------------------------------
Option Charge for each option written or $25.00
closing contract, per issue, per broker
Option expiration/Option exercised $15.00
Interest Rate Futures-no security movement $8.00
- --------------------------------------------------------------------------------
III. GLOBAL CUSTODY HOLDINGS FEES (BASIS POINTS PER PORTFOLIO PER ANNUM)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROUP I GROUP II GROUP III GROUP IV GROUP V
- ------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
3 BP 6 BP 12 BP 25 BP 50 BP
Australia Austria Bermuda Argentina Bahrain Lithuania
Canada Brazil Bolivia Belgium Bangladesh Luxembourg
Euroclear Denmark Czech Rep China Botswana Mauritius
Germany France Ecuador Finland Bulgaria Morocco
Ireland Indonesia Egypt Israel Chile Oman
Japan Netherlands Hong Kong Jordan Colombia Pakistan
New Zealand Italy Korea Croatia Peru
Singapore Norway Malaysia Cyprus Poland
South Africa Philippines Mexico Estonia Romania
Sweden Thailand Namibia Ghana Russia
Switzerland Venezuela Portugal Greece Slovenia
U.K. Slovak Rep Hungary Uruguay
Spain India Zambia
Sri Lanka Ivory Coast Zimbabwe
Swaziland Jamaica
Taiwan Kenya
Tunisia Latvia
Turkey Lebanon
</TABLE>
2
<PAGE> 59
- --------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IV. GLOBAL TRANSACTION CHARGES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROUP I GROUP II GROUP III GROUP IV GROUP V
- ------- -------- --------- -------- -------
<S> <C> <C> <C> <C>
$30 $60 $80 $100 $200
Australia Argentina Botswana Bahrain Bangladesh
Bermuda Austria Brazil China Bulgaria
Bolivia Belgium Chile Colombia Cyprus
Canada France Finland Croatia Hungary
Czech Rep Hong Kong Ghana Estonia Indonesia
Denmark Italy Israel Greece Latvia
Ecuador Jamaica Kenya India Lebanon
Egypt Jordan Malaysia Ireland Lithuania
Euroclear Morocco Mauritius Ivory Coast Luxembourg
Germany Namibia Mexico Oman Peru
Japan Netherlands New Zealand Pakistan Philippines
Korea Poland Norway Portugal Romania
Slovak Rep Spain Russia Singapore Slovenia
South Africa Sri Lanka Swaziland Turkey
Taiwan Switzerland Sweden
U.K. Thailand
Uruguay Tunisia
Venezuela
Zambia
Zimbabwe
</TABLE>
- --------------------------------------------------------------------------------
V. SPECIAL SERVICES
- --------------------------------------------------------------------------------
Fees for activities of a non-recurring nature such as fund
consolidation or reorganizations, extraordinary security shipments and
the preparation of special reports will be subject to negotiation.
Fees for tax accounting/recordkeeping for options, financial futures,
and other special items will be negotiated separately.
3
<PAGE> 60
- --------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VI. HOLDINGS CHARGES
- --------------------------------------------------------------------------------
PTC Paydowns, per issue per month. $3.00
- --------------------------------------------------------------------------------
VII. OUT-OF-POCKET EXPENSES
- --------------------------------------------------------------------------------
A billing for the recovery of applicable out-of-pocket expenses will be made
as of the end of each month. Out-of-pocket expenses include, but are not
limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer - $8.00 each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15.00
- --------------------------------------------------------------------------------
VIII. BALANCE CREDIT
- --------------------------------------------------------------------------------
A credit will be applied to each portfolio's monthly custody bill (excluding
out-of-pocket custody expenses) based on the average custody Demand Deposit
Account (DDA) balance during the month. This credit will be calculated by
applying 90% of the 90-day Treasury Bill rate in effect at month-end. Any
excess balance credits may be carried forward and applied to successive bills
incurred in the same calendar year.
4
<PAGE> 61
- --------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
- --------------------------------------------------------------------------------
AIM INVESTMENT SECURITIES FUNDS, STATES STREET BANK AND TRUST
ON BEHALF OF AIM HIGH YIELD FUND II COMPANY
By /s/ ROBERT H. GRAHAM By /s/ [ILLEGIBLE]
---------------------------------- -------------------------------
Title President Title Executive Vice President
------------------------------- ----------------------------
Date September 28, 1998 Date September 28, 1998
-------------------------------- -----------------------------
5
<PAGE> 1
EXHIBIT 9(a)(4)(ii)
AMENDMENT NO. 1
MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Master Administrative Services Agreement (the "Agreement"), dated
February 28, 1998, by and between AIM Investment Securities Funds, a Delaware
business trust, and A I M Advisors, Inc., a Delaware corporation, is hereby
amended as follows:
Appendix A to the Agreement is hereby deleted in its entirety and
replaced with the following:
"AIM INVESTMENT SECURITIES FUNDS
APPENDIX A TO MASTER ADMINISTRATIVE SERVICES AGREEMENT
AIM Limited Maturity Treasury Fund
AIM High Yield Fund II"
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: September 28, 1998
AIM INVESTMENT SECURITIES FUNDS
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
---------------------------- ----------------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
---------------------------- ----------------------------------
Assistant Secretary President
(SEAL)
<PAGE> 1
EXHIBIT 9(b)(1)(viii)
AMENDMENT NUMBER 4 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of June 30, 1998 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 Exhibit 1 of
the Agreement (the "Fund") and 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. Section 14(a) of the Agreement (as amended by Amendment Number 3) is
hereby deleted in its entirety and replaced with the following new Section
14(a):
"(a) This Agreement which became effective as of December 23, 1994 is
hereby extended and shall continue through December 31, 2002 (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 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."
2. Effective January 1, 1999, Section I "Shareholder Account Fees" of
Schedule C "Fee Schedule" (as amended by Amendment Number 3) is amended by
deleting Section I in its entirety and adding the following new Section I:
"I. SHAREHOLDER ACCOUNT FEES. The Fund shall pay the following
fees:
For the period beginning on January 1, 1999, and continuing through
December 31, 2002, 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 per shareholder account
-------------- ---------------------------
<S> <C> <C>
1-1.5 million $3.50
1.5-3 million $2.40
3-4 million $2.00
4-5 million $1.90
Exceeding 5 million $1.80
</TABLE>
<PAGE> 2
The Fund also shall pay FDISG Group an annualized fee of $1.60 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.
In addition, on January 1 of the years 2001 and 2002 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 seats. Includes six weeks of
technical training (Completed)
o Conversion of the GT Global Funds into the AIM Family of Funds.
Conversion estimated at 4500 hours of systems development
o License for up to 15 copies of FDISG's ACE+ (Automate Control
Environment) software as further defined in Schedule H
o Dedicated Programming Support equivalent to 1 Systems Manager, 4
Programmers, and 2 Business Systems Analysts
o Separate FSR processing cycle
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 (Completed)
o Implementation of the core TA system functionality identified in
Exhibit 1 of this Schedule C (Completed)
o Implementation of IWT Release 5.x functionality as identified in
Exhibit 2 of this Schedule C (Completed)
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."
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
<PAGE> 3
or other agent of either party is authorized to make any representation,
warranty, or other promises not expressly contained herein with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first above
written.
On behalf of the Funds and respective Portfolios and Classes set forth in
Exhibit 1 of the Agreement, as amended and as may be amended in the future from
time to time.
By: /s/ [ILLEGIBLE]
--------------------------------------
Title: AIM Fund Services, Inc.
-----------------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC
By: /s/ [ILLEGIBLE]
--------------------------------------
Title: Executive VP
-----------------------------------
<PAGE> 1
EXHIBIT 9(b)(1)(ix)
AMENDMENT NUMBER 5 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of July 1, 1998 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 Exhibit 1 of
the Agreement (the "Fund") and 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. Exhibit 1 of the Agreement is hereby deleted and replaced with the
Attached revised Exhibit 1.
2. Section III "Additional Fees" of Schedule C "Fee Schedule" is hereby
amended to add the following new subsection h:
"h. Fees for IMPRESS Plus COLD:
(i) IMPRESS Plus COLD Software License Fees - The Fund shall pay an
initial license fee of $302,469 (the "License Fee) based on 512
IMPRESS Plus COLD seats licensed, which includes the use of the
INSCI Software. The initial License Fee shall be financed over a
period of 36 months and be payable monthly in arrears in amounts of
$8,401.66. Thereafter, the then current monthly License Fee
payments shall continue so long as the Fund continues to license
and use the IMPRESS Plus COLD Software. License Fee payments shall
commence on the earlier of a) first production usage of IMPRESS
Plus COLD software or b) September 1, 1998.
(ii) IMPRESS Plus Software Usage Fees. In addition to the License
Fee set forth above, the Fund shall pay a monthly usage fee of
$9,728.00 (the "Usage Fee") based on 512 IMPRESS Plus COLD seats
licensed, which includes the use of the INSCI Software. The Usage
Fee shall commence on the earlier of a) first production usage of
IMPRESS Plus COLD software or b) September 1, 1998.
(iii) IMPRESS Plus COLD Installation Fees. - Thirty (30) days
following the execution of Amendment Number 4 to the Agreement and
receipt of an invoice, the Fund shall pay to FDISG one-time
installation fee of $140,000. Installation
<PAGE> 2
covers 3 line data application and 1 Intelligent Data Stream
application. Installation activities include:
o Hardware installation at FDISG site
o IMPRESS Plus COLD application installation
o IMPRESS Plus COLD third party software installation
o Network Design Assistance
o Project Management
o Post Installation Support
(iv) Additional IMPRESS Plus COLD Fees:
o One-time fee for each additional Line Data Application - $10,000
o One-time fee for each additional Intelligent Data Stream
Application - $20,000
o Application Enhancements - $150/hr
(v) Maintenance and Support for IMPRESS Plus COLD includes items
listed in Section III.b above and the following:
o Report conversion to Express Delivery/IMPRESS Plus COLD
o Hardware support and maintenance
(v) IMPRESS Plus COLD License and Usage and IMPRESS Plus COLD
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 COLD 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
(vi) IMPRESS Plus COLD Hardware and Network Fees:
<TABLE>
<CAPTION>
One-time* Monthly Support Fee*
--------- --------------------
(Due Upon Execution)
<S> <C> <C>
Hardware $308,729.52 $3276.27
</TABLE>
* Fee is subject to change based on actual vendor costs"
<PAGE> 3
3. Section 1.3 of Schedule G is amended by adding the following:
"Notwithstanding the foregoing provisions of this Section 1.3 to the
contrary, FDISG shall install and maintain the equipment associated
with FDISG's IMPRESS Plus COLD product set forth in Exhibit 2.3 of this
Schedule G at its facility for the fees set forth in Section III.h. of
Schedule C. At the expense of the Fund, upon termination of the
Agreement or at the request of the Funds FDISG shall deliver to the
Fund such equipment."
4. Exhibit 1 of Schedule G is hereby amended as follows:
(a) Section 1.1 is amended by adding "IMPRESS Plus COLD Release 6.0" to
the list of IMPRESS Plus software products.
(b) Section 2.1 "FDISG Provided Third Party Software" is amended by
adding the following new section 2.1.3:
"2.1.3 INSCI Software. The following Third Party Software is
licensed directly to the Fund by FDISG subject to the terms and
conditions set forth in this Agreement:
Advanced COINSERV Software w/Hierarchical Storage Mgr.
WINCOINS Software
Vector Forms Software
Jukebox Driver Software, Two, 12" Drives
Metacode Server License
CDP Metacode Viewer, 300 Concurrent Users
Metacode Desktop & Converter
Operating Kit (Includes Dial-In for Trouble Shooting)"
5. Exhibit 1.1 of Schedule G "Specifications" is hereby amended to add the
IMPRESS Plus COLD Specifications attached hereto as Exhibit 1.1a of Schedule G.
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> 4
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/ [ILLEGIBLE]
-----------------------------------
Title: Senior Vice President
--------------------------------
FMT DATA INVESTOR SERVICES GROUP, INC.
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: Executive VP
--------------------------------
<PAGE> 5
EXHIBIT 1
List of Funds
<TABLE>
<CAPTION>
Fund# Fund Name
<S> <C>
1 AIM WEINGARTEN FUND - CLASS A
2 AIM CONSTELLATION FUND - CLASS A
6 AIM BALANCED FUND - CLASS A
7 AIM LIMITED MATURITY TREASURY FUND - CL
8 AIM TAX-FREE INTERMEDIATE SHARES
10 AIM CHARTER FUND - CLASS A
16 AIM INTERNATIONAL EQUITY FUND - CLASS A
17 AIM HIGH INCOME MUNICIPAL FUND - CLASS
30 AIM EUROPEAN DEVELOPMENT FUND - CLASS A
31 AIM ASIAN GROWTH FUND - CLASS A
34 AIM SMALL CAP OPPORTUNITIES FUND - CLASS
81 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS
82 AIM GLOBAL GROWTH FUND - CLASS A
83 AIM GLOBAL INCOME FUND - CLASS A
301 AIM WEINGARTEN FUND - CLASS C
302 AIM CONSTELLATION FUND - CLASS C
303 AIM MUNICIPAL BOND FUND - CLASS C
305 AIM VALUE FUND - CLASS C
306 AIM BALANCED FUND - CLASS C
308 AIM GLOBAL UTILITIES FUND - CLASS C
310 AIM CHARTER FUND - CLASS C
314 AIM CAPITAL DEVELOPMENT FUND - CLASS C
315 AIM BLUE CHIP FUND - CLASS C
316 AIM INTERNATIONAL EQUITY FUND - CLASS C
317 AIM HIGH INCOME MUNICIPAL FUND - CLASS
320 AIM ADVISOR LARGE CAP VALUE FUND - CLASS
321 AIM ADVISOR INCOME FUND - CLASS C
322 AIM ADVISOR FLEX FUND - CLASS C
323 AIM ADVISOR CASH MANAGEMENT FUND - CLASS
324 AIM ADVISOR MULTIFLEX FUND - CLASS C
325 AIM ADVISOR REAL ESTATE FUND - CLASS C
326 AIM ADVISOR INTERNATIONAL VALUE FUND -
330 AIM EUROPEAN DEVELOPMENT FUND - CLASS C
331 AIM ASIAN GROWTH FUND - CLASS C
350 AIM SELECT GROWTH FUND - CLASS C
360 AIM INTERMEDIATE GOVERNMENT FUND - CLASS
365 AIM INCOME FUND - CLASS C
375 AIM HIGH YIELD FUND - CLASS C
380 AIM MONEY MARKET FUND - CLASS C
381 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS
382 AIM GLOBAL GROWTH FUND - CLASS C
383 AIM GLOBAL INCOME FUND - CLASS C
384 AIM NEW DIMENSION FUND - CLASS C
401 AIM MONEY MARKET FUND - CLASS A
402 AIM INCOME FUND - CLASS A
403 AIM MUNICIPAL BOND FUND - CLASS A
404 AIM INTERMEDIATE GOVERNMENT FUND - CLASS
405 AIM VALUE FUND - CLASS A
</TABLE>
Page 1
<PAGE> 6
EXHIBIT 1
List of Funds
<TABLE>
<S> <C>
406 AIM SELECT GROWTH FUND - CLASS A
407 AIM AGGRESSIVE GROWTH FUND - CLASS A
408 AIM GLOBAL UTILITIES FUND - CLASS A
421 AIM CASH RESERVE SHARES
422 AIM TAX-EXEMPT CASH FUND
425 AIM HIGH YIELD FUND - CLASS A
430 CG GUARANTEED ACCT 71-73
431 CG GUARANTEED ACCT 74-77
432 CG GUARANTEED ACCT 1978
433 CG GUARANTEED ACCT 1979
434 CG GUARANTEED ACCT 1980
435 CG GUARANTEED ACCT 1981
436 CG GUARANTEED ACCT 1982
437 CG GUARANTEED ACCT 1983
438 CG GUARANTEED ACCT 1984
439 CG GUARANTEED ACCT 1985
440 CG GUARANTEED ACCT 1985A
441 CG GUARANTEED ACCT 1985B
442 CG GUARANTEED ACCT 1986
443 CG GUARANTEED ACCT 1986A
444 CG GUARANTEED ACCT 1987
445 CG GUARANTEED ACCT 1988
446 CG GUARANTEED ACCT 1989
447 CG GUARANTEED ACCT 1990
448 CG GUARANTEED ACCT 1991
449 CG GUARANTEED ACCT 1992
460 AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
514 AIM CAPITAL DEVELOPMENT FUND - CLASS A
515 AIM BLUE CHIP FUND - CLASS A
520 AIM ADVISOR LARGE CAP VALUE FUND - CLASS
521 AIM ADVISOR INCOME FUND - CLASS A
522 AIM ADVISOR FLEX FUND - CLASS A
523 AIM ADVISOR CASH MANAGEMENT FUND - CLASS
524 AIM ADVISOR MULTIFLEX FUND - CLASS A
525 AIM ADVISOR REAL ESTATE FUND - CLASS A
526 AIM ADVISOR INTERNATIONAL VALUE FUND -
541 AIM DOLLAR FUND CLASS A
542 AIM NEW PACIFIC GROWTH FUND CLASS A
543 AIM EUROPE GROWTH FUND CLASS A
544 AIM JAPAN GROWTH FUND CLASS A
546 AIM MID CAP GROWTH FUND CLASS A
547 AIM WORLDWIDE GROWTH FUND CLASS A
548 AIM STRATEGIC INCOME FUND CLASS A
549 AIM GLOBAL GOVERNMENT INCOME FUND CLASS
551 AIM GLOBAL HEALTH CARE FUND CLASS A
553 AIM LATIN AMERICAN GROWTH FUND CLASS A
556 AIM EMERGING MARKETS FUND CLASS A
557 AIM FINANCIAL SERVICES FUND CLASS A
558 AIM GLOBAL HIGH INCOME - CLASS A
</TABLE>
Page 2
<PAGE> 7
EXHIBIT 1
List of Funds
<TABLE>
<S> <C>
559 AIM GLOBAL INFRASTRUCTURE - CLASS A
561 AIM GLOBAL RESOURCES - CLASS A
562 AIM GLOBAL CONSUMER PRODUCTS & SERVICES
563 AIM AMERICA VALUE FUND - CLASS A
564 AIM SMALL CAP EQUITY FUND - CLASS A
576 AIM DEVELOPING MARKETS FUND - CLASS A
577 AIM INTERNATIONAL GROWTH FUND - CLASS A
578 AIM GLOBAL GROWTH AND INCOME FUND - CLASS
579 AIM GLOBAL TELECOMMUNICATIONS FUND - CLASS
584 AIM NEW DEVELOPING MARKETS FUND - CLASS
602 AIM CONSTELLATION FUND - CLASS B
614 AIM CAPITAL DEVELOPMENT FUND - CLASS B
615 AIM BLUE CHIP FUND - CLASS B
617 AIM HIGH INCOME MUNICIPAL FUND - CLASS
620 AIM ADVISOR LARGE CAP VALUE FUND - CLASS
622 AIM ADVISOR FLEX FUND - CLASS B
624 AIM ADVISOR MULTIFLEX FUND - CLASS B
625 AIM ADVISOR REAL ESTATE FUND - CLASS B
626 AIM ADVISOR INTERNATIONAL VALUE FUND - CLASS
630 AIM EUROPEAN DEVELOPMENT FUND - CLASS B
631 AIM ASIAN GROWTH FUND - CLASS B
634 AIM SMALL CAP OPPORTUNITIES - CLASS B
640 AIM WEINGARTEN FUND - CLASS B
641 AIM DOLLAR FUND CLASS B
642 AIM NEW PACIFIC GROWTH FUND CLASS B
643 AIM EUROPE GROWTH FUND CLASS B
644 AIM JAPAN GROWTH FUND CLASS B
645 AIM CHARTER FUND - CLASS B
646 AIM MID CAP GROWTH FUND CLASS B
647 AIM WORLDWIDE GROWTH FUND CLASS B
648 AIM STRATEGIC INCOME FUND CLASS B
649 AIM GLOBAL GOVERNMENT INCOME FUND CLASS
650 AIM SELECT GROWTH FUND - CLASS B
651 AIM GLOBAL HEALTH CARE FUND CLASS B
653 AIM LATIN AMERICAN GROWTH FUND CLASS B
655 AIM GLOBAL UTILITIES FUND - CLASS B
656 AIM EMERGING MARKETS FUND CLASS B
657 AIM GLOBAL FINANCIAL SERVICES FUND CLASS
658 AIM GLOBAL HIGH INCOME FUND CLASS B
659 AIM GLOBAL INFRASTRUCTURE FUND CLASS B
660 AIM INTERMEDIATE GOVERNMENT FUND - CLASS
661 AIM GLOBAL RESOURCES FUND CLASS B
662 AIM GLOBAL CONSUMER PRODUCTS AND SERVICE
663 AIM AMERICA VALUE FUND CLASS B
664 AIM SMALL CAP EQUITY FUND CLASS B
665 AIM INCOME FUND - CLASS B
670 AIM MUNICIPAL BOND FUND - CLASS B
675 AIM HIGH YIELD FUND - CLASS B
676 AIM DEVELOPING MARKETS FUND CLASS B
</TABLE>
Page 3
<PAGE> 8
EXHIBIT I
List of Funds
<TABLE>
<S> <C>
677 AIM INTERNATIONAL GROWTH FUND CLASS B
678 AIM GLOBAL GROWTH AND INCOME FUND CLASS
679 AIM GLOBAL TELECOMMUNICATIONS FUND CLASS
680 AIM MONEY MARKET FUND - CLASS B
684 AIM NEW DIMENSION FUND CLASS B
685 AIM BALANCED FUND - CLASS B
690 AIM VALUE FUND - CLASS B
691 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS
692 AIM GLOBAL GROWTH FUND - CLASS B
693 AIM GLOBAL INCOME FUND - CLASS B
694 AIM INTERNATIONAL EQUITY FUND. - CLASS B
695 AIM FLOATING RATE FUND
800 SHORT-TERM INVESTMENTS TRUST - TREASURY
841 AIM DOLLAR FUND ADVISOR CLASS
842 AIM NEW PACIFIC GROWTH ADVISOR CLASS
843 AIM EUROPE GROWTH ADVISOR CLASS
844 AIM JAPAN GROWTH ADVISOR CLASS
846 AIM MID CAP GROWTH ADVISOR CLASS
847 AIM WORLDWIDE GROWTH ADVISOR CLASS
848 AIM STRATEGIC INCOME ADVISOR CLASS
849 AIM GLOBAL GOVT INCOME ADVISOR CLASS
851 AIM GLOBAL HEALTH CARE ADVISOR CLASS
853 AIM LATIN AMERICAN GROWTH ADVISOR CLASS
856 AIM EMERGING MARKETS ADVISOR CLASS
857 AIM GLOBAL FINANCIAL SERVICES ADVISOR CLASS
858 AIM GLOBAL HIGH INCOME ADVISOR CLASS
859 AIM GLOBAL INFRASTRUCTURE ADVISOR CLASS
861 AIM GLOBAL RESOURCES ADVISOR CLASS
862 AIM GLOBAL CONSUMER PRODUCTS & SERVICES
863 AIM AMERICAN VALUE FUND ADVISOR CLASS
864 AIM SMALL CAP EQUITY ADVISOR CLASS
876 AIM DEVELOPING MARKETS ADVISOR CLASS
877 AIM INTERNATIONAL GROWTH ADVISOR CLASS
878 AIM GLOBAL GROWTH & INCOME ADVISOR CLASS
879 AIM GLOBAL TELECOMMUNICATIONS ADVISOR CLASS
884 AIM NEW DIMENSION ADVISOR CLASS
</TABLE>
Page 4
<PAGE> 9
EXHIBIT 1.1a OF SCHEDULE G
SPECIFICATIONS
TABLE OF CONTENTS
III. HIGH LEVEL OVERVIEW OF IMPRESS PLUS FUNCTIONALITY
E. Computer Output to Laser Disc (COLD)
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
1994,1995,1996,1997
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> 10
COMPUTER OUTPUT TO LASER DISC (COLD)
IMPRESS PLUS COMPUTER OUTPUT TO LASER DISC (COLD)
The IMPRESS Plus COLD module is a client/server based, graphical user interface
(GUI) system designed to 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:
STATEMENTS AND TAXFORMS
IMPRESS Plus COLD provides the client with on-line access to shareholder and
broker statements and tax forms. The print mail output stream is stored on
optical platters for retrieval and printing later. The forms and statements can
be searched for on-line through a common browse window integrated with the
IMPRESS Plus Imaging application. Daily output journals can also be migrated to
on-line access eliminating microfiche.
TECHNICAL OVERVIEW
IMPRESS Plus Cold is a high-speed, electronic document storage and retrieval
system which utilizes the high-density, low-cost storage capabilities of optical
and RAID disks. IMPRESS Plus COLD operates in a true client-server environment
and has the capability to simultaneously store multiple document types in a
single system. Among these document types are traditional Line Data; AFP;
MetaCode; DJDE; Scanned Images, etc. Each of these data types can be stored on a
single system and are all viewed with a common viewer.
IMPRESS Plus utilizes third-party Metacode composition software from Gentext,
Inc. and third-party viewing software from CDP for local viewing and Adobe
Intranet/Internet viewing.
<PAGE> 11
EXHIBIT 2.3 OF SCHEDULE C
IMPRESS PLUS COLD
EQUIPMENT LIST AND NETWORK CONFIGURATION
<TABLE>
<CAPTION>
QUANTITY CATEGORY DESCRIPTION
=================================================================================
<S> <C> <C>
1 JUKEBOX Phillips 12Gb Tower Drive w/onsite installation
- ---------------------------------------------------------------------------------
2 JUKEBOX Phillips 6000 series media (10 to a box)
- ---------------------------------------------------------------------------------
1 JUKEBOX Cygnet 1802-2 with Philips Drives and SCSI Robotics
- ---------------------------------------------------------------------------------
1 JUKEBOX COLD Feet
- ---------------------------------------------------------------------------------
1 SUN CPU SUN Ultra 3000 base, CD-ROM, Solaris license, Cooling
package, (2) 25OMHZ Cpu's 4mb Cache, (1) CPU/Memory
Board/SharedApp
- ---------------------------------------------------------------------------------
2 SUN CPU SUN Sbus I/0 Board
- ---------------------------------------------------------------------------------
2 SUN CPU SUN 256Mb RAM Kit
- ---------------------------------------------------------------------------------
2 SUN CPU SUN 7200 RPM 9.1Gb Internal Hard Drive
- ---------------------------------------------------------------------------------
2 SUN CPU Enterprise Power/Cooling Module 300W
- ---------------------------------------------------------------------------------
1 SUN CPU Second Peripheral Power Supply
- ---------------------------------------------------------------------------------
2 SUN CPU X1052A Fast Differential/Buffered E-Net Card (SCSI
Controller)
- ---------------------------------------------------------------------------------
2 SUN CPU X1062A fast Wide Differential Sbus Card (SCSI Controller)
- ---------------------------------------------------------------------------------
1 SUN CPU SUN 17" Color Monitor and TGX Card
- ---------------------------------------------------------------------------------
1 SUN CPU SUN DLT7000 35-7OGb External Tape Drive w/50-68 pin
cable
- ---------------------------------------------------------------------------------
1 IBM Netfiniity Rack Cabinet with Power Supply
- ---------------------------------------------------------------------------------
1 DISK SUB Data General Clarion 2900D Raid Array w/2 SPs, and 3 PS's
(20) Drive Chassis
- ---------------------------------------------------------------------------------
1 DISK SUB DG Clarion 64mb mirrored cache upgrade
- ---------------------------------------------------------------------------------
2 DISK SUB Solaris Interface Kit
- ---------------------------------------------------------------------------------
5 DISK SUB Data General 7200 RPM 18Gb Disk Drives
- ---------------------------------------------------------------------------------
1 UPS Exide Electronics Powerware Plus 12 10 Kva UPS for SUN
CPU, DISK SUB and JUKEBOX
- ---------------------------------------------------------------------------------
1 UPS Exide Power Distribution Module for Powerware Plus 12
W/(1) L5.30 and (3) 5-15 receptacles
- ---------------------------------------------------------------------------------
1 NDM NOM TCP-IP 2 Concurrent Sessions SUN
- ---------------------------------------------------------------------------------
3 PREPRO PC Config #1
- ---------------------------------------------------------------------------------
1 SUPPORT PC Config #1/software/modem
- ---------------------------------------------------------------------------------
2 CABLES 25' Differential SCSI Cables (M) HD68 Thumbscrews (M)
- ---------------------------------------------------------------------------------
2 CABLES Active Differential Terminators Min DB-50
=================================================================================
</TABLE>
<PAGE> 1
EXHIBIT 10
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 "Organization of the Trust - Legal Counsel" in the
Prospectus for the retail Class of AIM Limited Maturity Treasury Fund and under
the caption "Miscellaneous Information - Legal Matters" in the Statement of
Additional Information relating thereto, and under the caption "General
Information - Legal Counsel" in the Prospectus for the Institutional Class of
AIM Limited Maturity Treasury Fund, which are included in Post-Effective
Amendment No. 10 to the Registration Statement under the Securities Act of 1933
(No. 33-39519) and Amendment No. 14 to the Registration Statement under the
Investment Company Act of 1940 (No. 811-5686) on Form N-1A of AIM Investment
Securities Funds.
/S/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
--------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
November 6, 1998
<PAGE> 1
EXHIBIT 11(a)
[LETTERHEAD OF DECHERT PRICE & RHOADS]
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. 10 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. 10 to the registration
statement of AIM Investment Securities Funds on Form N-1A.
Very truly yours,
/s/ DECHERT PRICE & RHOADS
<PAGE> 1
EXHIBIT 11(b)
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees and Shareholders of
AIM Investment Securities Funds:
We consent to the use of our report on AIM Limited Maturity Treasury Fund (a
series of AIM Investment Securities Funds) dated September 4, 1998 included
herein and to the references to our firm under the heading "Financial
Highlights" in the Prospectuses and "Audit Reports" or "Reports" in the
Statement of Additional Information.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
November 5, 1998
<PAGE> 1
[LETTERHEAD OF A I M ADVISORS, INC.]
EXHIBIT 13
September 30, 1998
Board of Trustees
AIM Investment Securities Funds
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
RE: INITIAL CAPITAL INVESTMENT IN NEW PORTFOLIO OF
AIM INVESTMENT SECURITIES FUNDS (THE "FUND")
Ladies and Gentlemen:
We are purchasing shares of the Fund for the purpose of providing
initial investment for a new investment portfolio of the Fund. The purpose of
this letter is to set forth our understanding of the conditions of and our
promises and representations concerning this investment.
We hereby agree to purchase shares equal to the following dollar
amount for the portfolio:
<TABLE>
<S> <C>
AIM High Yield Fund II - Class A $ 3,000,000
-----------
AIM High Yield Fund II - Class B $ -0-
-----------
AIM High Yield Fund II - Class C $ -0-
-----------
</TABLE>
We understand that the initial net asset value per share of each class
of the portfolio named above will be $10.00.
We hereby represent that we are purchasing these shares solely for our
own account and solely for investment purposes without any intent of
distributing or reselling said shares. We further represent that disposition of
said shares will only be by direct redemption to or repurchase by the Fund.
We further agree to provide the applicable Fund with at least ten
days' advance written notice of any intended redemption and agree that we will
work with the Fund with respect to the amount of such redemption so as not to
place a burden on the Fund and to facilitate normal portfolio management of the
Fund.
Sincerely yours,
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
---------------------------
Robert H. Graham
<PAGE> 1
EXHIBIT 14(g)
INSTRUCTIONS FOR THE AIM EDUCATION IRA
APPLICATION FORM
The Education IRA Application Form is used to establish an AIM Education IRA
appointing Institutional Trust Company as Custodian. An Education IRA account
can only be established on behalf of a child under the age of 18. (For asset
transfers and rollovers, an AIM Education IRA may be established for a
Designated Beneficiary between the ages of 18 and 29.)
1. Complete Sections 1 through 6 of the Education IRA Application Form on pages
11 through 13 of this booklet.
2. Include the Designated Beneficiary's (child's) Social Security Number and
date of birth in Section 1 of the Education IRA Application. Information
concerning the person who will be responsible for the account as well as the
person establishing the account must be included. The Social Security
Numbers are required to open an account. (If the Depositor is foreign and
does not have a Social Security Number, please write "foreign" in the space
provided.)
3. Indicate the AIM Fund(s) in which you would like your deposit to be invested
in Section 5 of the Application.
4. Be sure that you include a check for at least $250 or complete an Education
IRA Asset Transfer Form on pages 17 through 18. Subsequent investments can
be made subject to a minimum of $50.
5. The person who will be responsible for the account should complete Section
6. The Responsible Individual must be a parent or guardian of the Designated
Beneficiary (child).
6. To activate the account, please submit the completed AIM Education IRA
Application and check to:
----------------------------------------------------------------------------
REGULAR MAIL -OR- OVERNIGHT DELIVERIES ONLY
----------------------------------------------------------------------------
--------------------------------- -----------------------------------
A I M FUND SERVICES, INC. A I M FUND SERVICES, INC.
P.O. BOX 4739 11 GREENWAY PLAZA, SUITE 763
HOUSTON, TX 77210-4739 HOUSTON, TX 77046
--------------------------------- -----------------------------------
MAKE ALL CHECKS PAYABLE TO INSTITUTIONAL TRUST COMPANY.
Call Client Services at 800-959-4246 if you have any questions about The AIM
Education IRA.
The cost of an AIM Education IRA is $10 per year, assessed as the annual
custodian fee. This amount is deducted from the Education IRA account and cannot
be billed directly.
HELPFUL DEFINITIONS
You may refer to the following definitions when filling out the Application
Form:
o DEPOSITOR. The person establishing the custodian account on behalf of a
child under the age of 18. The Depositor does not have to be the Responsible
Individual or a family member.
o DESIGNATED BENEFICIARY. The person (child) on whose behalf the account is
being established.
o RESPONSIBLE INDIVIDUAL. The person who will be responsible for managing the
account. For a newly established account, the Responsible Individual must be
a parent or a guardian of the Designated Beneficiary (child).
10
<PAGE> 2
EDUCATION IRA APPLICATION [AIM LOGO APPEARS HERE]
To open an AIM Education IRA account.
Complete Sections 1 - 6. Return completed application and check to: A I M Fund
Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. Phone: 800-959-4246.
- --------------------------------------------------------------------------------
1. REGISTRATION INFORMATION (Please print or type.)
Depositor's Name
--------------------------------------------------------
First Name Middle Last Name
Depositor's Social Security Number
--------------------------------------
(Required to Open Account)
Home Telephone ( ) Work Telephone ( )
--- -------------- --- --------------
Designated Beneficiary's
(Child's) Name
---------------------------------------------------------
First Name Middle Last Name
Designated Beneficiary's Social Security Number
-------------------------
(Required to Open Account)
BirthDate / /
----- ----- -----
Month Day Year
Responsible Individual's Name
------------------------------------------
First Name Middle Last Name
Address
----------------------------------------------------------------
Street
------------------------------------------------------------------------
City State ZIP Code
- --------------------------------------------------------------------------------
2. CONTRIBUTION (Indicate type of contribution.)
[ ] REGULAR - Contribution for tax year _______. Contributions for the
current calendar year must be made by December 31. (Designated
Beneficiary must be under the age of 18.)
[ ] ROLLOVER - Represents a rollover from an existing Education IRA.
[ ] TRANSFER - Transfer from another Education IRA account. Please complete
an Education IRA Asset Transfer Form.
- --------------------------------------------------------------------------------
3. TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, I authorize the Transfer Agent to accept
instructions from any person to exchange shares in the account(s) by
telephone in accordance with the procedures and conditions set forth in the
Fund's current prospectus.
[ ] I DO NOT want the Telephone Exchange Privilege.
- --------------------------------------------------------------------------------
4. REDUCED SALES CHARGE (Optional)
RIGHT OF ACCUMULATION (This option is for Class A shares only.)
I apply for Right of Accumulation reduced sales charges based on the
following accounts in The AIM Family of Funds--Registered Trademark--:
Fund Account #
------------------------------------- ------------------
Fund Account #
------------------------------------- ------------------
Fund Account #
------------------------------------- ------------------
LETTER OF INTENT (This option is for Class A shares only.)
I agree to the Letter of Intent provisions in the Fund's current prospectus.
I plan to invest during a 13-month period a dollar amount of at least:
[ ] $ 25,000 [ ] $ 50,000 [ ] $100,000 [ ] $250,000
[ ] $500,000 [ ] $1,000,000
11
<PAGE> 3
5. FUND INVESTMENT
Indicate Fund(s) and contribution amount(s).
MAKE CHECK PAYABLE TO INSTITUTIONAL TRUST COMPANY. Minimum initial
investment in an Education IRA is $250. Subsequent investments can be made
subject to a minimum of $50.
<TABLE>
<CAPTION>
Fund Amount of Investment Class of Shares (check one)
<S> <C> <C> <C> <C>
[ ] AIM Advisor Flex Fund $___________________ [ ] A Shares (522) [ ] B Shares (622) [ ] C Shares (322)
[ ] AIM Advisor International Value Fund ___________________ [ ] A Shares (526) [ ] B Shares (626) [ ] C Shares (326)
[ ] AIM Advisor Large Cap Value Fund ___________________ [ ] A Shares (520) [ ] B Shares (620) [ ] C Shares (320)
[ ] AIM Advisor MultiFlex Fund ___________________ [ ] A Shares (524) [ ] B Shares (624) [ ] C Shares (324)
[ ] AIM Advisor Real Estate Fund ___________________ [ ] A Shares (525) [ ] B Shares (625) [ ] C Shares (325)
[ ] AIM Aggressive Growth Fund(1) ___________________ Fund Currently Closed To New Investors (407)
[ ] AIM Asian Growth Fund ___________________ [ ] A Shares (031) [ ] B Shares (631) [ ] C Shares (331)
[ ] AIM Balanced Fund ___________________ [ ] A Shares (006) [ ] B Shares (685) [ ] C Shares (306)
[ ] AIM Basic Value Fund(2)(3) ___________________ [ ] A Shares (563) [ ] B Shares (663)
[ ] AIM Blue Chip Fund ___________________ [ ] A Shares (515) [ ] B Shares (615) [ ] C Shares (315)
[ ] AIM Capital Development Fund ___________________ [ ] A Shares (514) [ ] B Shares (614) [ ] C Shares (314)
[ ] AIM Charter Fund ___________________ [ ] A Shares (010) [ ] B Shares (645) [ ] C Shares (310)
[ ] AIM Constellation Fund ___________________ [ ] A Shares (002) [ ] B Shares (602) [ ] C Shares (302)
[ ] AIM Developing Markets Fund(2) ___________________ [ ] A Shares (576) [ ] B Shares (676)
[ ] AIM Emerging Markets Debt Fund(2)(3) ___________________ [ ] A Shares (558) [ ] B Shares (658)
[ ] AIM Emerging Markets Fund(2) ___________________ [ ] A Shares (556) [ ] B Shares (656)
[ ] AIM Europe Growth Fund(2) ___________________ [ ] A Shares (543) [ ] B Shares (643)
[ ] AIM European Development Fund ___________________ [ ] A Shares (030) [ ] B Shares (630) [ ] C Shares (330)
[ ] AIM Global Aggressive Growth Fund ___________________ [ ] A Shares (081) [ ] B Shares (691) [ ] C Shares (381)
[ ] AIM Global Consumer Products & Services
Fund(2) ___________________ [ ] A Shares (562) [ ] B Shares (662)
[ ] AIM Global Financial Services Fund(2) ___________________ [ ] A Shares (557) [ ] B Shares (657)
[ ] AIM Global Government Income Fund(2) ___________________ [ ] A Shares (549) [ ] B Shares (649)
[ ] AIM Global Growth Fund ___________________ [ ] A Shares (082) [ ] B Shares (692) [ ] C Shares (382)
[ ] AIM Global Growth & Income Fund(2) ___________________ [ ] A Shares (578) [ ] B Shares (678)
[ ] AIM Global Health Care Fund(2) ___________________ [ ] A Shares (551) [ ] B Shares (651)
[ ] AIM Global Income Fund ___________________ [ ] A Shares (083) [ ] B Shares (693) [ ] C Shares (383)
[ ] AIM Global Infrastructure Fund(2) ___________________ [ ] A Shares (559) [ ] B Shares (659)
[ ] AIM Global Resources Fund(2) ___________________ [ ] A Shares (561) [ ] B Shares (661)
[ ] AIM Global Telecommunications Fund(2) ___________________ [ ] A Shares (579) [ ] B Shares (679)
[ ] AIM Global Trends Fund(2)(3) ___________________ [ ] A Shares (584) [ ] B Shares (684) [ ] C Shares (384)
[ ] AIM Global Utilities Fund ___________________ [ ] A Shares (408) [ ] B Shares (655) [ ] C Shares (308)
[ ] AIM High Yield Fund ___________________ [ ] A Shares (425) [ ] B Shares (675) [ ] C Shares (375)
[ ] AIM Income Fund ___________________ [ ] A Shares (402) [ ] B Shares (665) [ ] C Shares (365)
[ ] AIM Intermediate Government Fund ___________________ [ ] A Shares (404) [ ] B Shares (660) [ ] C Shares (360)
[ ] AIM International Equity Fund ___________________ [ ] A Shares (016) [ ] B Shares (694) [ ] C Shares (316)
[ ] AIM International Growth Fund(2) ___________________ [ ] A Shares (577) [ ] B Shares (677)
[ ] AIM Japan Growth Fund(2) ___________________ [ ] A Shares (544) [ ] B Shares (644)
[ ] AIM Latin American Growth Fund(2) ___________________ [ ] A Shares (553) [ ] B Shares (653)
[ ] AIM Limited Maturity Treasury Fund ___________________ Only "A Shares" Available (007)
[ ] AIM Mid Cap Equity Fund(2)(3) ___________________ [ ] A Shares (546) [ ] B Shares (646)
[ ] AIM Money Market Fund ___________________ [ ] A Shares (401) [ ] B Shares (680) [ ] C Shares (380)
[ ] AIM Cash Reserve Shares (421)
[ ] AIM New Pacific Growth Fund(2) ___________________ [ ] A Shares (542) [ ] B Shares (642)
[ ] AIM Select Growth Fund(4) ___________________ [ ] A Shares (406) [ ] B Shares (650) [ ] C Shares (350)
[ ] AIM Small Cap Growth Fund(2)(3) ___________________ [ ] A Shares (564) [ ] B Shares (664)
[ ] AIM Strategic Income Fund(2) ___________________ [ ] A Shares (548) [ ] B Shares (648)
[ ] AIM Value Fund ___________________ [ ] A Shares (405) [ ] B Shares (690) [ ] C Shares (305)
[ ] AIM Weingarten Fund ___________________ [ ] A Shares (001) [ ] B Shares (640) [ ] C Shares (301)
[ ] AIM Worldwide Growth Fund(2) ___________________ [ ] A Shares (547) [ ] B Shares (647)
Total $___________________
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where AIM Cash Reserve Shares will be
purchased. If you are funding an Education IRA account through a transfer,
please indicate the contribution amounts both in this section and in
Section 3 of the Asset Transfer Form. (1) AIM Aggressive Growth Fund closed
to new investors on June 5, 1997. (2) Effective May 29, 1998, A I M
Advisors, Inc. became advisor to the former GT Global Funds. (3) Effective
September 8, 1998, the fund names of AIM Mid Cap Growth Fund, AIM Small Cap
Equity Fund, AIM America Value Fund, AIM Global High Income Fund and AIM
New Dimension Fund changed to AIM Mid Cap Equity Fund, AIM Small Cap Growth
Fund, AIM Basic Value Fund, AIM Emerging Markets Debt Fund and AIM Global
Trends Fund, respectively. (4) On May 1, 1998, AIM Growth Fund was renamed
AIM Select Growth Fund.
12
<PAGE> 4
- --------------------------------------------------------------------------------
6. AUTHORIZATION AND SIGNATURE
I hereby appoint Institutional Trust Company as Custodian of this A I M
Distributors, Inc. Education Individual Retirement Account (IRA) for benefit
of the above-named Designated Beneficiary. I accept the responsibilities
over this account as set forth in the Education Individual Retirement
Custodial Account Agreement (the "Agreement"). I have received and read the
current prospectus of the investment company(ies) selected in this Agreement
and have read and understand the Agreement and disclosure statement and
consent to the custodial account fees as specified. I understand that a $10
annual AIM Fund IRA Maintenance Fee will be deducted in early December from
the established AIM Education IRA account.
Under the penalties of perjury I certify by signing this Application as
provided below that:
The number shown in Section 1 of this Application is the correct Social
Security Number of the Designated Beneficiary. I understand that failure to
provide the Social Security Number may result in backup withholding on
payments relating to the account and/or in the Designated Beneficiary's
inability to qualify for treaty withholding rates.
SIGNATURE PROVISIONS OF THE RESPONSIBLE INDIVIDUAL
Please Note: The Responsible Individual must be a parent or guardian of the
Designated Beneficiary.
I, the undersigned Responsible Individual, have read and understand the
foregoing Application and the attached material included herein by
reference. In addition, I certify that the information which I have provided
and the information which is included within the Application and the
attached material included herein by reference is accurate.
Dated / /
---- ---- ----
Signature of Responsible Individual
------------------------------------
- --------------------------------------------------------------------------------
7. DEALER INFORMATION (To be completed by securities dealer.)
Name of Broker/Dealer Firm
---------------------------------------------
Main Office Address
----------------------------------------------------
Representative Name and Number
------------------------------------------
Authorized Signature of Dealer
------------------------------------------
Branch Address
----------------------------------------------------------
Branch Telephone
--------------------------------------------------------
- --------------------------------------------------------------------------------
8. MAILING INSTRUCTIONS
Make check payable to Institutional Trust Company. Return Application to:
--------------------------------------------------------------------------
REGULAR MAIL -OR- OVERNIGHT DELIVERIES ONLY
--------------------------------------------------------------------------
------------------------------ ----------------------------------
A I M FUND SERVICES, INC. A I M FUND SERVICES, INC.
P.O. BOX 4739 11 GREENWAY PLAZA, SUITE 763
HOUSTON, TX 77210-4739 HOUSTON, TX 77046
------------------------------ ----------------------------------
- --------------------------------------------------------------------------------
9. SERVICE ASSISTANCE
Our knowledgeable Client Service Representatives are available to assist you
between 7:30 a.m. and 6:00 p.m. Central time at 800-959-4246.
<TABLE>
<S> <C> <C> <C>
[AIM LOGO APPEARS HERE] www.aimfunds.com AIM Distributors, Inc. INVEST WITH DISCIPLINE--REGISTERED TRADEMARK--
</TABLE>
13
<PAGE> 5
14
<PAGE> 6
INSTRUCTIONS FOR THE AIM EDUCATION IRA
ASSET TRANSFER FORM
The Education IRA Asset Transfer Form is used to transfer assets from an
existing Education IRA to the AIM Education IRA.
NOTE: It is not necessary to complete this form if the check representing
the transfer of assets has been attached to the application.
1. Complete Sections 1 through 5 of the Education IRA Asset Transfer Form (on
pages 17 through 18 of this booklet).
2. Be sure that you have included the bank account or mutual fund account
number in Section 2 of the form, as well as the complete mailing address for
the existing custodian. You should contact the existing custodian to verify
that firm's proper mailing address.
3. Be sure that the AIM account number is in Section 3 of the form. If you have
not established an AIM Education IRA, please complete the Education IRA
Application included on pages 11 through 13 of this booklet.
NOTE: If the account currently holds AIM shares through a brokerage firm,
check with the investment representative to determine if you should
establish an Education IRA with the brokerage firm or directly with AIM. If
you decide to establish an Education IRA directly with AIM, you must
complete the AIM Education IRA Application.
4. You may wish to attach a current account statement for the existing
Education IRA to the Education IRA Asset Transfer Form.
5. If you are transferring shares from an AIM Fund(s) already owned in a
self-directed Education IRA, please complete the Transfer-In-Kind portion in
Section 4 of the form and indicate the number of shares of the AIM Fund(s)
you want to transfer.
If you are transferring a certificate of deposit (CD), state whether the
CD will transfer immediately or on the maturity date.
Return the Education IRA Asset Transfer Form to AIM with the Education
IRA Application.
6. Contact the existing custodian to determine whether a signature guarantee is
required in Section 5 of the Education IRA Asset Transfer Form. Signature
guarantees can be obtained at your bank or brokerage firm.
7. Please mail the completed Education IRA Asset Transfer Form, along with the
completed Education IRA Application (if establishing a new AIM Education
IRA) to:
--------------------------------------------------------------------------
REGULAR MAIL -OR- OVERNIGHT DELIVERIES ONLY
--------------------------------------------------------------------------
------------------------------ ----------------------------------
A I M FUND SERVICES, INC. A I M FUND SERVICES, INC.
P.O. BOX 4739 11 GREENWAY PLAZA, SUITE 763
HOUSTON, TX 77210-4739 HOUSTON, TX 77046
------------------------------ ----------------------------------
15
<PAGE> 7
HELPFUL DEFINITIONS
You may refer to the following definitions when filling out the Education IRA
Asset Transfer Form:
o DEPOSITOR. The person establishing the custodian account on behalf of a
child under the age of 18. The Depositor does not have to be the Responsible
Individual or a family member.
o DESIGNATED BENEFICIARY. The person (child) on whose behalf the account is
being established.
o RESPONSIBLE INDIVIDUAL. The person who will be responsible for managing the
account. On a newly established account, the Responsible Individual must be
a parent or a guardian of the Designated Beneficiary (child).
o CUSTODIAN. In reference to the Education IRA, a national bank, trust company
or another qualified institution that physically safeguards securities and
performs recordkeeping tasks.
16
<PAGE> 8
THE AIM EDUCATION IRA ASSET TRANSFER FORM
Original Signature Required
Use this form only when transferring assets from an existing Education IRA to an
AIM Education IRA. This form is not to be used for Traditional IRA or Roth IRA
transfers or conversions.
[AIM LOGO APPEARS HERE]
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian.
Complete Sections 1 - 5.
If you have not already established an AIM Education IRA, you must also submit
an AIM Education IRA Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1. REGISTRATION INFORMATION (Please print or type.)
Designated Beneficiary's (child's) Name
-----------------------------------------------------------
First Name Middle Last Name
Designated Beneficiary's Social Security Number
--------------------------
(Required to Open Account)
BirthDate / /
----- ----- -----
Month Day Year
Responsible Individual's Name
--------------------------------------------
First Name Middle Last Name
Address
------------------------------------------------------------------
Street
--------------------------------------------------------------------------
City State ZIP Code
Home Telephone ( ) Work Telephone ( )
--- -------------- --- ---------------
- --------------------------------------------------------------------------------
2. CURRENT TRUSTEE/CUSTODIAN
(Please attach a copy of your most recent statement.)
Name of Resigning Trustee
-----------------------------------------------
Account Number of Resigning Trustee
-------------------------------------
Address of Resigning Trustee
--------------------------------------------
Street
--------------------------------------------------------------------------
City State ZIP Code
Attention Telephone ( )
------------------------------- --- --------------
- --------------------------------------------------------------------------------
3. EDUCATION IRA INVESTMENT INSTRUCTIONS
Please deposit proceeds in the [ ] New* [ ] Existing
Existing AIM Account Number
------------
INVESTMENT ALLOCATION:
Fund Name Class %
------------------------- -------------- -----------
Fund Name Class %
------------------------- -------------- -----------
Fund Name Class %
------------------------- -------------- -----------
*If this is a new AIM Education IRA account, you must attach a completed AIM
Education IRA Application. If no class of shares is selected, Class A shares
will be purchased, except in the case of AIM Money Market Fund, where
AIMCash Reserve Shares will be purchased.
17
<PAGE> 9
- --------------------------------------------------------------------------------
4. TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from the account(s) listed in Section 2 and issue
a check to the Designated Beneficiary's Education IRA with Institutional
Trust Company.
Amount to liquidate: [ ] all [ ] partial amount of $
------------------
When to liquidate: [ ] immediately [ ] at maturity / /
---- ---- ----
OPTION 2: (If the account listed in Section 2 contains shares of an AIM
Fund, you may choose to transfer them "in kind.") Please deposit "in kind"
the shares of the AIM Fund held in my account to Institutional Trust
Company. Note: Only The AIM Family of Funds--Registered Trademark-- shares
may be transferred "in kind." To transfer all other assets, they must be
liquidated.
Amount to transfer "in kind" immediately: [ ] all
[ ] partial amount of shares
-----
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
An Education IRA has been established with the AIM Funds and Institutional
Trust Company has been appointed as the successor Custodian. I, the
undersigned, give my authorization and instruction to liquidate or transfer
"in kind" the assets noted above, which your company holds for the above
named Designated Beneficiary.
Authorized Signature Date / /
------------------------------ ---- ---- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
--------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and Title)
- -------------------------------------------------------------------------------
6. CUSTODIAN ACCEPTANCE
SECTION 6 OF FORM TO BE COMPLETED BY AIM
This is to advise you that Institutional Trust Company, as custodian, will
accept the account identified above for:
Designated Beneficiary's Name
---------------------------------------------
Account Number
------------------------------------------------------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature /s/ HECTOR T. CRUZ Mailing Date
------------------------ ---- ---- ----
(Institutional Trust Company)
- --------------------------------------------------------------------------------
7. INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check and return to:
Institutional Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739,
Houston, TX 77210-4739.
Make check payable to Institutional Trust Company.
Indicate the AIM Fund, account number and Social Security Number of the
Education IRA holder on all documents.
<TABLE>
<S> <C> <C> <C>
[AIM LOGO APPEARS HERE] www.aimfunds.com AIM Distributors, Inc. INVEST WITH DISCIPLINE--REGISTERED TRADEMARK--
</TABLE>
18
<PAGE> 10
[AIM LOGO APPEARS HERE]
Form 5305-EA (Rev. January 1998) Department of the Treasury Internal Revenue
Service
EDUCATION INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
(under Section 530 of the Internal Revenue Code)
Please fill out and retain with your tax records. Do NOT file with Internal
Revenue Service or AIM.
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Name of Depositor Depositor's identification number
Check if Amendment [ ]
- ---------------------------------------------------------------------------------------------------------------------------
Name of Designated Beneficiary Designated Beneficiary's identification number
- ---------------------------------------------------------------------------------------------------------------------------
Address of Designated Beneficiary Date of birth of Designated Beneficiary
- ---------------------------------------------------------------------------------------------------------------------------
Name of Responsible Individual (generally the parent or guardian of the Designated Beneficiary)
- ---------------------------------------------------------------------------------------------------------------------------
Address of Responsible Individual
- ---------------------------------------------------------------------------------------------------------------------------
Name of Custodian Address or principal place of business of Custodian
INSTITUTIONAL TRUST COMPANY THE STATE OF COLORADO
- ---------------------------------------------------------------------------------------------------------------------------
The Depositor whose name appears above is establishing an Education Individual Retirement Custodial Account under
section 530 for the benefit of the Designated Beneficiary whose name appears above exclusively to pay for the qualified
higher education expenses, within the meaning of section 530(b)(2), of such Designated Beneficiary.
The Custodian named above has provided the Depositor with a concise statement disclosing the provisions governing
section 530. This disclosure statement must include an explanation of the statutory requirements applicable to, and the
income tax consequences of establishing and maintaining an account under, section 530. Providing the Depositor with a
copy of Notice 97-60, 1997-46 I.R.B. 8 (November 17, 1997) is considered a sufficient disclosure statement. The Custodian
also will provide a copy of this form and the disclosure statement to the Responsible Individual, as defined in Article VI
below, if the Responsible Individual is not the same person as the Depositor.
The Depositor assigned the custodial account........................................... dollars ($.....) in cash.
The Depositor and the Custodian make the following agreement:
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
AIM DISTRIBUTORS, INC. CUSTODIAN AGREEMENT
ARTICLE I
1.01 The Custodian may accept additional cash contributions. These
contributions may be from the Depositor, or from any other individual, for the
benefit of the Designated Beneficiary, provided the Designated Beneficiary has
not attained the age of 18 as of the date such contributions are made. Total
contributions that are not rollover contributions described in section 530(d)(5)
are limited to a maximum amount of $500 for the taxable year.
ARTICLE II
2.01 The maximum aggregate contribution that an individual may make to the
custodial account in any year may not exceed the $500 in total contributions
that the custodial account can receive. In addition, the maximum aggregate
contribution that an individual may make to the custodial account in any year is
phased out for unmarried individuals who have modified adjusted gross income
(AGI) between $95,000 and $110,000 for the year of the contribution and for
married individuals who file joint returns with modified AGI between $150,000
and $160,000 for the year of the contribution. Unmarried individuals with
modified AGI above $110,000 for the year and married individuals who file joint
returns and have modified AGI above $160,000 for the year may not make a
contribution for that year. Modified AGI is defined in section 530(c)(2).
ARTICLE III
3.01 No part of the custodial account funds may be invested in life
insurance contracts, nor may the assets of the custodial account be commingled
with other property except in a common investment fund (within the meaning of
section 530(b)(1)(D)).
ARTICLE IV
4.01 Any balance to the credit of the Designated Beneficiary on the date on
which such designated beneficiary attains age 30 shall be distributed to the
Designated Beneficiary within 30 days of such date.
4.02 Any balance to the credit of the designated beneficiary shall be
distributed to the estate of the Designated Beneficiary within 30 days of the
date of such Designated Beneficiary's death.
ARTICLE V
5.01 The Depositor shall have the power to direct the Custodian regarding
the investment of the above-listed amount assigned to the custodial account
(including earnings thereon) in the investment choices offered by the custodian.
The Responsible Individual, however, shall have the power to redirect the
Custodian regarding the investment of such amounts, as well as the power to
direct the Custodian regarding the investment of all additional contributions
(including earnings thereon) to the custodial account. In the event that the
Responsible Individual does not direct the Custodian regarding the investment of
additional contributions (including earnings thereon), the initial investment
direction of the Depositor also will govern all additional contributions made to
the custodial account until such time as the Responsible Individual otherwise
directs the Custodian. Unless otherwise provided in this agreement, the
Responsible Individual also shall have the power to direct the Custodian
regarding the administration, management, and distribution of the account.
ARTICLE VI
6.01 The "Responsible Individual" named by the Depositor shall be a parent
or guardian of the Designated Beneficiary. The custodial account shall have only
one Responsible Individual at any time. If the Responsible Individual becomes
incapacitated or dies while the Designated Beneficiary is a minor under state
law, the successor Responsible Individual shall be the person named to succeed
in that capacity by the preceding Responsible Individual in a witnessed writing
or, if no successor is so named, the successor Responsible Individual shall be
the Designated Beneficiary's other parent or successor guardian. Unless
otherwise directed by checking the option in the Adoption Agreement, at the time
that the Designated Beneficiary attains the age of majority under state law, the
Designated Beneficiary becomes the Responsible Individual.
6.02 If elected in the Adoption Agreement, the Responsible Individual shall
continue to serve as the Responsible Individual for the custodial account after
the Designated Beneficiary attains the age of majority under state law and until
such time as all assets have been distributed from the custodial account and the
custodial account terminates. If the Responsible Individual becomes
incapacitated or dies after the Designated Beneficiary reaches the age of
majority under state law, the Designated Beneficiary shall be the Responsible
Individual.
19
<PAGE> 11
ARTICLE VII
7.01 If elected in the Adoption Agreement, the Responsible Individual may
change the beneficiary designated under this agreement to another member of the
Designated Beneficiary's family described in section 529(e)(2) in accordance
with the custodian's procedures.
ARTICLE VIII
8.01 The Depositor agrees to provide the custodian with the information
necessary for the Custodian to prepare any reports required under section
530(h).
8.02 The Custodian agrees to submit reports to the Internal Revenue Service
and the Responsible Individual as prescribed by the Internal Revenue Service.
ARTICLE IX
9.01 Notwithstanding any other articles which may be added or incorporated,
the provisions of Articles I through IV will be controlling. Any additional
articles that are not consistent with section 530 and related regulations will
be invalid.
ARTICLE X
10.01 This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the Depositor and the Custodian whose signatures appear on
the Adoption Agreement.
ARTICLE XI
11.01 APPLICABLE LAW: This Custodial Agreement shall be governed by the laws
of the state where the Trust has its situs.
11.02 ANNUAL ACCOUNTING: The Custodian shall, at least annually, provide the
Designated Beneficiary with an accounting of such Designated Beneficiary's
account. Such accounting shall be deemed to be accepted by the Designated
Beneficiary, if the Designated Beneficiary does not object in writing within 60
days after the mailing of such accounting.
11.03 AMENDMENT: The Depositor irrevocably delegates to the Custodian the
right and power to amend this Custodial Agreement. Except as hereafter provided,
the Custodian will give the Designated Beneficiary 30 days prior written notice
of any amendment. In case of a retroactive amendment required by law, the
Custodian will provide written notice to the Designated Beneficiary of the
amendment within 30 days after the amendment is made, or if later, by the time
that notice of the amendment is required to be given under regulations or other
guidance provided by the IRS. The Designated Beneficiary shall be deemed to have
consented to any such amendment unless the Designated Beneficiary notifies the
Custodian to the contrary within 30 days after notice to the Designated
Beneficiary and requests a distribution or transfer of the balance in the
account.
11.04 RESIGNATION AND REMOVAL OF CUSTODIAN:
(a) The Custodian may resign at any time by giving at least 30 days
notice to the Designated Beneficiary. The Custodian may resign and appoint a
successor trustee or custodian to serve under this agreement or under another
governing instrument selected by the successor trustee or custodian by giving
the Designated Beneficiary written notice at least 30 days prior to the
effective date of such resignation and appointment, which notice shall also
include a copy of such other governing instrument, if applicable, and the
related disclosure statement. The Designated Beneficiary shall then have 30 days
from the date of such notice to either request a complete distribution of the
account balance or designate a different successor trustee or custodian. If the
Designated Beneficiary does not request distribution of the account or designate
a different successor within such 30 days, the Designated Beneficiary shall be
deemed to have consented to the appointment of the successor trustee or
custodian and the terms of any new governing instrument, and neither the
Designated Beneficiary nor the successor shall be required to execute any
written document to complete the transfer of the account to the successor
trustee or custodian. The successor trustee or custodian may rely on any
information, including beneficiary designations, previously provided by the
Designated Beneficiary.
(b) The Designated Beneficiary may at any time remove the Custodian
and replace the Custodian with a successor trustee or custodian of the
Designated Beneficiary's choice by giving 30 days written notice to the
Custodian. In such event, the Custodian shall then deliver the assets of the
account as directed by the Designated Beneficiary. However, the Custodian may
retain a portion of the assets of the Education IRA as a reserve for payment of
any anticipated remaining fees and expenses, and shall pay over any remainder of
this reserve to the successor trustee or custodian upon satisfaction of such
fees and expenses.
11.05 CUSTODIAN'S FEES AND EXPENSES:
(a) The Depositor agrees that the Custodian shall be entitled to receive
any and all fees specified in the Custodian's current published fee schedule for
establishing and maintaining this Education IRA, including, but not limited to,
any fees for distributions from, transfers from, and terminations of this
Education IRA. The Custodian may change its fee schedule at any time by giving
the Designated Beneficiary 30 days prior written notice.
(b) The Depositor agrees that the Custodian shall be entitled to
reimbursement for any expenses incurred by the Custodian in the performance of
its duties in connection with the account. Such expenses include, but are not
limited to, administrative expenses, such as legal and accounting fees, and any
taxes of any kind whatsoever that may be levied or assessed with respect to such
account.
(c) All such fees, taxes, and other administrative expenses charged to
the account shall be collected either from the assets in the account or from any
contributions to or distributions from such account if not paid by the Depositor
or Designated Beneficiary, but the Depositor and Designated Beneficiary shall be
responsible for any deficiency.
(d) In the event that for any reason the Custodian is not certain as to
who is entitled to receive all or part of the Custodial Funds, the Custodian
reserves the right to withhold any payment from the Custodial Account, to
request a court ruling to determine the disposition of the Custodial Account
assets, and to charge the Custodial Account for any expenses incurred in
obtaining such legal determination.
11.06 WITHDRAWAL REQUESTS: All requests for withdrawal, distribution, or
payment from the account shall be in writing on the form provided by the
Custodian. Such written request must also specify the reason for the withdrawal,
distribution, or payment and the desired method or form of withdrawal, payment,
or distribution.
11.07 NOTICE AND INSTRUCTION:
(a) Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on this Custodian's records.
(b) If any provision of any document governing the Custodial Account
provides for notice, instructions or other communication from one party to
another in writing, to the extent provided for in the procedures of the
Custodian, or another party, any such notice, instructions or other
communications may be given by telephonic, computer, other electronic or other
means, and the requirement for written notice will be deemed satisfied.
11.08 RESPONSIBILITIES: The Depositor represents that all information and
instructions given to the Custodian by the Depositor is complete and accurate
and that the Custodian shall have no responsibility for any incomplete or
inaccurate information provided by the Depositor or Designated Beneficiary. The
Depositor agrees to be responsible for all tax consequences arising from
contributions to and distributions from this Custodial Account and acknowledges
that no tax advice has been provided by the Custodian.
11.09 CHANGE OF DESIGNATED BENEFICIARY: While the Designated Beneficiary is
a minor or otherwise lacks legal capacity, the Responsible Individual may at any
time change the Designated Beneficiary for this Education IRA to any member of
the family of the original Designated Beneficiary or direct the Custodian to
roll over or transfer the funds in this Education IRA to an Education IRA for
any member of the family of the original Designated Beneficiary. If elected in
the Adoption Agreement, when the Designated Beneficiary has legal capacity, the
Designated Beneficiary may at any time change the Designated Beneficiary for
this Education IRA to any member of the family of the original Designated
Beneficiary or direct the Custodian to roll over or transfer the funds in this
Education IRA to an Education IRA for any member of the family of the original
Designated Beneficiary.
11.10 DESIGNATED BENEFICIARY'S MINORITY OR INCAPACITY: The following
provisions apply while the Designated Beneficiary is a minor or lacks legal
capacity:
(a) The Responsible Individual shall have, to the exclusion of the
Designated Beneficiary, all of the rights, powers, and responsibilities granted
to the Designated Beneficiary under this Custodial Agreement, including, without
limitation, the right to receive accountings and notices of amendment and
resignation, the power to remove and replace the Custodian, the power to direct
investments, the power to request withdrawals, distributions, and payments, and
the power to direct a rollover or transfer to the trustee or custodian of an
Education IRA for the Designated Beneficiary or another member of the family of
the Designated Beneficiary.
(b) In the event the Responsible Individual dies, becomes disabled, or
otherwise fails or refuses to act and no successor Responsible Individual has
been appointed, or no duly appointed Responsible Individual is willing or able
to serve, then a parent of the Designated Beneficiary or the legal guardian or
conservator of the estate of the Designated Beneficiary may appoint a
Responsible Individual in writing on a form acceptable to and filed with the
Custodian.
(c) The Designated Beneficiary shall not have the right or power to
anticipate any part of the Custodial Account or to sell, assign, transfer,
pledge or hypothecate any part thereof. The Custodial Account shall not be
liable for the debts of the Designated Beneficiary or subject to any seizure,
attachment, execution or other legal process in respect thereof except to the
extent required by law. At no time shall it be possible for any part of the
assets of the Custodial Account to be used for or diverted to purposes other
than for the exclusive benefit of the Designated Beneficiary except to the
extent required by law.
20
<PAGE> 12
11.11 DEFINITIONS:
(a) Custodian. The Custodian must be a bank or savings and loan
association, as defined in section 408(n), or any person who has the approval of
the IRS to act as Custodian.
(b) Depositor. The Depositor is the person who establishes the custodial
account.
(c) Designated Beneficiary. The Designated Beneficiary is the person on
whose behalf the custodial account has been established.
(d) Member of the Family. The term "member of the family of the
Designated Beneficiary" includes the Designated Beneficiary's: children and
their descendants; stepchildren; brothers and sisters and their children;
stepbrothers and stepsisters; parents and their ancestors; brothers and sisters
of parents; stepparents; a son-in-law, daughter-in-law, father-in-law, mother-in
law, brother-in-law, or sister-in-law; and spouses of the foregoing.
(e) Responsible Individual. The Responsible Individual, generally, is a
parent or guardian of the Designated Beneficiary. However, under certain
circumstances, the Responsible Individual may be the Designated Beneficiary.
11.12 INDEMNIFICATION: The Designated Beneficiary and Responsible Individual
shall always fully indemnify the Custodian, A I M Distributors, Inc. and The AIM
Family of Funds--Registered Trademark-- and save them harmless from any and all
liability whatsoever that may arise either (i) in connection with this Agreement
and the matter which it contemplates, except that which arises out of the
Custodian's A I M Distributors, Inc. and The AIM Family of Funds--Registered
Trademark-- bad faith, gross negligence or willful misconduct, (ii) with respect
to making or failing to make any distribution, other than for failure to make
distribution in accordance with an order therefore which is in full compliance
with Article 11.06, or (iii) actions taken or omitted in good faith by such
parties. Neither the Custodian, A I M Distributors, Inc. nor The AIM Family of
Funds--Registered Trademark-- shall be obligated to commence or defend any legal
action or proceeding in connection with this Agreement or such matters unless
agreed upon by that party and the Designated Beneficiary, and unless fully
indemnified for so doing to that party's satisfaction. The Custodian's
acceptance of contributions to this Account is expressly conditioned upon the
Designated Beneficiary's and Responsible Individual's agreement with the
foregoing, and with all other provisions of this Agreement. Exercise of any
right, duty or responsibility by Responsible Individual (or Designated
Beneficiary, as the case may be) in connection with the Designated Beneficiary's
account shall be deemed to constitute acceptance of this condition.
ARTICLE XII
SELF-DIRECTED EDUCATION IRA PROVISIONS
12.01 INVESTMENT OF CONTRIBUTIONS: At the direction of the Designated
Beneficiary (or the direction of the Grantor or the Responsible Individual,
whichever applies) the Custodian shall invest all contributions to the account
and earnings thereon in investments acceptable to the Custodian, which may
include marketable securities traded on a recognized exchange or "over the
counter" (excluding any securities issued by the Custodian), covered call
options, certificates of deposit, and other investments to which the Custodian
consents, in such amounts as are specifically selected and specified in orders
to the Custodian in such form as may be acceptable to the Custodian, without any
duty to diversify and without regard to whether such property is authorized by
the laws of any jurisdiction as a trust investment. The Custodian shall be
responsible for the execution of such orders and for maintaining adequate
records thereof. However, if any such orders are not received as required, or,
if received, are unclear in the opinion of the Custodian, all or a portion of
the contribution may be held uninvested without liability for loss of income or
appreciation, and without liability for interest pending receipt of such orders
or clarification, or the contribution may be returned. The Custodian may, but
need not, establish programs under which cash deposits in excess of a minimum
set by it will be periodically and automatically invested in interest-bearing
investment funds. The Custodian shall have no duty other than to follow the
written investment directions of the Designated Beneficiary (or Responsible
Individual), and shall be under no duty to question said instructions and shall
not be liable for any investment losses sustained by the Designated Beneficiary.
12.02 REGISTRATION: All assets of the account shall be registered in the
name of the Custodian or of a suitable nominee. The same nominee may be used
with respect to assets of other investors whether or not held under agreements
similar to this one or in any capacity whatsoever. However, each Designated
Beneficiary's account shall be separate and distinct; a separate account
therefor shall be maintained by the Custodian, and the assets thereof shall be
held by the Custodian in individual or bulk segregation either in the
Custodian's vaults or in depositories approved by the Securities and Exchange
Commission under the Securities Exchange Act of 1934.
12.03 INVESTMENT ADVISOR: The Designated Beneficiary (or Grantor or
Responsible Individual) may appoint an Investment Advisor, qualified under
Section 3(38) of the Employee Retirement Income Security Act of 1974, to direct
the investment of this Education IRA. The Designated Beneficiary shall notify
the Custodian in writing of any such appointment by providing the Custodian a
copy of the instruments appointing the Investment Advisor and evidencing the
Investment Advisor's acceptance of such appointment, an acknowledgement by
the Investment Advisor that it is a fiduciary of the account, and a certificate
evidencing the Investment Advisor's current registration under the Investment
Advisor's Act of 1940. The Custodian shall comply with any investment directions
furnished to it by the Investment Advisor, unless and until it receives written
notification from the Designated Beneficiary that the Investment Advisor's
appointment has been terminated. The Custodian shall have no duty other than to
follow the written investment directions of such Investment Advisor and shall be
under no duty to question said instructions, and the Custodian shall not be
liable for any investment losses sustained by the Designated Beneficiary.
12.04 NO INVESTMENT ADVICE: The Custodian does not assume any responsibility
for rendering advice with respect to the investment and reinvestment of
Designated Beneficiary's account and shall not be liable for any loss which
results from Designated Beneficiary's exercise of control over his account. The
Custodian and Designated Beneficiary may specifically agree in writing that the
Custodian shall render such advice, but the Designated Beneficiary shall still
have and exercise exclusive responsibility for control over the investment of
the assets of his account, and the Custodian shall not have any duty to question
his investment directives.
12.05 PROHIBITED TRANSACTIONS: Notwithstanding anything contained herein to
the contrary, the Custodian shall not lend any part of the corpus or income of
the account to; pay any compensation for personal services rendered to the
account to; make any part of its services available on a preferential basis to;
acquire for the account any property, other than cash, from; or sell any
property to, any Designated Beneficiary, any member of a Designated
Beneficiary's family, or a corporation controlled by any Designated Beneficiary
through the ownership, directly or indirectly, of 50 percent or more of the
total combined voting power of all classes of stock entitled to vote, or of 50
percent or more of the total value of shares of all classes of stock of such
corporation.
12.06 UNRELATED BUSINESS INCOME TAX: If the Designated Beneficiary directs
investment of the account in any investment which results in unrelated business
taxable income, it shall be the responsibility of the Designated Beneficiary to
so advise the Custodian and to provide the Custodian with all information
necessary to prepare and file any required returns or reports for the account.
As the Custodian may deem necessary, and at the Designated Beneficiary's
expense, the Custodian may request a taxpayer identification number for the
account, file any returns, reports, and applications for extension, and pay any
taxes or estimated taxes owed with respect to the account. The Custodian may
retain suitable accountants, attorneys, or other agents to assist it in
performing such responsibilities.
12.07 DISCLOSURES AND VOTING: The Custodian shall deliver, or cause to be
executed and delivered, to Designated Beneficiary all notices, prospectuses,
financial statements, proxies and proxy soliciting materials relating to assets
credited to the account. The Custodian shall not vote any shares of stock or
take any other action, pursuant to such documents, with respect to such assets
except upon receipt by the Custodian of adequate written instructions from
Designated Beneficiary.
12.08 MISCELLANEOUS EXPENSES: In addition to those expenses set out in
Section 11.05 of this plan, the Designated Beneficiary agrees to pay any and all
expenses incurred by the Custodian in connection with the investment of the
account, including expenses of preparation and filing any returns and reports
with regard to unrelated business income, including taxes and estimated taxes,
as well as any transfer taxes incurred in connection with the investment or
reinvestment of the assets of the account.
12.09 NONBANK CUSTODIAN PROVISION: If the Custodian is a nonbank custodian,
the Designated Beneficiary shall substitute another trustee or custodian in
place of the Custodian upon receipt of notice from the Commissioner of the
Internal Revenue Service or his delegate that such substitution is required
because the Custodian has failed to comply with the requirements of Income Tax
Regulations Section 1.408-2(e), or is not keeping such records, making such
returns, or rendering such statements as are required by applicable law,
regulations, or other rulings. The successor trustee or custodian shall be a
bank, insured credit union, or other person satisfactory to the Secretary of the
Treasury pursuant to Section 408(a)(2) of the Code. Upon receipt by the
Custodian of written acceptance by its successor of such successor's
appointment, Custodian shall transfer and pay over to such successor the assets
of the account (less amounts retained pursuant to Section 11.04 of the Custodial
Agreement) and all records (or copies thereof) of the Custodian pertaining
thereto, provided that the successor trustee or custodian agrees not to dispose
of any such records without the Custodian's consent.
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<PAGE> 13
EDUCATION IRA DISCLOSURE STATEMENT
SPECIAL NOTE
This Disclosure Statement describes the rules applicable to Education IRAs
beginning January 1, 1998. Education IRAs are a new kind of IRA available for
the first time in 1998. Contributions to an Education IRA for 1997 are not
permitted. Contributions to an Education IRA are not tax deductible to the
person making the contribution, but withdrawals that meet certain requirements
are not subject to federal income taxes when received. This makes the dividends
on and growth of the investments held in an Education IRA tax-free for federal
income tax purposes if the requirements are met.
Regular IRAs, which have existed since 1975, are still available. New Roth
IRAs are also available January 1, 1998. Both Regular IRAs and Roth IRAs provide
a tax-advantaged savings vehicle that can be used to save for higher education
expenses as well as other needs, including retirement. This Disclosure Statement
does not describe either Roth or Regular IRAs. This Disclosure Statement also
does not describe IRAs established in connection with a SIMPLE IRA program or a
Simplified Employee Pension (SEP) plan maintained by your employer. If you wish
to receive information about those IRA products, including forms and explanatory
materials, call the 800 number or write the address listed at the end of this
Disclosure Statement.
ESTABLISHING AN EDUCATION IRA
This Disclosure Statement contains information about an Education Individual
Retirement Custodial Account with Institutional Trust Company as Custodian. An
Education IRA provides several tax benefits. While contributions to an Education
IRA are not deductible to the contributor, dividends on the growth of the assets
held in the Education IRA are not subject to federal income tax. Withdrawals
from an Education IRA are excluded from income for federal income tax purposes
if used for qualifying higher education expenses (described below). State income
tax treatment of your Education IRA may differ from federal treatment; ask your
state tax department or your personal tax advisor for details.
Regular annual contributions to Education IRAs must be made in cash, on
behalf of a designated individual (the "Student") who is less than 18 years old
at the time of the contribution, and rollover contributions must be made on
behalf of a Student who is less than age 30 at the time of the rollover. The IRA
trustee or custodian must be a bank or other person who has been approved by the
Secretary of the Treasury. Contributions may not be invested in life insurance
or be commingled with other property except in a common trust or investment
fund. The Student's interest in the account must be nonforfeitable at all times.
Upon the death of the Student, any balance undistributed in the account shall be
distributed to the Student's estate within 30 days of the date of death. You may
object further information on Education IRAs from any district office of the
Internal Revenue Service.
The Donor may revoke a newly established Education IRA at any time within
seven days after the date on which he or she receives this Disclosure Statement.
An Education IRA established more than seven days after the date of receipt of
this Disclosure Statement may not be revoked. To revoke the Education IRA, mail
or deliver a written notice of revocation to the Custodian at the address that
appears at the end of this Disclosure Statement. Mailed notice will be deemed
given on the date that it is postmarked (or if sent by certified or registered
mail, on the date of certification or registration). If the Education IRA is
revoked within the seven-day period, the Donor will receive payment of the
entire amount originally contributed into the Education IRA, without adjustment
for such items as sales charges, administrative expenses or fluctuations in
market value.
An Education IRA is established on behalf of the Student and is controlled
by the Student (or Parent). The Donor making a contribution, if not the Student
or Parent, may designate the initial investments in the Education IRA account,
but shall have no further rights, interests or obligations related to the
Education IRA, except that he or she can make additional contributions subject
to the limits described below.
The Adoption Agreement must be signed by the Donor, and any and all forms,
applications, certifications and other documents must be signed by the Parent,
if the Student has not yet reached the age of majority recognized by the laws of
the state of Student's residence ("age of majority").
While the Student remains a minor, the Parent identified in the Adoption
Agreement will exercise all of the rights and responsibilities of the Student,
including the selection and exchange of Fund shares in which the Education IRA
is invested. The Custodian's acceptance of the contribution to the Education IRA
account is conditioned on agreement by the Parent of a minor Student to be bound
by all of the terms and conditions of this Disclosure Agreement and the
provisions set out in Articles I - XI of the Custodial Account Agreement. The
Student may notify the Custodian in writing that he or she has reached the age
of majority in the state where the Student then resides (and provide any
documentation the Custodian may request verifying the fact that he or she has
attained such age). Upon receiving such request (and documentation, if
requested), the Custodian will recognize the Student as the individual
controlling the account with power to exercise all rights and responsibilities
related to the Education IRA and the Parent will thereafter have no control or
power over the account.
Note: The Custodian is under no obligation to determine whether any Parent
actually holds the legal right and capacity to direct or control a Student's
Education IRA account.
FEES AND EXPENSES
CUSTODIAN'S FEES
The fees charged by the Custodian for maintaining your Education IRA are
listed in the Adoption Agreement.
GENERAL FEE POLICIES
o Fees may be paid by you directly or the Custodian may deduct them from your
Education IRA.
o Fees may be changed upon 30 days written notice to you.
o The full annual maintenance fee will be charged for any calendar year during
which you have an Education IRA with us. This fee is not prorated for
periods of less than one full year.
o If provided for in the Disclosure Statement or Adoption Agreement,
termination fees are charged when your account is closed whether the funds
are distributed to you or transferred to a successor custodian or trustee.
o The Custodian may charge you for its reasonable expenses for services not
covered by its fee schedule.
OTHER CHARGES
There may be sales or other charges associated with the purchase or
redemption of shares of a Fund in which your Education IRA is invested. Before
investing, be sure to read carefully the current prospectus of any Fund you are
considering as an investment for your Education IRA for a description of
applicable charges.
CONTRIBUTIONS
WHO MAY CONTRIBUTE TO AN EDUCATION IRA?
Starting in 1998, anyone, including the Student, may open and contribute to
an Education IRA established on the Student's behalf, as long as the Student is
less than 18 at the time of the contribution. The person making the
contribution- "the Donor"- can be anyone, even the Student; the Donor does not
have to be related to the Student.
ARE CONTRIBUTIONS TO AN EDUCATION IRA TAX DEDUCTIBLE?
Contributions to an Education IRA are not tax deductible. This is a major
difference between Education IRAs and Regular IRAs.
WHEN CAN CONTRIBUTIONS BE MADE TO AN EDUCATION IRA?
A Donor may make a contribution to an Education IRA for a particular
calendar year by the end of that year (December 31). (Note: Unlike Regular IRAs
or Roth IRAs, contributions for a particular year may not be made by the due
date of the Donor's federal income tax return for that year.)
HOW MUCH MAY BE CONTRIBUTED TO AN EDUCATION IRA?
Donors may contribute up to $500 in a calendar year for the benefit of any
one Student. For example, if Uncle Joe contributes $300 to an Education IRA on
behalf of Bobby, his nephew, all other contributions made on behalf of Bobby by
Uncle Joe or any other potential Donor (such as parents or grandparents) to this
or any other Education IRA, are limited to $200 for that tax year.
Note: The Custodian is under no obligation, nor can it be, to determine
whether the maximum limit for any Student has been reached. It is the Parent's
responsibility to consult with the other parent or guardian to determine whether
the maximum limits will be exceeded.
For Donors with high income levels, the contribution limits my be reduced
below $500. This depends upon the Donor's filing status and the amount of his or
her modified adjusted gross income (MAGI). The following table shows how the
contribution limits are restricted.
22
<PAGE> 14
EDUCATION IRA CONTRIBUTION LIMITS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
IF DONOR IS A SINGLE
TAXPAYER OR MARRIED IF DONOR IS MARRIED THE DONOR
FILING SEPARATELY FILING JOINTLY MAY MAKE
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Up to $95,000 Up to $150,000 Full Contribution
-----------------------------------------------------------------------------
Modified Adjusted Gross More than $95,000 More than $150,000 Reduced Contribution
Income (MAGI) Level but less than $110,000 but less than $160,000 (see explanation below)
-----------------------------------------------------------------------------
$110,000 and up $160,000 and up Zero
(no contributions)
-----------------------------------------------------------------------------
</TABLE>
HOW ARE THE LIMITS CALCULATED FOR MAGI IN THE "REDUCED CONTRIBUTION" RANGE?
If the Donor's MAGI falls in the reduced contribution range, that Donor's
contribution limit must be calculated. To do this, multiply the normal
contribution limit ($500) by a fraction. The numerator is the amount by which
MAGI exceeds the lower limit of the reduced contribution range ($95,000 if
single, or $150,000 if married filing jointly). The denominator is $15,000
(single taxpayers) or $10,000 (married filing jointly). Subtract this from the
normal limit.
For example, assume the Donor's MAGI for the year is $157,555 and she is
married, filing jointly. The Education IRA contribution limit would be
calculated as follows:
The amount by which MAGI exceed the lower limit of the reduced contribution
deductible range:
($157,555 - $150,000) = $7,555
Is divided by $10,000:
$7,555 / $10,000 = 0.7555
Multiply this by $500:
0.7555 X $500 = $377.75
Subtract this from the $500 contribution limit:
($500 - $377.75) = $122.25
This is the contribution limit.
Of course, if one Donor is prevented by these rules from making a full $500
contribution on behalf of a Student, another person (who is not the Donor's
spouse) may be willing to contribute so that the full $500 per year that the law
allows will be added to the Student's Education IRA.
Note: Any amount contributed to the Education IRA above the maximum is
considered an "excess contribution," which is subject to excise tax of 6% for
each year it remains in the Education IRA.
HOW DO I DETERMINE MAGI?
For most taxpayers, MAGI is the same as adjust gross income, which is their
gross income minus those deductions which are available for all taxpayers even
if they don't itemize. (Instructions to calculate AGI are provided with income
tax Form 1040 or 1040A.) Modified AGI is simply regular AGI adjusted to include
certain amounts earned abroad. If a Donor has not earned income in any foreign
country, Guam, American Samoa, the Northern Mariana Islands or Puerto Rico,
normal AGI should be used in the calculations above.
ARE THERE ANY OTHER LIMITS ON THE AMOUNT THAT MAY BE CONTRIBUTED TO AN
EDUCATION IRA?
A Donor cannot contribute to an Education IRA in any year in which a
contribution is made to a state prepaid tuition plan for the same Student. (A
state tuition plan allows taxpayers to pay their child's tuition in advance.)
Any amount contributed to an Education IRA in the same year that a contribution
is made to a state prepaid tuition plan on behalf of the Student is an excess
contribution, subjecting the Student (or the Parent, if the Student is under 14)
to the 6% penalty tax.
HOW ARE EXCESS CONTRIBUTIONS CORRECTED?
Excess contributions may be corrected without paying a 6% penalty. To do so,
the excess and any earnings on the excess must, in accordance with directions
from the Student (or Parent) to the Custodian, be paid to the Student before the
due date (including extensions) for filing his or her federal income tax return
for the year for which the excess contribution was made. The earnings must be
included in the Student's income for the tax year for which the contribution was
made.
WHAT HAPPENS IF THE EXCESS CONTRIBUTION IS NOT CORRECTED BY THE TAX RETURN DUE
DATE?
Any excess contribution withdrawn after the tax return due date (including
any extensions) for the year for which the contribution was made will subject
the Student to the 6% excise tax.
Unless an exception applies, the excess contribution and any earnings on it
withdrawn after tax filing time will be includable in the Student's (or the
Parent's if the Student is under 14) taxable income and may be subject to a 10%
withdrawal penalty.
INVESTMENTS
HOW ARE EDUCATION IRA CONTRIBUTIONS INVESTED?
The Donor indicates the initial investment elections on the Adoption
Agreement. Thereafter, the Student controls the investment by making choices
among the available Fund(s) in accordance with the Fund rules. Investment must
be in one or more of the Fund(s) available from time to time as listed in the
Adoption Agreement for the Education IRA or in an investment selection form
provided with the Education IRA Adoption Agreement or from the Fund Distributor
or Service Company. The investments of your Education IRA are directed by giving
the investment instructions to the Distributor or Service Company for the
Fund(s). Since the Student controls the investment of the Education IRA, he or
she is responsible for the investment results achieved; neither the custodian,
the Distributor nor the Service Company has any responsibility for any loss or
diminution in value occasioned by your exercise of investment control.
Transactions for the Education IRA will generally be at the applicable public
offering price or net asset value for shares of the Fund(s) involved next
established after the Distributor or the Service Company (whichever may apply)
receives proper investment instructions from you; consult the current prospectus
for the Fund(s) involved for additional information.
Before making any investment, read carefully the current prospectus for any
fund under consideration as an investment for the Education IRA. The prospectus
will contain information about the Fund's investment objectives and policies, as
well as any minimum initial investment or minimum balance requirements and any
sales, redemption or other charges.
Because you control the selection of investments for your Education IRA and
because mutual fund shares fluctuate in value, the growth in value of the
Education IRA cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF THE EDUCATION IRA ASSETS?
The tax-exempt status of the Education IRA will be revoked if you engage in
any of the prohibited transactions listed in Section 4975 of the tax code. Upon
such revocation, the Education IRA is treated as distributing its assets to the
Student. The taxable portion of the amount in the Education IRA will be subject
to income tax unless the requirements for a tax-free withdrawal are satisfied
(see below). Also, you may be subject to a 10% penalty tax on the taxable
amount.
WHAT IS A PROHIBITED TRANSACTION?
Generally, a prohibited transaction is any improper use of assets in your
Education IRA. Some examples of prohibited transactions are:
o Direct or indirect sale or exchange of property between you and your
Education IRA.
o Transfer of any property from your Education IRA to yourself or from
yourself to your Education IRA.
The Education IRA could lose its tax-exempt status if you use all or part of
your interest in your Education IRA as a security for a loan or borrow any money
from your Education IRA. Any portion of your Education IRA used as security for
a loan will be treated as a distribution in the year in which the money is
borrowed. This amount may be taxable and you may also be subject to the 10%
premature withdrawal penalty on the taxable amount.
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY EDUCATION IRA?
You may make a withdrawal from the Education IRA at any time. If the
withdrawal meets the requirements discussed below, it is tax-free. This means
that no federal income tax is due, even though the withdrawal includes dividends
or gains on the Fund shares while held in the Education IRA.
WHEN ARE DISTRIBUTIONS MANDATORY?
Any amount remaining in the account as of your 30th birthday must be
distributed to you and any dividends or gains will then be subject to income tax
and penalty (unless an exception applies.) You can avoid these tax implications
if, before you reach age 30, you roll over or transfer your account balance, or
change the designated beneficiary of your Education IRA to another member of
your family. (See Transfers/Rollovers Section on page 24.)
If you die before withdrawing your entire account balance, your Education
IRA must be distributed to your estate within 30 days after your death.
WHAT ARE THE REQUIREMENTS FOR A TAX-FREE WITHDRAWAL?
To be tax free, a withdrawal from your Education IRA must meet two
requirements. First, the amounts withdrawn must be made to cover the cost of
"qualified higher education expenses" incurred by you while attending an
"eligible education institution."
The two important terms are defined as follows:
o Qualified Higher Education Expenses for all students include expenses for
tuition, books, supplies, and equipment required for enrollment or
attendance at an eligible educational institution. For students attending an
eligible educational institution at least half time, qualified higher
education expenses also
23
<PAGE> 15
include room and board. (Note: These costs will generally be the school's posted
room and board charge, or $2,500 per year if the Student lives off campus and
not at home.) Also, qualified expenses include amounts contributed to a
qualified state tuition program.
An Eligible Educational Institution includes most colleges, universities,
vocational schools, or other postsecondary educational institutions. The Student
should check with his or her school to verify that it is an eligible educational
institute as described in section 481 of the Higher Education Act of 1965.
Second, the amount of the withdrawal in a year must not exceed your
qualified higher education expenses for that year.
HOW ARE WITHDRAWALS FROM AN EDUCATION IRA TAXED IF THE TAX-FREE REQUIREMENTS ARE
NOT MET?
If the withdrawal doe not meet the tax-free requirements discussed above,
the general rule is that the amount equal to the principal contributions will
not be taxed nor will the 10% withdrawal penalty apply to principal. However,
that portion of the account attributable to dividends or gains is includable in
the Student's (or the Parent's) gross income in the taxable year it is received
and may be subject to the 10% withdrawal penalty.
A special rule may apply if the amount withdrawn exceeds the Student's
qualified higher education expenses in a year. In this case, the amount that
must be included as income for tax purposes is determined by first determining
the ratio that the qualified higher education expense bear to the actual
withdrawal. The portion of the Withdrawal that is potentially subject to
taxation - the amount of gain or dividends - is then multiplied by that
percentage amount. The resulting sum is the amount excludable from income. The
following example explains this formula:
In 2010, John withdraws $9,000 from his Education IRA, of which $4,000 is
attributable to dividends or gains. John's qualified education expenses total
only $7,000 for that year. Therefore, 77% ($7,000/$9,000) of the withdrawal is
attributable to educational expenses. So, $3,080 (77% of $4,000) is excludable
as income and the difference, $920, is includable as income and possibly subject
to the 10% penalty tax.
Taxable withdrawals of dividends and gains from an Education IRA are treated
as ordinary income. Withdrawals of taxable amounts from an Education IRA are not
eligible for averaging treatment currently available to certain lump-sum
distributions from qualified employer-sponsored retirement plans, nor are such
withdrawals eligible for taxable gains tax treatment.
The receipts of any taxable withdrawal from an Education IRA may also be
subject to a 10% penalty tax, unless:
o The withdrawal is paid to your estate within 30 days of your death;
o The withdrawal is paid to you on account of your disability; or
o The withdrawal is equal to or less than the amount of a scholarship or
other tax-free educational assistance you receive.
Note: The Custodian is not responsible for monitoring withdrawals or
determining whether any withdrawal is being made by any individual for education
expenses, nor is the Custodian responsible for determining what taxes or
penalties, if any, may apply.
HOW DOES RECEIPT OF A TAX-FREE, QUALIFIED WITHDRAWAL AFFECT AVAILABLE EDUCATION
TAX CREDITS?
If the Student receives a tax-free distribution from an Education IRA in a
particular tax year, none of the Student's education expenses for that year may
be claimed as the basis for a Hope Scholarship Credit or Lifetime Learning
Credit for that year.
However, the tax-free treatment of the Education IRA withdrawal may be
waived (thus subjecting the withdrawal to the imposition of tax, as discussed
above), and the Student or Student's Parents, as the case may be, may elect
instead to claim a Hope Scholarship Credit or Lifetime Learning Credit for the
education expenses.
You should consult with your tax advisor to determine whether you qualify
for either credit and whether waiving the tax-free withdrawal of the Education
IRA is right for you.
TRANSFERS/ROLLOVERS
CAN A DISTRIBUTION BE TRANSFERRED OR ROLLED OVER FROM AN EMPLOYER'S RETIREMENT
PLAN INTO AN EDUCATION IRA?
Distributions from qualified employer-sponsored retirement plans or 403(b)
arrangements (for employees of tax-exempt employers) are not eligible for
rollover or direct transfer to an Education IRA. Nor are withdrawals from other
types of IRAs.
CAN ROLLOVERS BE MADE FROM ONE EDUCATION IRA TO ANOTHER EDUCATION IRA?
Amounts rolled over from one Education IRA to another Education IRA are
permitted only if the receiving Education IRA is for your benefit or for the
benefit of a member of your family. Such a rollover must be completed within 60
days after the withdrawal from the first Education IRA. Only one rollover from
an Education IRA to another is permitted in a full year (365 days).
CAN THE BENEFICIARY OF AN EDUCATION IRA BE CHANGED?
Instead of rolling over an Education IRA account to another Education IRA
account, the Student may simply change the designated beneficiary of his account
to another member of his family who is under the age of 30. This can be done at
any time. (Note: This approach can be used up to the day before your 30th
birthday to avoid the tax and penalty that may otherwise apply if a distribution
is required because you reach age 30.) (See "When Are Distributions Mandatory?"
question on page 23.)
WHO IS A MEMBER OF THE STUDENT'S FAMILY?
Family members include the Student and any of the following who are under
age 30: the Student's children and their descendants, stepchildren and their
descendants, siblings and their children, parents and grandparents, stepparents,
and spouses of all of the foregoing.
HOW DO ROLLOVERS AFFECT EDUCATION IRA CONTRIBUTIONS LIMITS?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, rollovers from one Education IRA to another can be made even
during a year when the Donor is not eligible to contribution to an Education IRA
(for example, because MAGI for that year is too high).
TAX MATTERS
WHAT IRA REPORTS DOES THE CUSTODIAN ISSUE?
The Custodian will report all withdrawals to the IRS and the recipient on
the appropriate form.
The Custodian will report to the IRS the year-end value of the Account and
the amount of any rollovers or regular contributions made during a calendar
year.
WHAT TAX INFORMATION MUST THE STUDENT REPORT TO THE IRS?
The appropriate tax reporting form must be filed with the IRS for each
taxable year for which there is made an excess contribution or in which there is
a premature withdrawal that is subject to the 10% penalty tax.
ARE EDUCATION IRA WITHDRAWALS SUBJECT TO WITHHOLDING?
Federal income tax withholding requirements have not been established by the
law or by IRS regulations or rulings. Consult your tax advisor or the IRS for
the latest information on withholding requirements on taxable withdrawals form
an Education IRA.
ARE THE EARNINGS ON EDUCATION IRA FUNDS TAXED?
Any dividends on or growth of investments held in an Education IRA are
generally exempt from federal income taxes and will not be taxed until
withdrawn, unless the tax-exempt status of the Education IRA is revoked. If a
withdrawal qualifies as a tax-free withdrawal (see above), amounts reflecting
earnings or growth of assets in the Education IRA will not be subject to federal
income tax.
ACCOUNT TERMINATION
The Student may terminate the Education IRA at any time after its establishment
by sending a completed withdrawal form (or other instructions in a form
acceptable to the Custodian), or a transfer authorization form to :
A I M FUND SERVICES, INC.
P.O. BOX 4739
HOUSTON, TEXAS 77210-4739
An Education IRA with The AIM Family of Funds--Registered Trademark-- will
terminate upon the first to occur of the following:
o The date the Student's properly executed withdrawal form or instructions
(as described above) withdrawing the total Education IRA balance is
received and accepted by the Custodian.
o The date the Education IRA ceases to qualify under the tax code. This
will be deemed a termination.
o The transfer of the Education IRA to another custodian/trustee.
o The rollover of the amounts in the Education RIA to another
custodian/trustee.
Any outstanding fees must be received prior to such a termination of an
Education IRA account.
The amount received from an Education IRA upon termination of the account will
be treated as a withdrawal and thus the rules relating to Education IRA
withdrawals will apply. For example, if the Education IRA is terminated and
distributions are not made for qualified education expenses, the 10% early
withdrawal penalty may apply to the taxable amount received.
IMPORTANT: THE DISCUSSION OF THE TAX RULES FOR EDUCATION IRAs IN THIS DISCLOSURE
STATEMENT IS BASED UPON THE BEST AVAILABLE INFORMATION. HOWEVER, EDUCATION IRAs
ARE NEW UNDER THE TAX LAWS, AND NOT ALL ISSUES PERTAINING TO THE OPERATION AND
TAX TREATMENT OF EDUCATION IRA ACCOUNTS HAVE BEEN ADDRESSED BY THE IRS.
THEREFORE, THE STUDENT SHOULD CONSULT HIS OR HER TAX ADVISOR FOR THE LATEST
DEVELOPMENTS OR FOR ADVICE ON HOW MAINTAINING AN EDUCATION IRA WILL AFFECT HIS
OR HER (OR PARENT'S) PERSONAL TAX OR FINANCIAL SITUATION.
24
<PAGE> 16
EDUCATION IRA DOCUMENTS
The terms contained in Articles I to X of the Education Individual Retirement
Custodial Account document are in the form promulgated by the IRS in Form
5305-EA for use in establishing an Education IRA under Code section 530. If the
IRS issues an amendment to Form 5305-EA, the Custodian will adopt the provisions
of such model form as an amendment, accordingly. IRS approval relates only to
the form of Articles I to X and will not be an approval of the merits of the
Education IRA or of any investment permitted by the Education IRA.
ADDITIONAL INFORMATION
For additional information you may write to the following address or call the
following telephone number:
A I M FUND SERVICES, INC.
P.O. BOX 4739
HOUSTON, TEXAS 77210-4739
1-800-959-4246
25
<PAGE> 17
26
<PAGE> 18
EDUCATION IRA CHECKLIST:
Did you remember to:
[ ] Include the required Social Security Numbers in Section 1 of the Education
IRA Application? (This information is required to open an account.)
[ ] Include the Designated Beneficiary's date of birth on all sections where
requested?
[ ] Include a check for at least $250 or complete an Education IRA Asset
Transfer Form?
[ ] Indicate the AIM Fund(s) in which you would like the funds to be invested?
(Section 5 of the Education IRA Application.)
[ ] Complete the Education IRA Asset Transfer Form, if applicable, indicating
the resigning trustee and account number of the resigning trustee? Did you
complete the transfer instructions? Did you check with the existing
custodian to see if a signature guarantee is required for Education IRA
asset transfers? (Sections 2, 4 and 5 of the Education IRA Asset Transfer
Form.)
[ ] Sign all forms where indicated?
NOTE: You may NOT use this IRA Application or Custodial Agreement to open a
TRADITIONAL IRA or a ROTH IRA. Please contact an AIM Client Service
Representative at 800-959-4246 for applications for these plans.
27
<PAGE> 1
EXHIBIT 15(a)(3)
SECOND
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(CLASS A SHARES)
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
<PAGE> 2
Customers who may from time to time directly or beneficially
own Shares. The 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 Variable Group Annuity
Contractholder Service Agreement substantially in the form
attached hereto as Exhibit C ("Variable Contract Agreements")
with selected insurance companies ("Companies") offering
variable annuity contracts to employers as funding vehicles for
retirement plans qualified under Section 401(a) of the Internal
Revenue Code, where amounts contributed under such plans are
invested pursuant to such variable annuity contracts in Shares
of the Fund. The Companies receiving payments under such
Variable Contract Agreements will provide specialized services
to contractholders and plan participants, as set forth in the
Variable Contract Agreements from time to time.
(e) Distributors may also enter into Agency Pricing
Agreements substantially in the form attached hereto as Exhibit
D ("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.
(f) Distributors may also enter into Shareholder Service
Agreements substantially in the form attached hereto as Exhibit
E ("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.
- 2 -
<PAGE> 3
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.
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.
- 3 -
<PAGE> 4
AIM INVESTMENT SECURITIES FUNDS
(on behalf of its Class A Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------ ----------------------------------
Assistant Secretary 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.
Amended and restated for all Portfolios as of June 30, 1998.
- 4 -
<PAGE> 5
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.
PORTFOLIO/CLASS ANNUAL RATE
--------------- -----------
AIM Limited Maturity Treasury Fund (Class A Shares) 0.15%
- --------
* 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.
- 5 -
<PAGE> 1
EXHIBIT 15(a)(4)
THIRD AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(CLASS A AND CLASS C SHARES)
SECTION 1. AIM Investment Securities Funds (the "Fund") on behalf of
the series of the Shares of beneficial interest set forth in Appendix A
attached hereto (the "Portfolios") may act as a distributor of the Class A
shares and Class C shares 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. The Fund may incur pursuant to the terms of this Master
Distribution Plan expenses at the rates set forth in Appendix A per annum of
the average daily net assets of the Fund attributable to the Shares, subject to
any applicable limitations imposed from time to time by applicable rules of the
National Association of Securities Dealers, Inc.
SECTION 3. 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 4, 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 service as a service fee pursuant to Section 4 shall be deemed an
asset-based sales charge. The distribution agreement with any Distributor shall
provide that the portion of the amounts set forth in Appendix A that is an
asset based sales charge with respect to Class C Shares shall be deemed to be
paid for services rendered by the Distributor or any Dealers in placing the
Class C Shares, which services are fully performed upon the settlement of each
sale of a Class C Share (or share of another portfolio from which the Class C
Share derives). 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 4.
(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%) per annum of
the average daily net assets of the Fund attributable to the
Shares owned by the customers of such service provider.
<PAGE> 2
(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") who may from time to time directly
or beneficially own Shares. The 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 Variable Group Annuity
Contractholder Service Agreements substantially in the form
attached hereto as Exhibit C ("Variable Contract Agreements")
with selected insurance companies ("Companies") offering
variable annuity contracts to employers as funding vehicles for
retirement plans qualified under Section 401(a) of the Internal
Revenue Code, where amounts contributed under such plans are
invested pursuant to such variable annuity contracts in Shares
of the Fund. The Companies receiving payments under such
Variable Contract Agreements will provide specialized services
to contractholders and plan participants, as set forth in the
Variable Contract Agreements from time to time.
(e) Distributors may also enter into Agency Pricing
Agreements substantially in the form attached hereto as Exhibit
D ("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.
(f) Distributors may also enter into Shareholder Service
Agreements substantially in the form attached hereto as Exhibit
E ("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.
-2-
<PAGE> 3
SECTION 5. Any amendment to this Plan that requires the approval of
the shareholders of a Class pursuant to Rule 12b-1 under the 1940 Act shall
become effective as to such Class upon the approval of such amendment by a
"majority of the outstanding voting securities" (as defined in the 1940 Act) of
such Class, provided that the Board of Trustees of the Fund has approved such
amendment in accordance with the provisions of Section 6 of this Plan.
SECTION 6. This Plan, any amendment to this Plan and any agreements
related to this Plan shall become effective immediately upon the receipt by the
Fund of both (a) the affirmative vote of a majority of the Board of Trustees of
the Fund, and (b) the affirmative vote of a majority of 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.
Notwithstanding the foregoing, no such amendment that requires the approval of
the shareholders of a Class of a Fund shall become effective as to such Class
until such amendment has been approved by the shareholders of such Class in
accordance with the provisions of Section 5 of this Plan.
SECTION 7. Unless sooner terminated pursuant to Section 9, this Plan
shall continue in effect until June 30, 1999 and thereafter shall continue in
effect so long as such continuance is specifically approved, at least annually,
in the manner provided for approval of this Plan in Section 6.
SECTION 8. 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 9. This Plan may be terminated 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 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 10. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated 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 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 11. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 5 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 6 hereof.
-3-
<PAGE> 4
AIM INVESTMENT SECURITIES FUNDS
(on behalf of its Class A
and Class C Shares)
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
------------------------------ -------------------------
Assistant Secretary President
Amended and restated for all Portfolios as of September 28, 1998.
-4-
<PAGE> 5
APPENDIX A
TO
THIRD AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(CLASS A AND CLASS C SHARES)
(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 as designated below, a Distribution Fee* determined by applying
the annual rate set forth below as to each Portfolio (or Class A or Class C
thereof) to the average daily net assets of the Portfolio (or Class A or Class
C thereof) for the plan year, computed in a manner used for the determination
of the offering price of shares of the Portfolio (or Class A or Class C
thereof).
<TABLE>
<CAPTION>
MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ------- ----------
Class A Shares
--------------
<S> <C> <C> <C>
AIM Limited Maturity Treasury Fund 0.00% 0.15% 0.15%
AIM High Yield Fund II 0.00% 0.25% 0.25%
Class C Shares
--------------
AIM High Yield Fund II 0.75% 0.25% 1.00%
</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.
-5-
<PAGE> 1
EXHIBIT 15(a)(5)
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(CLASS B SHARES)
(SECURITIZATION FEATURE)
SECTION 1. AIM Investment Securities Funds (the "Fund"), on behalf of
the series of its shares of beneficial interest set forth in Schedule A to this
plan (the "Portfolios"), may pay for distribution of the Class B Shares of such
Portfolios (the "Shares") which the Fund issues from time to time, pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"), according
to the terms of this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur expenses for and pay any institution
selected to act as the Fund's agent for distribution of the Shares of any
Portfolio from time to time (each, a "Distributor") at the rates set forth on
Schedule A hereto based on the average daily net assets of each class of Shares
subject to any applicable limitations imposed by the Conduct Rules of the
National Association of Securities Dealers, Inc. and NASD Regulation, Inc. in
effect from time to time (the "Conduct Rules"). All such payments are the legal
obligation of the Fund and not of any Distributor or its designee.
SECTION 3.
(a) Amounts set forth in Section 2 may be used to finance
any activity which is primarily intended to result in the sale
of the Shares, including, but not limited to, expenses of
organizing and conducting sales seminars and running
advertising programs, payment of finders fees, printing of
prospectuses and statements of additional information (and
supplements thereto) and reports for other than existing
shareholders, preparation and distribution of advertising
material and sales literature, payment of overhead and
supplemental payments to dealers and other institutions as
asset-based sales charges. Amounts set forth in Section 2 may
also be used to finance payments of service fees under a
shareholder service arrangement, which may be established by
each Distributor in accordance with Section 4, the costs of
administering the Plan. To the extent that amounts paid
hereunder are not used specifically to reimburse the
Distributor for any such expense, such amounts may be treated
as compensation for the Distributor's distribution-related
services. No provision of this Plan shall be interpreted to
prohibit any payments by the Fund during periods when the Fund
has suspended or otherwise limited sales.
(b) Subject to the provisions of Sections 8 and 9 hereof,
amounts payable pursuant to Section 2 in respect of Shares of
each Portfolio shall be paid by the Fund to the Distributor in
respect of such Shares or, if more than one institution has
acted or is acting as Distributor in respect of such Shares,
then amounts payable pursuant to Section 2 in respect of such
Shares shall be paid to each such Distributor in proportion to
the number of such Shares sold by or attributable to such
Distributor's distribution efforts in respect of such Shares in
accordance with allocation provisions of each Distributor's
distribution agreement (the "Distributor's 12b-1 Share")
notwithstanding that such Distributor's distribution agreement
with the Fund may have
<PAGE> 2
been terminated. That portion of the amounts paid under the
Plan that is not paid or advanced by the Distributor to dealers
or other institutions that provide personal continuing
shareholder service as a service fee pursuant to Section 4
shall be deemed an asset-based sales charge.
(c) Any Distributor may assign, transfer or pledge
("Transfer") to one or more designees (each an "Assignee"), its
rights to all or a designated portion of its Distributor's
12b-1 Share from time to time (but not such Distributor's
duties and obligations pursuant hereto or pursuant to any
distribution agreement in effect from time to time, if any,
between such Distributor and the Fund), free and clear of any
offsets or claims the Fund may have against such Distributor.
Each such Assignee's ownership interest in a Transfer of a
specific designated portion of a Distributor's 12b-1 Share is
hereafter referred to as an "Assignee's 12b-1 Portion." A
Transfer pursuant to this Section 3(c) shall not reduce or
extinguish any claims of the Fund against the Distributor.
(d) Each Distributor shall promptly notify the Fund in
writing of each such Transfer by providing the Fund with the
name and address of each such Assignee.
(e) A Distributor may direct the Fund to pay an Assignee's
12b-1 Portion directly to such Assignee. In such event, the
Distributor shall provide the Fund with a monthly calculation
of the amount of (i) the Distributor's 12b-1 Share, and (ii)
each Assignee's 12b-1 Portion, if any, for such month (the
"Monthly Calculation"). In such event, the Fund shall, upon
receipt of such notice and Monthly Calculation from the
Distributor, make all payments required under such distribution
agreement directly to the Assignee in accordance with the
information provided in such notice and Monthly Calculation
upon the same terms and conditions as if such payments were to
be paid to the Distributor.
(f) Alternatively, in connection with a Transfer, a
Distributor may direct the Fund to pay all of such
Distributor's 12b-1 Share from time to time to a depository or
collection agent designated by any Assignee, which depository
or collection agent may be delegated the duty of dividing such
Distributor's 12b-1 Share between the Assignee's 12b-1 Portion
and the balance of the Distributor's 12b-1 Share (such balance,
when distributed to the Distributor by the depository or
collection agent, the "Distributor's 12b-1 Portion"), in which
case only the Distributor's 12b-1 Portion may be subject to
offsets or claims the Fund may have against such Distributor.
SECTION 4.
(a) Amounts expended by the Fund under the Plan shall be
used in part for the implementation by the Distributor of
shareholder service arrangements with respect to the Shares.
The maximum service fee payable to any provider of such
shareholder service shall be twenty-five one-hundredths of one
percent (0.25%) per annum of the average daily net assets of
the Shares attributable to the customers of such service
provider. All such payments are the legal obligation of the
Fund and not of any Distributor or its designee.
(b) Pursuant to this Plan, the Distributor may enter into
agreements substantially in the form attached hereto as Exhibit
A ("Service Agreements") with
- 2 -
<PAGE> 3
such broker-dealers ("Dealers") as may be selected from time to
time by the Distributor for the provision of continuing
shareholder services in connection with Shares held by such
Dealers' clients and customers ("Customers") who may from time
to time directly or beneficially own Shares. The personal
continuing shareholder services to be rendered by Dealers under
the Service Agreements may include, but shall not be limited
to, some or all of the following: (i) distributing sales
literature; (ii) answering routine Customer inquiries
concerning the Fund and the Shares; (iii) assisting Customers
in changing dividend options, account designations and
addresses, and enrolling in any of several retirement plans
offered in connection with the purchase of Shares; (iv)
assisting in the establishment and maintenance of Customer
accounts and records, and in the processing of purchase and
redemption transactions; (v) investing dividends and capital
gains distributions automatically in Shares; (vi) performing
sub-accounting; (vii) providing periodic statements showing a
Customer's shareholder account balance and the integration of
such statements with those of other transactions and balances
in the Customer's account serviced by such institution; (viii)
forwarding applicable prospectuses, proxy statements, and
reports and notices to Customers who hold Shares; and (ix)
providing such other information and administrative services as
the Fund or the Customer may reasonably request.
(c) The Distributor may also enter into Bank Shareholder
Service Agreements substantially in the form attached hereto as
Exhibit B ("Bank Agreements") with selected banks and financial
institutions acting in an agency capacity for their customers
("Banks"). Banks acting in such capacity will provide some or
all of the shareholder services to their customers as set forth
in the Bank Agreements from time to time.
(d) 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) The Distributor 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 customers as
set forth in the Bank Trust Department Agreements and Brokers
for Bank Trust Department Agreements from time to time.
SECTION 5. This Plan shall not take effect until (i) it has been
approved, together with any related agreements, by votes of the majority of
both (a) the Board of 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, and
(ii) the execution by the Fund and A I M Distributors, Inc. of a Master
Distribution Agreement in respect of the Shares.
- 3 -
<PAGE> 4
SECTION 6. Unless sooner terminated pursuant to Section 8, this Plan
shall continue in effect until June 30, 1999, and thereafter shall continue in
effect so long as such continuance is specifically approved, at least annually,
in the manner provided for approval of this Plan in Section 5.
SECTION 7. Each Distributor 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 expended for distribution of the Shares and the purposes
for which such expenditures were made.
SECTION 8. This Plan may be terminated with respect to the Shares of
any Portfolio at any time by vote of a majority of the Dis-interested Trustees,
or by vote of a majority of outstanding Shares of such Portfolio. Upon
termination of this Plan with respect to any or all such Classes, the
obligation of the Fund to make payments pursuant to this Plan with respect to
such Classes shall terminate, and the Fund shall not be required to make
payments hereunder beyond such termination date with respect to expenses
incurred in connection with Shares sold prior to such termination date,
provided, in each case that each of the requirements of a Complete Termination
of this Plan in respect of such class, as defined below, are met. A termination
of this Plan with respect to any or all Shares of any or all Portfolios shall
not affect the obligation of the Fund to withhold and pay to any Distributor
contingent deferred sales charges to which such distributor is entitled
pursuant to any distribution agreement. For purposes of this Section 8 a
"Complete Termination" of this Plan in respect of any Portfolio shall mean a
termination of this Plan in respect of such Portfolio, provided that: (i) the
Dis-interested Trustees of the Fund shall have acted in good faith and shall
have determined that such termination is in the best interest of the Fund and
the shareholders of such Portfolio; (ii) and the Fund does not alter the terms
of the contingent deferred sales charges applicable to Shares outstanding at
the time of such termination; and (iii) unless the applicable Distributor at
the time of such termination was in material breach under the distribution
agreement in respect of such Portfolio, the Fund shall not, in respect of such
Portfolio, pay to any person or entity, other than such Distributor or its
designee, either the asset-based sales charge or the service fee (or any
similar fee) in respect of the Shares sold by such Distributor prior to such
termination.
SECTION 9. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated with respect
to the Shares of any or all Portfolios at any time, without
payment of any penalty, by vote of a majority of the
Dis-interested Trustees or by a vote of the majority of the
outstanding Shares of such Portfolio, on not more than sixty
(60) days' written notice to any other party to the agreement;
and
(b) that such agreement shall terminate automatically in
the event of its assignment; provided, however, that, subject
to the provisions of Section 8 hereof, if such agreement is
terminated for any reason, the obligation of the Fund to make
payments of (i) the Distributor's Share in accordance with the
directions of the Distributor pursuant to Section 3(e) or (f)
hereof if there exist Assignees for all or any portion of such
Distributor's 12b-1 Share, and (ii) the remainder of such
Distributor's 12b-1 Share to such Distributor if there are no
Assignees for such Distributor's Share, pursuant to such
agreement and this Plan will continue with respect to the
Shares until such Shares are redeemed or automatically
converted into another class of shares of the Fund.
- 4 -
<PAGE> 5
SECTION 10. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved by a vote of at least a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Shares, and no material
amendment to the Plan shall be made unless approved in the manner provided for
in Section 5 hereof.
AIM INVESTMENT SECURITIES FUNDS
(on behalf of its Class B Shares)
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
--------------------------- ----------------------------
Assistant Secretary President
Effective as of September 28, 1998
- 5 -
<PAGE> 6
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(CLASS B SHARES)
(DISTRIBUTION FEE)
<TABLE>
<CAPTION>
MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ------- ----------
<S> <C> <C> <C>
AIM High Yield Fund II 0.75% 0.25% 1.00%
(Class B Shares)
</TABLE>
- 6 -
<PAGE> 1
EXHIBIT 15(b)
Exhibit A
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc. FOR SALE OF SHARES
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, by each of the
AIM-managed mutual funds (or designated classes of such funds) listed in
Schedule A, which may be amended from time to time by AIM Distributors, Inc.
("Distributors") to this Agreement (the "Funds"), under a Distribution Plan
(the "Plan") adopted pursuant to said Rule. This Agreement, being made between
Distributors, solely as agent for such 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 and 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 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 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 a 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.
<PAGE> 2
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 and Schedule A 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 or Statement of Additional
Information for the Funds, and you shall have no authority to act as
agent for the Funds or for Distributors.
9. We may enter into other similar Shareholder Service Agreements with
any other person without your consent.
10. This Agreement may be amended at any time without your consent by
Distributors mailing a copy of an amendment to you at 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
<PAGE> 3
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:
------------------------ -------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By:
------------------------ -------------------------------------
Signature
-------------------------------------
Print Name Title
-------------------------------------
Dealer's Name
-------------------------------------
Address
-------------------------------------
City State Zip
-------------------------------------
Telephone
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
<PAGE> 4
SCHEDULE "A" TO
SHAREHOLDER SERVICE AGREEMENT
<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 B Shares 0.25 March 3, 1998
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund B Shares 0.25 March 3, 1998
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 B Shares 0.25 March 3, 1998
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 B Shares 0.25 March 3, 1998
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 B Shares 0.25 March 3, 1998
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 1, 1997
AIM Asian Growth Fund B Shares 0.25 November 1, 1997
AIM Asian Growth Fund C Shares 1.00** November 1, 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 1, 1997
AIM European Development Fund B Shares 0.25 November 1, 1997
AIM European Development Fund C Shares 1.00** November 1, 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
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -----------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50** September 15, 1994
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 High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM High Income Municipal Fund B Shares 0.25 December 22, 1997
AIM High Income Municipal Fund C Shares 1.00** December 22, 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 High Yield Fund II A Shares 0.25 October 1, 1998
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 Money Market Fund 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 Select Growth Fund A Shares 0.25 July 1, 1992
AIM Select Growth Fund B Shares 0.25 September 1,1993
AIM Select Growth Fund C Shares 1.00** August 4, 1997
AIM Small Cap Opportunities Fund A Shares 0.25 June 29, 1998
AIM Small Cap Opportunities Fund B Shares 0.25 July 13, 1998
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
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>
<PAGE> 6
*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 the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
THE FOLLOWING FUNDS ARE ADDED AS OF THE CLOSE OF BUSINESS MAY 29, 1998:
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------
<S> <C> <C>
AIM Basic Value Fund A Shares 0.25 May 29, 1998
AIM Basic Value Fund B Shares 0.25 May 29, 1998
AIM Developing Markets Fund A Shares 0.25 May 29, 1998
AIM Developing Markets Fund B Shares 0.25 May 29, 1998
AIM Emerging Markets Fund A Shares 0.40** May 29, 1998
AIM Emerging Markets Fund B Shares 0.25 May 29, 1998
AIM Europe Growth Fund A Shares 0.25 May 29, 1998
AIM Europe Growth Fund B Shares 0.25 May 29, 1998
AIM Global Consumer Products and
Services Fund A Shares 0.40** May 29, 1998
AIM Global Consumer Products and
Services Fund B Shares 0.25 May 29, 1998
AIM Global Financial Services Fund A Shares 0.40** May 29, 1998
AIM Global Financial Services Fund B Shares 0.25 May 29, 1998
AIM Global Government Income Fund A Shares 0.25 May 29, 1998
AIM Global Government Income Fund B Shares 0.25 May 29, 1998
AIM Global Growth & Income Fund A Shares 0.25 May 29, 1998
AIM Global Growth & Income Fund B Shares 0.25 May 29, 1998
AIM Global Health Care Fund A Shares 0.40** May 29, 1998
AIM Global Health Care Fund B Shares 0.25 May 29, 1998
AIM Emerging Markets Debt Fund A Shares 0.25 May 29, 1998
AIM Emerging Markets Debt Fund B Shares 0.25 May 29, 1998
AIM Global Infrastructure Fund A Shares 0.40** May 29, 1998
AIM Global Infrastructure Fund B Shares 0.25 May 29, 1998
AIM Global Resources Fund A Shares 0.40** May 29, 1998
AIM Global Resources Fund B Shares 0.25 May 29, 1998
AIM Global Telecommunications Fund A Shares 0.40** May 29, 1998
AIM Global Telecommunications Fund B Shares 0.25 May 29, 1998
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM International Growth Fund A Shares 0.25 May 29, 1998
AIM International Growth Fund B Shares 0.25 May 29, 1998
AIM Japan Growth Fund A Shares 0.25 May 29, 1998
AIM Japan Growth Fund B Shares 0.25 May 29, 1998
AIM Latin American Growth Fund A Shares 0.40** May 29, 1998
AIM Latin American Growth Fund B Shares 0.25 May 29, 1998
AIM Mid Cap Equity Fund A Shares 0.25 May 29, 1998
AIM Mid Cap Equity Fund B Shares 0.25 May 29, 1998
AIM Global Trends Fund A Shares 0.40** May 29, 1998
AIM Global Trends Fund B Shares 0.25 May 29, 1998
AIM Global Trends Fund C Shares 1.00** May 29, 1998
AIM New Pacific Growth Fund A Shares 0.25 May 29, 1998
AIM New Pacific Growth Fund B Shares 0.25 May 29, 1998
AIM Small Cap Growth Fund A Shares 0.25 May 29, 1998
AIM Small Cap Growth Fund B Shares 0.25 May 29, 1998
AIM Strategic Income Fund A Shares 0.25 May 29, 1998
AIM Strategic Income Fund B Shares 0.25 May 29, 1998
AIM Worldwide Growth Fund A Shares 0.25 May 29, 1998
AIM Worldwide Growth Fund B Shares 0.25 May 29, 1998
</TABLE>
*Frequency of Payments:
EFFECTIVE UNTIL JUNE 30, 1998: Class A and B share payments commence
immediately and are paid quarterly. Class C share payments commence after an
initial twelve month holding period and are paid quarterly.
**Of this amount, 0.25% is paid as a shareholder servicing fee and the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
EFFECTIVE JULY 1, 1998: B share payments, like C share payments, will begin
after an initial 12 month holding period and are paid quarterly. 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 the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
<PAGE> 1
EXHIBIT 15(c)
Exhibit B
[LOGO APPEARS HERE] BANK SHAREHOLDER
SERVICE AGREEMENT
A I M Distributors, Inc.
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 inquires 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 three (3) 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
<PAGE> 2
Bank Shareholder Service Agreement Page 2
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. 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, which may be amended from
time to time by the Company. 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
Company 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.
<PAGE> 3
Bank Shareholder Service Agreement Page 3
11. All communications to the Company shall be sent to it at Eleven
Greenway Plaza, Suite 100, 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
<PAGE> 4
Bank Shareholder Service Agreement Page 4
<TABLE>
<CAPTION>
SCHEDULE "A" TO
SHAREHOLDER SERVICE AGREEMENT
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund B Shares 0.25 March 3, 1998
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund B Shares 0.25 March 3, 1998
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 B Shares 0.25 March 3, 1998
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 B Shares 0.25 March 3, 1998
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 B Shares 0.25 March 3, 1998
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 1, 1997
AIM Asian Growth Fund B Shares 0.25 November 1, 1997
AIM Asian Growth Fund C Shares 1.00** November 1, 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 1, 1997
AIM European Development Fund B Shares 0.25 November 1, 1997
AIM European Development Fund C Shares 1.00** November 1, 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
</TABLE>
<PAGE> 5
Bank Shareholder Service Agreement Page 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
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
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 High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM High Income Municipal Fund B Shares 0.25 December 22, 1997
AIM High Income Municipal Fund C Shares 1.00** December 22, 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 High Yield Fund II A Shares 0.25 October 1, 1998
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 Money Market Fund 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 Select Growth Fund A Shares 0.25 July 1, 1992
AIM Select Growth Fund B Shares 0.25 September 1,1993
AIM Select Growth Fund C Shares 1.00** August 4, 1997
AIM Small Cap Opportunities Fund A Shares 0.25 June 29, 1998
AIM Small Cap Opportunities Fund B Shares 0.25 July 13, 1998
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
</TABLE>
<PAGE> 6
Bank Shareholder Service Agreement Page 6
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
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
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 the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
THE FOLLOWING FUNDS ARE ADDED AS OF THE CLOSE OF BUSINESS MAY 29, 1998:
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM Basic Value Fund A Shares 0.25 May 29, 1998
AIM Basic Value Fund B Shares 0.25 May 29, 1998
AIM Developing Markets Fund A Shares 0.25 May 29, 1998
AIM Developing Markets Fund B Shares 0.25 May 29, 1998
AIM Emerging Markets Fund A Shares 0.40** May 29, 1998
AIM Emerging Markets Fund B Shares 0.25 May 29, 1998
AIM Europe Growth Fund A Shares 0.25 May 29, 1998
AIM Europe Growth Fund B Shares 0.25 May 29, 1998
AIM Global Consumer Products and
Services Fund A Shares 0.40** May 29, 1998
AIM Global Consumer Products and
Services Fund B Shares 0.25 May 29, 1998
AIM Global Financial Services Fund A Shares 0.40** May 29, 1998
</TABLE>
<PAGE> 7
Bank Shareholder Service Agreement Page 7
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Financial Services Fund B Shares 0.25 May 29, 1998
AIM Global Government Income Fund A Shares 0.25 May 29, 1998
AIM Global Government Income Fund B Shares 0.25 May 29, 1998
AIM Global Growth & Income Fund A Shares 0.25 May 29, 1998
AIM Global Growth & Income Fund B Shares 0.25 May 29, 1998
AIM Global Health Care Fund A Shares 0.40** May 29, 1998
AIM Global Health Care Fund B Shares 0.25 May 29, 1998
AIM Emerging Markets Debt Fund A Shares 0.25 May 29, 1998
AIM Emerging Markets Debt Fund B Shares 0.25 May 29, 1998
AIM Global Infrastructure Fund A Shares 0.40** May 29, 1998
AIM Global Infrastructure Fund B Shares 0.25 May 29, 1998
AIM Global Resources Fund A Shares 0.40** May 29, 1998
AIM Global Resources Fund B Shares 0.25 May 29, 1998
AIM Global Telecommunications Fund A Shares 0.40** May 29, 1998
AIM Global Telecommunications Fund B Shares 0.25 May 29, 1998
AIM International Growth Fund A Shares 0.25 May 29, 1998
AIM International Growth Fund B Shares 0.25 May 29, 1998
AIM Japan Growth Fund A Shares 0.25 May 29, 1998
AIM Japan Growth Fund B Shares 0.25 May 29, 1998
AIM Latin American Growth Fund A Shares 0.40** May 29, 1998
AIM Latin American Growth Fund B Shares 0.25 May 29, 1998
AIM Mid Cap Equity Fund A Shares 0.25 May 29, 1998
AIM Mid Cap Equity Fund B Shares 0.25 May 29, 1998
AIM Global Trends Fund A Shares 0.40** May 29, 1998
AIM Global Trends Fund B Shares 0.25 May 29, 1998
AIM Global Trends Fund C Shares 1.00** May 29, 1998
AIM New Pacific Growth Fund A Shares 0.25 May 29, 1998
AIM New Pacific Growth Fund B Shares 0.25 May 29, 1998
AIM Small Cap Growth Fund A Shares 0.25 May 29, 1998
AIM Small Cap Growth Fund B Shares 0.25 May 29, 1998
AIM Strategic Income Fund A Shares 0.25 May 29, 1998
AIM Strategic Income Fund B Shares 0.25 May 29, 1998
AIM Worldwide Growth Fund A Shares 0.25 May 29, 1998
AIM Worldwide Growth Fund B Shares 0.25 May 29, 1998
</TABLE>
*Frequency of Payments:
EFFECTIVE UNTIL JUNE 30, 1998: Class A and B share payments commence
immediately and are paid quarterly. Class C share payments commence after an
initial twelve month holding period and are paid quarterly.
<PAGE> 8
Bank Shareholder Service Agreement Page 8
**Of this amount, 0.25% is paid as a shareholder servicing fee and the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
EFFECTIVE JULY 1, 1998: B share payments, like C share payments, will begin
after an initial 12 month holding period and are paid quarterly. 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 the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
<PAGE> 1
EXHIBIT 15(d)
EXHIBIT D
AGENCY PRICING AGREEMENT
(THE AIM FAMILY OF FUNDS--Registered Trademark--)
This Agreement is entered into as of the ____ of _______________,
19___, 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
which may be amended from time to time by Distributor (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
<PAGE> 2
Exchange or as at such later times at which a Fund's net asset value
is calculated as specified in such Fund's prospectus ("Close of
Trading"), (ii) dividend and capital gains information as it becomes
available, and (iii) in the case of income Funds, the daily accrual or
interest rate factor (mil rate). The Funds shall use their best
efforts to provide such information to Plan Provider by 6:00 p.m.
Central Time on the same Business Day.
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.
-5-
<PAGE> 6
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
-6-
<PAGE> 7
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 Shares of the
Plans' balances for the prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- ---- ----------
<S> <C>
AIM Advisor Funds, Inc. (Class A Shares Only)
AIM Advisor Flex Fund .25%
AIM Advisor International Value Fund .25%
AIM Advisor Large Cap Value Fund .25%
AIM Advisor MultiFlex Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds, Inc. (Class A Shares Only)
AIM Aggressive Growth Fund* .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group (Class A Shares Only)
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Select Growth Fund .25%
AIM Value Fund .25%
AIM Growth Series (Class A Shares Only)
AIM Basic Value Fund .25%
AIM Europe Growth Fund .25%
AIM International Growth Fund .25%
AIM Japan Growth Fund .25%
AIM Mid Cap Equity Fund .25%
AIM New Pacific Growth Fund .25%
AIM Small Cap Growth Fund .25%
AIM Worldwide Growth Fund .25%
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
AIM International Funds, Inc. (Class A Shares Only)
<S> <C>
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 Funds (Class A Shares Only)
AIM Developing Markets Fund .25%
AIM Emerging Markets Fund .25%
AIM Emerging Markets Debt Fund .25%
AIM Global Consumer Products and Services Fund .25%
AIM Global Financial Services Fund .25%
AIM Global Government Income Fund .25%
AIM Global Growth & Income Fund .25%
AIM Global Health Care Fund .25%
AIM Global Infrastructure Fund .25%
AIM Global Resources Fund .25%
AIM Global Telecommunications Fund .25%
AIM Latin American Growth Fund .25%
AIM Strategic Income Fund .25%
AIM Investment Securities Funds (Class A Shares Only)
AIM High Yield Fund II .25%
AIM Limited Maturity Treasury Fund .15%
AIM Series Trust (Class A Shares Only)
AIM Global Trends Fund .25%
AIM Special Opportunities Funds (Class A Shares Only)
AIM Small Cap Opportunities Fund .25%
</TABLE>
Distributor or its affiliates shall calculate the amount of quarterly
payment and shall deliver to Plan Provider a quarterly statement showing the
calculation of the quarterly amounts payable to Plan Provider. Distributor
reserves the right at any time to impose minimum fee payment requirements
before any quarterly payments will be made to Plan Provider. Payment to Plan
Provider shall occur within 30 days following the end of each quarter. All
parties agree that the payments referred to herein are for record keeping and
administrative services only and are not for legal, investment advisory or
distribution services.
Minimum Payments: $50 (with respect to all Funds in the aggregate.)
* AIM Aggressive Growth Fund is currently closed to new investors.
<PAGE> 1
EXHIBIT 15(e)
EXHIBIT E
[LOGO APPEARS HERE] A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
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> 2
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 any such cause.
<PAGE> 3
Shareholder Service Agreement Page 3
(Bank Trust Departments)
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> 4
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-----------------------------------
(Firm Name)
-----------------------------------
(Address)
-----------------------------------
City/State/Zip/County
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Dated:
-----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
Dated:
----------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM Aggressive Growth Fund*
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Select Growth Fund
AIM Value Fund
AIM Growth Series
AIM Basic Value Fund
AIM Europe Growth Fund
AIM International Growth Fund
AIM Japan Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund
AIM Worldwide Growth Fund
AIM International Funds, Inc.
AIM Asian Growth Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
</TABLE>
- ------------------
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 6
Shareholder Service Agreement Page 6
(Bank Trust Departments)
AIM Investment Funds
AIM Developing Markets Fund
AIM Emerging Markets Fund
AIM Emerging Markets Debt Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Government Income Fund
AIM Global Growth & Income Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM High Yield Fund II
AIM Series Trust
AIM Global Trends Fund
AIM Special Opportunities Funds
AIM Small Cap Opportunities Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
<PAGE> 7
[LOGO APPEARS HERE] A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc. (BROKERS FOR BANK TRUST DEPARTMENTS)
__________, 19__
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto,
which may be amended from time to time by AIM Distributors (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> 8
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 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
<PAGE> 9
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> 10
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> 11
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
*AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Select Growth Fund
AIM Value Fund
AIM Growth Series
AIM Basic Value Fund
AIM Europe Growth Fund
AIM International Growth Fund
AIM Japan Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund
AIM Worldwide Growth Fund
AIM International Funds, Inc.
AIM Asian Growth Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
</TABLE>
- ---------------------
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth
Fund.
<PAGE> 12
Shareholder Service Agreement Page 6
(Brokers for Bank Trust Departments)
AIM Investment Funds
AIM Developing Markets Fund
AIM Emerging Markets Fund
AIM Emerging Markets Debt Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Government Income Fund
AIM Global Growth & Income Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM High Yield Fund II
AIM Series Trust
AIM Global Trends Fund
AIM Special Opportunities Funds
AIM Small Cap Opportunities Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
<PAGE> 1
EXHIBIT 15(f)
EXHIBIT C
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
This Variable Group Annuity Conractholder Service Agreement (the
"Agreement") has been adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act") under a Distribution Plan adopted pursuant
to said Rule. This Agreement, being made between A I M Distributors, Inc.
("Distributors") and the authorized insurance company, sets forth the terms for
the provision of specialized services to holders of Group Annuity Contracts
(the "Contracts") issued by insurance company separate accounts to employers
for their pension, stock bonus or profit-sharing plans qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Plans"), where
amounts contributed under such plans are invested pursuant to the Contracts in
shares of one or more of the series portfolios of the AIM - managed mutual
funds (or designated classes of such funds) (the "Fund(s)") listed in Appendix
A, attached hereto, which may be amended from time to time by Distributors.
Distributors' role in these arrangements will be solely as agent for the Funds.
1. To the extent you provide specialized services to holders of
Contracts who have selected the Fund(s) for purposes of their Group
Annuity Contracts ("Contractholders") you will receive payment pursuant to
the distribution plan adopted by each of the Funds. Such services to Group
Contractholders may include, without limitation, some or all of the
following: answering inquiries regarding the Fund(s); performing
sub-accounting for Contractholders; establishing and maintaining
Contractholder accounts and records; processing and bunching purchase and
redemption transactions; providing periodic statements of Contract account
balances; forwarding such reports and notices to Contractholders relative
to the Fund(s) as we deem necessary; generally, facilitating
communications with Contractholders concerning investments in the Fund(s)
on behalf of Plan participants; and performing such other administrative
services as we deem to be necessary or desirable, to the extent permitted
by applicable statute, rule or regulation. You represent that you will
accept a fee hereunder only so long as you continue to provide personal
services to Contractholders.
2. Shares of the Fund(s) purchased by you will be registered in your
name and you may exercise all applicable rights of a holder of such
Shares. You agree to transmit to the Funds, in a timely manner, all
purchase orders and redemption requests and to forward to each of your
Contractholders as you deem necessary, periodic shareholder reports and
other communications received from the Funds.
3. You agree to wire to the Fund(s)' custodian bank, within three (3)
business days of the placing of a purchase order, federal funds in an
amount equal to the amount of all purchase orders placed by you on behalf
of your Contractholders and accepted by the Funds (net of any redemption
orders placed by you on behalf of your Contractholders).
C-1
<PAGE> 2
4. You shall provide such facilities and personnel (which may be all
or any part of the facilities currently used in your business, or all or
any personnel employed by you) as may be necessary or beneficial in
carrying out the purposes of this Agreement.
5. Except as may be provided in a separate written agreement between
Distributors and you, neither you nor any of your employees or agents are
authorized to assist in the distribution of any shares of the Fund(s) to
the public or to make any representations to Contractholders concerning
the Fund(s) except those contained in the then current prospectus
applicable to the Fund(s). Neither the Funds, A I M Advisors, Inc.
("Advisors"), Distributors nor any of their affiliates will be a party,
nor will they be represented as a party, to any Group Annuity Contract
agreement between you and the Contractholders nor shall the Funds,
Advisors, Distributors or any of their affiliates participate, directly or
indirectly, in any compensation that you may receive from Contractholders
and their Plans' participants.
6. In consideration of the services and facilities described herein,
you shall receive an annual fee, payable quarterly, as set forth in
Appendix A, of the aggregate average net asset value of shares of the
Fund(s) owned by you during each quarterly period for the benefit of
Contractholders' Plans' participants. You understand that this Agreement
and the payment of such distribution fees have been authorized and
approved by the Boards of Directors/Trustees of the Fund(s). You further
understand that this Agreement and the fees payable hereunder are subject
to limitations imposed by applicable rules of the National Association of
Securities Dealers, Inc.
7. The Funds reserve the right, at their discretion and without
notice, to suspend the sale of their shares or to withdraw the sale of
their shares.
8. This Agreement may be amended at any time without your consent by
mailing a copy of an amendment to you at the address set forth below. Such
amendment shall become effective on the date set forth in such amendment
unless you terminate this Agreement as set forth below within thirty (30)
days of your receipt of such amendment.
9. This Agreement may be terminated at any time by us on not less than
60 days' written notice to you at your principal place of business. You
may terminate this Agreement on 60 days' written notice addressed to us at
our principal place of business. We may also terminate this Agreement for
cause on violation by you of any of the provisions of this Agreement, said
termination to become effective on the date of mailing notice to you of
such termination. Our failure to terminate for any cause shall not
constitute a waiver of our right to terminate at a later date for any such
cause.
This Agreement may be terminated with respect to any Fund at any
time without payment of any penalty by the vote of a majority of the
directors/trustees of such Fund who are Disinterested Directors/Trustees,
as defined in the 1940 Act, or by a vote of a majority of the Fund's
outstanding shares, on sixty (60) days' written notice. It will be
terminated by any act which terminates either the Fund's Distribution
Agreement with us, the Selected Dealer Agreement between your firm and us
or the Fund's Distribution Plan, and in any event, it shall terminate
automatically in the event of its assignment as that term is defined in
the 1940 Act.
C-2
<PAGE> 3
10. All communications to us shall be sent to 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Any notice to you shall be duly given if
mailed, telegraphed or sent by facsimile to you at the address shown on
this Agreement.
11. This Agreement shall become effective as of the date when it is
executed and dated below by us. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
Date: By:
---------------------------- -------------------------------
Signature
-------------------------------
Print Name
The undersigned agrees to abide by the foregoing terms and conditions.
Date:
---------------------------- --------------------------------
(Firm Name)
--------------------------------
(Address)
--------------------------------
(City) / (State) / (County)
By:
-----------------------------
Name:
---------------------------
Title:
---------------------------
C-3
<PAGE> 4
APPENDIX A
TO
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
<TABLE>
<CAPTION>
FUND FEE RATE*
- ---- --------
<S> <C>
AIM Advisor Funds, Inc. (Class A and Class C Shares)
AIM Advisor Flex Fund .25%
AIM Advisor International Value Fund .25%
AIM Advisor Large Cap Value Fund .25%
AIM Advisor MultiFlex Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds, Inc. (Class A and Class C Shares)
AIM Aggressive Growth Fund** .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group (Class A and Class C Shares)
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Select Growth Fund .25%
AIM Value Fund .25%
AIM International Funds, Inc. (Class A and Class C Shares)
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 (Class A Shares Only)
AIM Limited Maturity Treasury Fund .15%
AIM High Yield Fund II .25%
AIM Special Opportunities Funds (Class A Shares Only)
AIM Small Cap Opportunities Fund .25%
</TABLE>
- ---------------
* Frequency of Payments: Quarterly.
** AIM Aggressive Growth Fund is currently closed to new investors and
currently offers Class A Shares only.
C-4
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE LIMITED MATURITY
TREASURY FUND RETAIL SHARES JULY 31, 1998 ANNUAL REPORT.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> AIM LIMITED MATURITY TREASURY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 391,293,845
<INVESTMENTS-AT-VALUE> 391,994,363
<RECEIVABLES> 5,868,066
<ASSETS-OTHER> 98,126
<OTHER-ITEMS-ASSETS> 58,653
<TOTAL-ASSETS> 398,019,208
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,054,661
<TOTAL-LIABILITIES> 2,054,661
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 400,652,004
<SHARES-COMMON-STOCK> 39,326,428
<SHARES-COMMON-PRIOR> 43,572,323
<ACCUMULATED-NII-CURRENT> 88,842
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,476,817)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 700,518
<NET-ASSETS> 395,964,547
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 24,949,619
<OTHER-INCOME> 0
<EXPENSES-NET> 2,191,000
<NET-INVESTMENT-INCOME> 22,758,619
<REALIZED-GAINS-CURRENT> 1,855,056
<APPREC-INCREASE-CURRENT> (1,793,413)
<NET-CHANGE-FROM-OPS> 22,820,262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (22,758,619)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24,282,791
<NUMBER-OF-SHARES-REDEEMED> (30,204,372)
<SHARES-REINVESTED> 1,675,686
<NET-CHANGE-IN-ASSETS> (42,712,676)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7,332,297)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 855,900
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,195,054
<AVERAGE-NET-ASSETS> 378,032,807
<PER-SHARE-NAV-BEGIN> 10.07
<PER-SHARE-NII> 0.53
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.53)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.07
<EXPENSE-RATIO> 0.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE LIMITED MATURITY
TREASURY FUND INSTITUTIONAL SHARES JULY 31, 1998 ANNUAL REPORT.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> AIM LIMITED MATURITY TREASURY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 391,293,845
<INVESTMENTS-AT-VALUE> 391,994,363
<RECEIVABLES> 5,868,066
<ASSETS-OTHER> 98,126
<OTHER-ITEMS-ASSETS> 58,653
<TOTAL-ASSETS> 398,019,208
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,054,661
<TOTAL-LIABILITIES> 2,054,661
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 400,652,004
<SHARES-COMMON-STOCK> 39,326,428
<SHARES-COMMON-PRIOR> 43,572,323
<ACCUMULATED-NII-CURRENT> 88,842
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,476,817)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 700,518
<NET-ASSETS> 395,964,547
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 24,949,619
<OTHER-INCOME> 0
<EXPENSES-NET> 2,191,000
<NET-INVESTMENT-INCOME> 22,758,619
<REALIZED-GAINS-CURRENT> 1,855,056
<APPREC-INCREASE-CURRENT> (1,793,413)
<NET-CHANGE-FROM-OPS> 22,820,262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (22,758,619)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24,282,791
<NUMBER-OF-SHARES-REDEEMED> (30,204,372)
<SHARES-REINVESTED> 1,675,686
<NET-CHANGE-IN-ASSETS> (42,712,676)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7,332,297)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 855,900
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,195,054
<AVERAGE-NET-ASSETS> 49,917,358
<PER-SHARE-NAV-BEGIN> 10.07
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.07
<EXPENSE-RATIO> 0.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
