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[AIM LOGO] THE AIM FAMILY OF FUNDS(R)
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
(SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.)
PROSPECTUS
MARCH 1, 1995
AS REVISED
MAY 2, 1995
AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND and AIM
GLOBAL INCOME FUND (collectively, the "Funds") are series investment
portfolios of AIM International Funds, Inc. (the "Company"), an
open-end, series, management investment company. The Company also
offers shares of another series portfolio, AIM International Equity
Fund, pursuant to a separate prospectus.
AIM GLOBAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND"). The
investment objective of the AGGRESSIVE GROWTH FUND is to provide
above-average long-term growth of capital appreciation. The Fund
seeks to achieve its objective by investing in a portfolio of global
(i.e., U.S. and foreign) equity securities including securities of
selected companies with relatively small market capitalization.
AIM GLOBAL GROWTH FUND ("GROWTH FUND"). The investment objective of
the GROWTH FUND is to provide long-term growth of capital. The Fund
seeks to achieve its objective by investing in a portfolio of global
(i.e., U.S. and foreign) equity securities of selected companies that
are considered by the Fund's investment advisor to have strong
earnings momentum.
AIM GLOBAL INCOME FUND ("INCOME FUND"). The investment objective of
the INCOME FUND is to provide high current income. The Fund seeks to
achieve its objective by investing in a portfolio of U.S. and foreign
government and corporate debt securities. As a secondary objective,
the Fund seeks preservation of principal and capital appreciation.
This Prospectus sets forth basic information about the Funds that
prospective investors should know before investing. It should be read
and retained for future reference. A Statement of Additional
Information, dated March 1, 1995 as revised May 2, 1995, has been
filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Statement of Additional Information is
available without charge upon written request to the Company at P.O.
Box 4739, Houston, Texas 77210-4739.
AIM GLOBAL INCOME FUND MAY INVEST UP TO 35% OF ITS TOTAL ASSETS IN
NON-INVESTMENT GRADE DEBT SECURITIES, COMMONLY REFERRED TO AS "JUNK
BONDS." JUNK BONDS ARE CONSIDERED TO BE SPECULATIVE, AND ENTAIL
GREATER RISKS, INCLUDING DEFAULT RISKS, THAN THOSE FOUND IN HIGHER
RATED SECURITIES. PURCHASERS SHOULD CAREFULLY CONSIDER THE RISKS
ASSOCIATED WITH AN INVESTMENT IN THIS FUND PRIOR TO INVESTING. SEE
"INVESTMENT OBJECTIVES AND POLICIES -- AIM GLOBAL INCOME FUND," "RISK
FACTORS -- NON-INVESTMENT GRADE DEBT SECURITIES (INCOME FUND ONLY)"
AND "APPENDIX A -- DESCRIPTIONS OF CORPORATE BOND RATINGS."
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
<TABLE>
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SUMMARY................................. 2
THE FUNDS............................... 4
Table of Fees and Expenses............ 4
Financial Highlights.................. 5
Performance........................... 7
Investment Objectives and Policies.... 8
Hedging Strategies.................... 10
Other Investment Techniques........... 12
Risk Factors.......................... 14
Investment Restrictions............... 15
Portfolio Turnover.................... 16
Management............................ 16
Organization of the Company........... 19
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INVESTOR'S GUIDE........................ A-1
Introduction to The AIM Family of
Funds(R)........................... A-1
How to Purchase Shares................ A-1
Terms and Conditions of Purchase of
the AIM Funds...................... A-2
Special Plans......................... A-8
Exchange Privilege.................... A-10
How to Redeem Shares.................. A-12
Determination of Net Asset Value...... A-15
Dividends, Distributions and Tax
Matters............................ A-16
General Information................... A-18
APPENDIX A.............................. A-19
APPENDIX B.............................. A-22
APPLICATION INSTRUCTIONS................ B-1
</TABLE>
SUMMARY
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THE FUNDS. AIM International Funds, Inc. (the "Company") is a Maryland
corporation organized as an open-end, series, management investment company.
Currently, the Company offers four series comprising four separate investment
portfolios. Three of these series are offered pursuant to this Prospectus: AIM
GLOBAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND"), AIM GLOBAL GROWTH FUND
("GROWTH FUND") and AIM GLOBAL INCOME FUND ("INCOME FUND")(individually, a
"Fund" and collectively, the "Funds"), each of which pursues unique investment
objectives. The AGGRESSIVE GROWTH FUND and the GROWTH FUND are diversified
investment portfolios; the INCOME FUND is a non-diversified investment
portfolio. For more complete information on each Fund's investment objective and
policies, see "Investment Objectives and Policies."
RISK FACTORS. EACH FUND IS DESIGNED FOR LONG-TERM INVESTORS SEEKING GLOBAL
DIVERSIFICATION AND WILLING TO BEAR THE RISKS ASSOCIATED WITH INVESTMENTS IN
FOREIGN SECURITIES, INCLUDING CURRENCY RISK, POLITICAL AND ECONOMIC RISK,
REGULATORY RISK AND MARKET RISK. THE INCOME FUND IS A NON-DIVERSIFIED PORTFOLIO,
AND MAY ALSO INVEST IN HIGH YIELD SECURITIES (I.E., "JUNK BONDS") THAT ENTAIL
CERTAIN RISKS. NONE OF THE FUNDS IS DESIGNED AS A COMPLETE INVESTMENT PROGRAM.
FOR A DISCUSSION OF THESE RISKS, SEE "RISK FACTORS." THE INCOME FUND MAY ENGAGE
IN LEVERAGING WHICH MAY INVOLVE AN INCREASE IN RISK. SEE "BORROWING."
MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Funds' investment
advisor pursuant to an investment advisory agreement (the "Advisory Agreement").
AIM manages or advises 37 investment company portfolios. As of February 1, 1995,
the total assets advised or managed by AIM or its affiliates were approximately
$27.7 billion. Under the terms of the Advisory Agreement, AIM supervises all
aspects of the Funds' operations and provides investment advisory services to
the Funds. As compensation for these services, AIM receives a fee based on each
Fund's average daily net assets. Under an Administrative Services Agreement, AIM
may be reimbursed by each Fund for its costs of performing, or arranging for the
performance of, certain accounting, shareholder servicing and other
administrative services for each 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 fee for its provision of shareholder
services for each Fund.
MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A or Class B
shares of the Funds which are offered by this Prospectus at an offering price
that reflects differing sales charges and expense levels. See "Terms and
Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer
Concessions."
Class A Shares -- Shares are offered at net asset value plus any
applicable initial sales charge.
Class B Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a maximum contingent deferred
sales charge of 5% on certain redemptions made within six years of the end
of the calendar month in which a purchase was made. Class B shares
automatically convert to Class A shares of the same Fund eight years
following the end of the calendar month in which a purchase was made. Class
B shares are subject to higher expenses than Class A shares.
SUITABILITY FOR INVESTORS. The Multiple Distribution System permits an
investor to choose the method of purchasing shares that is most beneficial given
the amount of the purchase, the length of time the shares are expected to be
held, whether dividends will be paid in cash or reinvested in additional shares
of a Fund and other circumstances. Investors should consider whether, during the
anticipated life of their investment in a Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges
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on Class B shares prior to conversion would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same
time, and to what extent such differential would be offset by the higher return
on Class A shares. To assist investors in making this determination, the table
under the caption "Table of Fees and Expenses" sets forth examples of the
charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial
sales charges, as described below. Therefore, A I M Distributors, Inc. will
reject any order for purchase of more than $250,000 for Class B shares.
PURCHASING SHARES. Initial investments in either class of shares must be at
least $500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the Fund's shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, Texas 77210-4739. See "How to Purchase
Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Funds are several of the mutual funds distributed
by AIM Distributors ("The AIM Family of Funds(R)"). Class A shares of the Funds
may be exchanged for Class A Shares (or shares which normally involve payment of
initial sales charges) of other funds in The AIM Family of Funds(R) in the
manner and subject to the policies and charges set forth herein. Class B shares
of each Fund may be exchanged only for Class B Shares of other funds in The AIM
Family of Funds(R). See "Exchange Privilege."
REDEEMING SHARES. Holders of Class A shares may redeem all or a portion of
their shares at net asset value on any business day, generally without charge. A
contingent deferred sales charge of 1% may apply to certain redemptions of Class
A shares, where purchases of shares in an amount of $1 million or more are made
at net asset value. See "How to Redeem Shares -- Contingent Deferred Sales
Charge Program for Large Purchases."
Holders of Class B shares may redeem all or a portion of their shares at
net asset value on any business day, less a contingent deferred sales charge for
redemptions made within six years following the end of the calendar month in
which a purchase was made. Class B shares redeemed after six years following the
end of the calendar month of purchase will not be subject to any contingent
deferred sales charge. See "How to Redeem Shares -- Multiple Distribution
System."
DISTRIBUTIONS. The AGGRESSIVE GROWTH FUND and the GROWTH FUND declare and
pay dividends from net investment income, if any, and make distributions of
realized capital gains, if any, on an annual basis. The INCOME FUND declares
dividends from net investment income on a daily basis and pays such dividends
monthly. The INCOME FUND declares and makes distributions of realized short-term
capital gains, if any, annually, and of realized long-term capital gains, if
any, annually. Dividends and distributions paid with respect to Class A shares
of a Fund may be paid by check, may be reinvested in additional Class A shares
of the Fund or, subject to certain conditions, in Class A shares (or shares
which normally involve payment of initial sales charges) of other funds in The
AIM Family of Funds(R) at current net asset value (without payment of a sales
charge). Dividends and distributions paid with respect to Class B shares of a
Fund may be paid by check or reinvested in additional Class B shares of the Fund
or Class B Shares of other funds in The AIM Family of Funds(R), subject to
certain conditions. See "Dividends, Distributions and Tax Matters" and "Special
Plans."
The AIM Family of Funds(R), The AIM Family of Funds and Design (i.e., the
AIM logo), and AIM and Design are registered service marks of A I M Management
Group Inc.
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THE FUNDS
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TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Funds understand
the various costs that an investor will bear, both directly and indirectly. The
fees and expenses set forth in the table are based on estimated amounts for the
current fiscal year. Actual expenses may be greater or less than such estimates.
The rules of the Securities and Exchange Commission 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>
AGGRESSIVE
GROWTH FUND GROWTH FUND INCOME FUND
----------------- ----------------- ------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase
of shares (as a % of offering price). 4.75% None 4.75% None 4.75% None
Maximum sales load on reinvested
dividends and distributions.......... None None None None None None
Deferred sales load (as a % of original
purchase price or redemption
proceeds, whichever is lower)........ None* 5.0% None* 5.0% None* 5.0%
Redemption fee.......................... None None None None None None
Exchange fee**.......................... None None None None None None
Annual Fund Operating Expenses (as a % of
average net assets)
Management fees*** (after fee
waivers)............................. .90% .90% .61% .61% .14% .14%
Rule 12b-1 distribution plan payments... .50% 1.00% .50% 1.00% .50% 1.00%
Other expenses.......................... .57% .57% 1.03% 1.03% .61% .61%
----- ----- ----- ----- ----- -----
Total fund operating expenses... 1.97% 2.47% 2.14% 2.64% 1.25% 1.75%
===== ===== ===== ===== ===== =====
</TABLE>
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* Purchases of shares in an amount of $1 million or more are not subject to
an initial sales charge. However, a contingent deferred sales charge of 1%
applies to certain redemptions made within 18 months following the end of
the calendar month in which such purchases were made. See the Investor's
Guide, under the caption "How to Redeem Shares -- Contingent Deferred
Sales Charge Program for Large Purchases."
** No fee will be charged for exchanges among The AIM Family of Funds(R);
however, a $5 service fee will be charged for exchanges by accounts of
market timers.
*** If no fee waivers were projected on the GROWTH FUND and INCOME FUND,
management fees would be 0.85% and 0.70%, respectively.
EXAMPLES. An investor in each of the Funds would pay the following expenses
on a $1,000 investment in Class A shares of the Funds, assuming (1) a 5% annual
return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH GROWTH INCOME
FUND FUND FUND
---------- ------ ------
<S> <C> <C> <C>
1 year......................................... $ 67 $ 68 $60
3 years........................................ $106 $111 $85
</TABLE>
The examples above assume payment of a sales charge at the time of purchase
of Class A shares; actual expenses may vary for purchases of shares in an amount
of $50,000 or more. Purchases in an amount of $1 million or more are made at net
asset value and are subject to a contingent deferred sales charge for 18 months
following the end of the calendar month in which the purchases were made.
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An investor in each of the Funds would pay the following expenses on a
$1,000 investment in Class B shares of the Funds, assuming (1) a 5% annual
return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH GROWTH INCOME
FUND FUND FUND
---------- ------ ------
<S> <C> <C> <C>
1 year......................................... $ 75 $ 77 $68
3 years........................................ $107 $112 $85
</TABLE>
An investor in each of the Funds would pay the following expenses on the
same $1,000 investment in Class B shares, assuming no redemption at the end of
each time period:
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH GROWTH INCOME
FUND FUND FUND
---------- ------ ------
<S> <C> <C> <C>
1 year......................................... $25 $27 $18
3 years........................................ $77 $82 $55
</TABLE>
As a result of 12b-1 fees, a long-term shareholder may pay more than the
economic equivalent of the maximum front-end sales charges permitted by rules of
the National Association of Securities Dealers, Inc. Given the maximum front-end
sales charge applicable to Class A shares and the Rule 12b-1 fees applicable to
Class A shares and Class B shares, it is estimated that it would require a
substantial number of years to exceed the maximum permissible front-end sales
charges.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF A PARTICULAR
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, a Fund's actual
performance 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.
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FINANCIAL HIGHLIGHTS
Shown below are per share income and capital changes for a Class A share
and Class B share of each of the Funds for the period September 15, 1994 (date
operations commenced) through October 31, 1994. The information has been audited
by KPMG Peat Marwick LLP, independent auditors, whose unqualified reports on the
Funds' financial statements and the related notes appear in the Statement of
Additional Information.
AIM GLOBAL AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
PERIOD SEPTEMBER 15, 1994
THROUGH OCTOBER 31, 1994
-------------------------
CLASS A CLASS B
------- -------
<S> <C> <C>
Net asset value, beginning of period................................... $ 10.00 $ 10.00
Income from investment operations:
Net investment income............................................. -- --
Net gains or losses on securities (both realized and
unrealized)...................................................... 0.22 0.21
------- -------
Total from investment operations.................................. 0.22 0.21
------- -------
Less distributions:
Dividends from net investment income.............................. -- --
Distributions from capital gains.................................. -- --
------- -------
Total distributions............................................... -- --
------- -------
Net asset value, end of period......................................... $ 10.22 $ 10.21
======= =======
Total return(a)........................................................ 2.20% 2.10%
======= =======
Ratio/supplemental data:
Net assets, end of period (000s omitted)............................. $18,410 $ 6,201
======= =======
Ratio of expenses to average net assets.............................. 2.02%(b) 2.54%(c)
======= =======
Ratio of net investment income (loss) to average net assets.......... 0.27%(b) (0.25)%(c)
======= =======
Portfolio turnover rate.............................................. 2% 2%
======= =======
</TABLE>
(See notes on following page)
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(a) Does not include sales charges and for periods less than one year; total
returns are not annualized.
(b) Ratios are annualized and based on average net assets of $9,080,196.
Annualized ratios of expenses and net investment income (loss) to average
net assets before fee waivers and expenses reimbursements are 4.03% and
(1.74)%, respectively.
(c) Ratios are annualized and based on average net assets of $2,612,907.
Annualized ratios of expenses and net investment income (loss) to average
net assets before fee waivers and expense reimbursements are 4.43% and
(2.14)%, respectively.
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
PERIOD SEPTEMBER 15, 1994
THROUGH OCTOBER 31, 1994
-------------------------
CLASS A CLASS B
------- -------
<S> <C> <C>
Net asset value, beginning of period................................... $10.00 $10.00
Income from investment operations:
Net investment income (loss)...................................... -- --
Net gains or losses on securities (both realized and
unrealized)...................................................... 0.23 0.22
------ ------
Total from investment operations.................................. 0.23 0.22
------ ------
Less distributions:
Dividends from net investment income.............................. -- --
Distributions from capital gains.................................. -- --
------ ------
Total distributions............................................... -- --
------ ------
Net asset value, end of period......................................... $10.23 $10.22
====== ======
Total return(a)........................................................ 2.30% 2.20%
====== ======
Ratio/supplemental data:
Net assets, end of period (000s omitted)............................. $3,093 $1,277
====== ======
Ratio of expenses to average net assets.............................. 1.95%(b) 2.51%(c)
====== ======
Ratio of net investment income (loss) to average net assets.......... 0.10%(b) (0.47)%(c)
====== ======
Portfolio turnover rate.............................................. 6% 6%
====== ======
</TABLE>
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(a) Does not include sales charges and for periods less than one year; total
returns are not annualized.
(b) Ratios are annualized and based on average net assets of $1,890,074.
Annualized ratios of expenses and net investment income (loss) to average
net assets before fee waivers and expense reimbursements are 5.67% and
(3.63)%, respectively.
(c) Ratios are annualized and based on average net assets of $683,047.
Annualized ratios of expenses and net investment income (loss) to average
net assets before fee waivers and expense reimbursements are 6.20% and
(4.16)%, respectively.
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AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
PERIOD SEPTEMBER 15, 1994
THROUGH OCTOBER 31, 1994
--------------------------
CLASS A CLASS B
------- -------
<S> <C> <C>
Net asset value, beginning of period................................... $10.00 $10.00
Income from investment operations:
Net investment income............................................. 0.08 0.07
Net gains or losses on securities (both realized and
unrealized)...................................................... 0.01 0.01
------ ------
Total from investment operations.................................. 0.09 0.08
------ ------
Less distributions:
Dividends from net investment income.............................. (0.07) (0.07)
------ ------
Total distributions............................................... (0.07) (0.07)
------ ------
Net asset value, end of period......................................... $10.02 $10.01
====== ======
Total return(a)........................................................ 0.93% 0.79%
====== ======
Ratio/supplemental data:
Net assets, end of period (000s omitted)............................. $2,661 $ 362
====== ======
Ratio of expenses to average net assets.............................. 1.25%(b) 1.73%(c)
====== ======
Ratio of net investment income to average net assets................. 6.01%(b) 3.59%(c)
====== ======
Portfolio turnover rate.............................................. 6% 6%
====== ======
</TABLE>
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(a) Does not include sales charges and for periods less than one year; total
returns are not annualized.
(b) Ratios are annualized and based on average net assets of $2,226,439.
Annualized ratios of expenses and net investment income (loss) to average
net assets before fee waivers and expenses reimbursements are 5.61% and
1.65%, respectively.
(c) Ratios are annualized and based on average net assets of $102,724.
Annualized ratios of expenses and net investment income (loss) to average
net assets before fee waivers and expense reimbursements are 22.09% and
(16.77)%, respectively.
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PERFORMANCE
The performance of each Fund may be quoted in advertising in terms of total
return, and the performance of the INCOME FUND may also be quoted in terms of
yield. All advertisements of a Fund will disclose the maximum sales charge
(including deferred sales charge) to which investments in shares of the Funds
may be subject. Each Fund will also include performance data on Class A and
Class B shares in any advertisement or promotional material which includes Fund
performance data. If any advertised performance data does not reflect the
maximum sales charge (if any), such advertisement will disclose that the sales
charge has not been deducted in computing the performance data, and that, if
reflected, the maximum sales charge would reduce the performance quoted. See the
Statement of Additional Information for further details concerning performance
comparisons used in advertisements by the Funds.
Standardized total return for Class A shares reflects the deduction of the
Fund's maximum initial sales charge at the time of purchase. Standardized total
return for Class B shares reflects the deduction of the maximum applicable
contingent deferred sales charge on a redemption of shares held for the period.
Each Fund's total return shows its overall change in value, including
changes in share price assuming that all the Fund's dividends and capital gain
distributions are reinvested and that all charges and expenses are deducted. A
cumulative total return reflects a Fund's performance over a stated period of
time. An average annual total return reflects the hypothetical compounded annual
rate of return that would have produced the same cumulative total return if the
Fund's performance had been constant over the entire period. BECAUSE AVERAGE
ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN A 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.
Yield is computed in accordance with a standardized formula described in
the Statement of Additional Information and can be expected to fluctuate from
time to time and is not necessarily indicative of future results. Accordingly,
the yield information may not provide a basis for comparison with investments
which pay a fixed rate of interest for a stated period of time. Yield reflects
investment income net of expenses over the relevant period attributable to a
share of the Fund, expressed as an annualized percentage of the maximum offering
price per share of the Fund. It is a function of the type and quality of a
Fund's investments, its maturity and its operating expense ratio.
7
<PAGE> 8
From time to time and in its discretion, AIM may waive all or a portion of
its advisory fees and/or assume certain expenses of any Fund. Such a practice
will have the effect of increasing the Fund's yield and total return.
The performance of each Fund will vary from time to time, and past results
are not necessarily representative of future results. Each Fund's performance is
a function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund as well
as by general market conditions. A shareholder's investment in any of the Funds
is not insured or guaranteed. These factors should be carefully considered by
the investor before making an investment in a Fund.
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INVESTMENT OBJECTIVES AND POLICIES
Each of the Funds has its own investment objective and investment program
as discussed herein. The Funds' investment objective(s) are fundamental policies
that cannot be changed without shareholder approval. There can, of course, be no
assurance that any Fund will in fact achieve its objective(s). The Board of
Directors of the Company reserves the right to change any of the investment
policies, strategies or practices of any of the Funds, as described in this
Prospectus and in the Statement of Additional Information, without shareholder
approval, except in those instances where shareholder approval is expressly
required.
AIM GLOBAL AGGRESSIVE GROWTH FUND. The investment objective of the
AGGRESSIVE GROWTH FUND is to provide above-average long-term growth of capital
appreciation. The Fund seeks to achieve its objective by investing in a
portfolio of global equity securities including securities of selected companies
with relatively small market capitalization.
The AGGRESSIVE GROWTH FUND will invest in companies throughout the world
which AIM believes possess exceptional growth potential that should enhance such
companies' prospects for future growth in earnings. As a result of this policy,
the market prices of many of the securities purchased and held by the AGGRESSIVE
GROWTH FUND may fluctuate widely. Any income received from securities held by
the Fund will be incidental, and an investor should not consider a purchase of
shares of the AGGRESSIVE GROWTH FUND as equivalent to a complete investment
program. The AGGRESSIVE GROWTH FUND will emphasize investment in small to
medium-sized companies, but its strategy does not preclude investment in large,
seasoned companies which in AIM's judgment possess superior potential returns
similar to companies with formative growth profiles. The Fund will also invest
in established smaller companies (under $1 billion in market capitalization)
which in AIM's judgment offer exceptional value based upon substantially above
average earnings growth potential relative to market value. Investors should
realize that equity securities of small to medium-sized companies may involve
greater risk than is associated with investing in more established companies.
Small to medium-sized companies often have limited product and market
diversification, fewer financial and managerial resources or may be dependent on
a few key managers. Also, because smaller companies normally have fewer shares
outstanding than larger companies and trade less frequently, it may be more
difficult for the Fund to buy and sell shares without an unfavorable impact on
prevailing market prices. Some of the companies in which the Fund may invest may
distribute, sell or produce products which have recently been brought to market.
Any of the foregoing may change suddenly and have an immediate impact on the
value of the Fund's investments. Furthermore, whenever the securities markets
have experienced rapid price changes due to national economic trends, secondary
growth securities have historically been subject to exaggerated price changes.
AIM GLOBAL GROWTH FUND. The investment objective of the GROWTH FUND is to
provide long-term growth of capital. The Fund seeks to achieve its objective by
investing in a portfolio of global equity securities of selected companies that
are considered by AIM to have strong earnings momentum. Current income will not
be an important criterion of investment selection, and any such income should be
considered incidental.
In managing both the AGGRESSIVE GROWTH FUND and the GROWTH FUND, AIM seeks
to apply to each of the diversified portfolios of equity securities the same
investment strategy which it applies to several of its other managed portfolios
which have similar investment objectives but which invest primarily in United
States equities markets. Each of the AGGRESSIVE GROWTH FUND and the GROWTH FUND
will utilize to the extent practicable a fully managed investment policy
providing for the selection of securities which meet certain quantitative
standards determined by AIM. AIM reviews carefully the earnings history and
prospects for growth of each company considered for investment by each of the
two Funds. It is anticipated that common stocks will be the principal form of
investment of the AGGRESSIVE GROWTH FUND and the GROWTH FUND. The portfolio of
each of the two Funds is primarily comprised of securities of two basic
categories of companies: (a) "core" companies, which AIM considers to have
experienced above-average and consistent long-term growth in earnings and to
have excellent prospects for outstanding future growth, and (b) "earnings
acceleration" companies which AIM believes are currently enjoying a dramatic
increase in earnings.
Under normal market conditions, the AGGRESSIVE GROWTH FUND and the GROWTH
FUND will invest primarily in marketable equity securities (including common and
preferred stock and other securities having the characteristics of stock (such
as an equity or ownership interest in a company)) of companies which, with their
predecessors, have been in continuous operation for three years or more and
which are listed on a recognized securities exchange or traded in an
over-the-counter market. The Fund may satisfy the foregoing requirement in part
through the ownership of securities which are convertible into, or exchangeable
for, common stocks, or by investment in the securities of issuers which are in
the form of American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), or other securities representing underlying securities of foreign
issuers.
8
<PAGE> 9
If a particular foreign company meets the quantitative standards determined
by AIM, its securities may be acquired by a Fund regardless of the location of
the company or the percentage of the Fund's investments in the company's country
or region. However, AIM will also consider other factors in making investment
decisions for these Funds, including such factors as the prospects for relative
economic growth among countries or regions, economic and political conditions,
currency exchange fluctuations, tax considerations and the liquidity of a
particular security. Under normal market conditions, the AGGRESSIVE GROWTH FUND
and the GROWTH FUND will maintain at least 20% of their respective total assets
in U.S. dollar denominated securities.
AIM recognizes that often there is less public information about foreign
companies than is available in reports supplied by domestic companies, that
foreign companies are not subject to uniform accounting and financial reporting
standards, and that there may be greater delays experienced by a Fund in
receiving financial information supplied by foreign companies than comparable
information supplied by domestic companies. In addition, the value of a Fund's
investments that are denominated in a foreign currency may be affected by
changes in currency exchange rates. For these and other reasons, AIM from time
to time may encounter greater difficulty applying its disciplined stock
selection strategy to an international equity investment portfolio than to a
portfolio of domestic equity securities. See "Risk Factors -- Foreign
Securities."
The AGGRESSIVE GROWTH FUND and the GROWTH FUND each will normally invest at
least 65% of their respective total assets in marketable equity securities of
foreign and domestic issuers, including common and preferred stock.
As a temporary defensive measure, and without regard to each Fund's
investment objective, AIM may invest all or substantially all of the assets of
the AGGRESSIVE GROWTH FUND or the GROWTH FUND in cash or high-grade short-term
securities, including repurchase agreements, denominated either in U.S. dollars
or foreign currencies. To the extent a Fund assumes a temporary defensive
posture and holds cash or invests in high-grade short-term securities, it will
not be pursuing its investment objective. Under normal circumstances, neither
the AGGRESSIVE GROWTH FUND nor the GROWTH FUND will invest more than 35% of the
value of its total assets in high-grade short-term securities, including
repurchase agreements.
The AGGRESSIVE GROWTH FUND and the GROWTH FUND will each emphasize
investment in companies in developed countries such as the United States, the
countries of Western Europe and certain countries in the Pacific Basin (such as
Japan, Hong Kong and Australia). The Funds may also invest in the securities of
companies located in developing countries (such as Turkey, Poland and Mexico) in
various regions of the world. A "developing country" is a country in the initial
stages of its industrial cycle. Under normal market conditions, the assets of
each Fund will be invested in the securities of companies located in at least
four different countries, including the United States.
Investment in the equity markets of developing countries involves exposure
to securities exchanges that may have substantially less trading volume and
greater price volatility, economic structures that are less diverse and mature,
and political systems that may be less stable than the equity markets of
developed countries. See "Risk Factors -- Emerging Markets and Developing
Countries."
AIM GLOBAL INCOME FUND. The INCOME FUND'S primary investment objective is
to provide a high level of current income. As a secondary objective the Fund
seeks preservation of principal and capital appreciation. The Fund seeks to
achieve its objectives by investing in a portfolio of U.S. and foreign
government and corporate debt securities. The INCOME FUND intends to invest in
(i) foreign government securities, (ii) securities issued by supranational
organizations (such as the World Bank), (iii) foreign and domestic corporate
debt securities, including lower-rated or unrated U.S. dollar-denominated high
yield corporate debt securities, commonly known as "junk bonds" and (iv) U.S.
Government securities, including U.S. Government Agency mortgage-backed
securities.
The INCOME FUND is a non-diversified portfolio, which means that with
respect to 50% of its assets, it is permitted to invest more than 5% of its
assets in the securities of any one issuer. The INCOME FUND will, however,
invest no more than 5% of its total assets in the securities of any one
corporate issuer, and will invest no more than 25% of its total assets in
securities of any one foreign government or supranational issuer. The INCOME
FUND will generally invest in the securities of issuers located in at least four
countries, including the United States, although for defensive purposes, it may
from time to time invest 100% of its total assets in securities of U.S. issuers,
which may include U.S. Government securities, or money market securities with
maturities of 397 days or less. Under normal market conditions, the INCOME FUND
will maintain at least 20% of total assets in securities of U.S. issuers.
The INCOME FUND may invest in securities issued by governments and
companies throughout the world, but expects that it will invest primarily in
securities of issuers in industrialized countries with established securities
markets, such as Western European countries, Canada, Japan, Australia, New
Zealand and the United States. The INCOME FUND may, however, invest up to 20% of
its total assets in securities of issuers in developing countries such as
Turkey, Poland and Mexico.
Although the INCOME FUND will invest at least 65% of its total assets in
debt securities of foreign and domestic issuers, it may invest up to 10% of its
total assets in common stocks, preferred stocks, convertible securities and
similar equity securities of foreign and domestic issuers.
The INCOME FUND may invest up to 35% of its total assets in high yield debt
securities (i.e., "junk bonds"). Such securities, at the time of purchase, are
rated below investment grade or are determined by AIM to be of non-investment
grade quality. (For a description of the various rating categories of corporate
debt securities in which the INCOME FUND may invest, see Appendix A to this
Prospectus.)
9
<PAGE> 10
During 1994, the percentage of the Income Fund's average annual assets,
calculated on a dollar weighted basis, which was invested in securities within
each rating category of Moody's (as described in Appendix A), and in unrated
securities determined by AIM to be of comparable quality, was as follows:
<TABLE>
<CAPTION>
INCOME
FUND
-------
<S> <C>
Aaa................................................................................ 59.04%
Aa................................................................................. 6.20%
A.................................................................................. 12.75%
Baa................................................................................ 1.84%
Ba................................................................................. 7.46%
B.................................................................................. 11.01%
Caa................................................................................ 1.70%
Ca................................................................................. 0.00%
C.................................................................................. 0.00%
D.................................................................................. 0.00%
Unrated............................................................................ 0.00%
-------
Total Average Annual Assets.............................................. 100.0%
</TABLE>
Securities issued by the U.S. Treasury (notes, bonds and bills) are
supported by the full faith and credit of the United States government, while
certain securities issued or guaranteed by agencies or instrumentalities of the
U.S. Government may not be supported by the full faith and credit of the United
States. These agency securities include both obligations supported by the right
of the issuer to borrow from the U.S. Treasury (such as obligations of the
Federal Home Loan Bank) and obligations supported by the credit of the agency or
instrumentality (such as Federal National Mortgage Association bonds.)
Similarly, obligations of foreign governments include obligations issued by
national, provincial, state or other governments that have taxing authority over
their local populations, or by agencies of such governments that may be
supported by the full faith and credit of the governmental entity, or solely by
the credit of such agency.
Supranational organizations include organizations formed and supported by
governmental entities to promote economic growth and development, or
international banking institutions, such as the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the Inter-American Development Bank.
Supranational organizations are generally formed and supported by the capital
contributions of governmental entities and, in their lending and other
activities, carry out the particular purposes designated by their member
governmental entities.
The value of the debt securities in which the INCOME FUND invests will
change in response to interest rate changes and other factors. During periods of
rising interest rates, the values of outstanding long-term debt securities will
generally decline, and during periods of falling interest rates, the values of
such securities will generally rise. Such changes will affect the net asset
value per share of the INCOME FUND. The INCOME FUND generally expects to invest
in securities with maturities ranging from 4 to 10 1/2 years. Longer-term fixed
income securities tend to be subject to greater fluctuations in price than
shorter-term securities.
For a discussion of certain risks associated with investments in high yield
securities (i.e., "junk bonds"), foreign securities and non-diversified funds,
see "Risk Factors" in this Prospectus. For a further discussion of the intended
investment strategy of the AGGRESSIVE GROWTH FUND, the GROWTH FUND and the
INCOME FUND, see "Hedging Strategies" and "Other Investment Techniques" in this
Prospectus.
- --------------------------------------------------------------------------------
HEDGING STRATEGIES
Each of the Funds may, at such times as AIM deems appropriate and
consistent with the investment objective of the Fund, write (sell) covered put
or call options on its portfolio securities. Each of the Funds may also purchase
and sell (i) options on domestic and foreign securities and currencies, (ii)
stock index options, (iii) stock, currency and interest rate futures, (iv)
options on stock, currency, stock index and interest rate futures and (v)
foreign forward currency exchange contracts. The purpose of such transactions is
to hedge against changes in the market value of a Fund's portfolio securities
caused by fluctuating interest rates, fluctuating currency exchange rates and
changing market conditions, and to close out or offset existing positions in
such options or futures contracts as described below. None of the Funds will
engage in such transactions for speculative purposes.
OPTIONS. Each Fund may purchase options issued by the Options Clearing
Corporation. Such options give a Fund the right for a fixed period of time to
sell (in the case of purchase of a put option) or to buy (in the case of
purchase of a call option) the number of units of the underlying security or
obligation covered by the option at a fixed or determinable exercise price.
Buying a put option hedges against the risk of a market decline. Buying a call
option hedges against a market advance. Prior to its expiration, a put or call
option may be sold in a closing sale transaction. Gain or loss from such a sale
will depend on whether the amount received is more or less than the premium paid
for the option plus the related transaction costs.
Each Fund also may write (sell) put or call options, but only if such
options are covered and remain covered as long as the Fund is obligated as a
writer of the option (seller). A call option is "covered" if a Fund owns the
underlying security covered by the call. A
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<PAGE> 11
put option is "covered" if a Fund segregates with its custodian cash, U.S.
Treasury bills or other high-grade short-term debt obligations with a value
equal to the exercise price of the put option. If a "covered" call or put option
expires unexercised, the writer realizes a gain in the amount of the premium
received. If the covered call option is exercised, the writer realizes either a
gain or loss from the sale or purchase of the underlying security with the
proceeds to the writer being increased by the amount of the premium. If the
covered put option is exercised, the writer's cost of purchasing the underlying
security is reduced by the amount of the premium received from the initial sale
of the put option. Prior to its expiration, a put or call option may be closed
out by means of a purchase of an identical option. Any gain or loss from such
transaction will depend on whether the amount paid is more or less than the
premium received for the option plus related transaction costs.
Each Fund may also purchase and write options in combination with each
other to adjust the risk and return characteristics of certain portfolio
security positions. This technique is commonly referred to as a "straddle."
Options are subject to certain risks, including the risk of imperfect
correlation between the option and a Fund's other investments and the risk that
there might not be a liquid secondary market for the option when the Fund seeks
to hedge against adverse market movements. In general, options whose strike
prices are close to their underlying securities' current values will have the
highest trading value, while options whose strike prices are further away may be
less liquid. The liquidity of options may also be affected if options exchanges
impose trading halts, particularly when markets are volatile.
None of the Funds will write options if, immediately after such sale, the
aggregate value of the securities or obligations underlying the outstanding
options exceeds 25% of the Fund's total assets. None of the Funds will purchase
put options (including options on securities indices and futures contracts) if,
at the time of investment, the aggregate premiums paid for such options will
exceed 5% of the Fund's total assets.
FUTURES AND FORWARD CONTRACTS. Since substantially all of the securities
held by each Fund may be denominated in foreign currencies, the value of their
respective portfolios will be affected by changes in exchange rates between
currencies (including the U.S. dollar), as well as by changes in the market
value of the securities themselves. Each Fund may enter into interest rate,
exchange rate and currency futures contracts and related options, or it may
purchase or sell stock index futures contracts and related options in order to
mitigate the effects of such changes. Futures contracts obligate the seller to
deliver a specific type of security called for in the contract, at a specified
future time and for a specified price. Futures contracts are traded on U.S. and
foreign exchanges and generally contain standardized strike prices and
expiration dates. Certain futures contracts may be satisfied by actual delivery
of the securities or, more typically, by entering into an offsetting
transaction. 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. In
addition to purchasing or selling futures contracts on currencies and specific
securities, interest rates and exchange rates, each Fund may purchase or sell
stock index futures contracts. A stock index futures contract is an agreement to
take or make delivery of an amount of cash based on the difference between the
value of a stock index at the beginning and at the end of the contract period.
No more than 5% of each Fund's total assets will be committed to initial margin
deposits required pursuant to futures contracts. Percentage investment
limitations on each Fund's investment in options on futures contracts are set
forth above under "Options." Although each Fund is authorized to invest in
futures contracts and related options with respect to foreign securities, stock
indices, interest rates and currencies, it will limit such investments to those
which have been approved by the Commodity Futures Trading Commission for
investment by United States investors.
In attempting to manage its currency exposure, each Fund may buy and sell
currencies, either in the spot (cash) market or in the forward market (through
forward contracts generally expiring within one year). Each Fund may also enter
into forward contracts with respect to a specific purchase or sale of a
security, or with respect to its portfolio positions generally. When a Fund
purchases a security for settlement in the near future, it may immediately
purchase in the forward market the currency needed to pay for and settle the
purchase. By entering into a forward contract with respect to the specific
purchase or sale of a security denominated in a foreign currency, a Fund can
secure an exchange rate between the trade and settlement dates for that purchase
or sale transaction. This practice is sometimes referred to as "transaction
hedging." In addition to hedging specific securities transactions, the Funds may
also generally hedge their respective holdings denominated in a particular
currency. This practice is sometimes referred to as "position hedging." The
Funds may not position hedge with respect to the currency of a particular
country to an extent greater than the aggregate market value (at the time of
making such sale) of the securities held in any such Fund's portfolio
denominated or quoted in that particular foreign currency.
Unlike futures contracts, forward contracts are generally individually
negotiated and privately traded. A forward contract obligates the seller to sell
a specific security or currency at a specified price on a future date, which may
be any fixed number of days from the date of the contract. Each Fund may enter
into transaction hedging forward contracts with respect to all or a substantial
portion of its trades.
There are risks associated with the use of futures and forward contracts
and options thereon for hedging purposes. During certain market conditions,
sales of futures contracts may not completely offset a decline or rise in the
value of a Fund's portfolio securities or currency against which the futures or
forward contract or options thereon are being sold. In the futures and options
on futures markets, it may not always be possible to execute a buy or sell order
at the desired price, or to close out an open position due to market conditions,
limits on open positions and/or daily price fluctuations. Risks in the use of
futures contracts and options thereon also result from the possibility that
changes in the market value of securities or currency may differ substantially
from the changes anticipated by a Fund when hedged positions were established.
Successful use of futures and forward contracts and options thereon is
11
<PAGE> 12
dependent upon AIM's ability to predict correctly movements in the direction of
the applicable markets. No assurance can be given that AIM's judgment in this
respect will be correct. Accordingly, the Funds may lose the expected benefit of
futures and forward transactions and options thereon if markets move in
unanticipated by AIM.
- --------------------------------------------------------------------------------
OTHER INVESTMENT TECHNIQUES
Each of the Funds has the flexibility to invest, to the extent described
below, in a variety of instruments designed to enhance its investment
capabilities. Each of the Funds may invest in money market obligations, foreign
securities, repurchase agreements, reverse repurchase agreements, illiquid
securities, Rule 144A securities, ADRs and EDRs; the INCOME FUND may invest in
U.S. Government Agency Mortgage-Backed Securities; and each of the Funds may
purchase or sell securities on a delayed delivery or when-issued basis, may
borrow money, may lend portfolio securities and make short sales "against the
box." A short sale is "against the box" to the extent that the Fund
contemporaneously owns or has the right to obtain securities identical to those
sold short without payment of any further consideration.
MONEY MARKET OBLIGATIONS. When deemed appropriate for temporary or
defensive purposes, each of the Funds may hold cash or cash equivalent Money
Market Obligations. The term "Money Market Obligations" includes a broad range
of U.S. Government and foreign government obligations, and bank and commercial
instruments that may be available in the money markets. Such obligations include
U.S. Treasury obligations and repurchase agreements secured by such obligations.
The term also includes investments in bankers' acceptances, certificates of
deposit, repurchase agreements, time deposits and commercial paper, and U.S.
Government direct obligations and U.S. Government agencies' securities. Bankers'
acceptances, certificates of deposit and time deposits may be purchased from
U.S. or foreign banks. See the Statement of Additional Information for more
information on Money Market Obligations.
In addition to the Money Market Obligations described above, as a temporary
or defensive measure, and without regard to their respective investment
objectives, each Fund may also purchase foreign currencies in the form of bank
deposits as well as other foreign money market instruments, including, but not
limited to, bankers' acceptances, certificates of deposit, commercial paper,
short-term government and corporate obligations and repurchase agreements.
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES. The INCOME FUND may
invest in U.S. Government Agency Mortgage-Backed Securities. These securities
are obligations issued or guaranteed by the United States Government or by one
of its agencies or instrumentalities, including but not limited to the
Government National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"), or the Federal Home Loan Mortgage Corporation ("FHLMC").
U.S. Government Agency Mortgage-Backed Certificates provide for the pass-through
to investors of their pro-rata share of monthly payments (including any
principal prepayments) made by the individual borrowers on the pooled mortgage
loans, net of any fees paid to the guarantor of such securities and the
servicers of the underlying mortgage loans. GNMA, FNMA, and FHLMC each guarantee
timely distributions of interest to certificate holders. GNMA and FNMA guarantee
timely distributions of scheduled principal. FHLMC has in the past guaranteed
only the ultimate collection of principal of the underlying mortgage loan;
however, FHLMC Gold Participation Certificates now guarantee timely payment of
monthly principal reductions. Although their close relationship with the U.S.
Government is believed to make them high-quality securities with minimal credit
risks, the U.S. Government is not obligated by law to support either FNMA or
FHLMC. However, historically there have not been any defaults of FNMA or FHLMC
issues. See Appendix B for a more complete description of these securities.
Mortgage-backed securities consist of interests in underlying mortgages
generally with maturities of up to thirty years. However, due to early
unscheduled payments of principal on the underlying mortgages, the securities
have a shorter average life and, therefore, less volatility than a comparable
thirty-year bond. The value of U. S. Government Agency Mortgage-Backed
Securities, like other traditional debt instruments, will tend to decline as
interest rates rise and increase as interest rates decline.
REPURCHASE AGREEMENTS. Each of the Funds may enter into repurchase
agreements with institutions believed by the Company's Board of Directors to
present minimal credit risk. A repurchase agreement is an instrument under which
the Fund acquires ownership of a debt security and the seller agrees, at the
time of the sale, to repurchase the obligation at a mutually agreed upon time
and price, thereby determining the yield during the Fund's holding period. In
the event of a bankruptcy or other default of a seller of a repurchase agreement
(such as the sellers' failure to repurchase the obligation in accordance with
the terms of the agreement), a Fund could experience both delays in liquidating
the underlying securities and losses, including: (a) a possible decline in the
value of the underlying security during the period while the Fund seeks to
enforce its rights thereto; (b) possible reduced levels of income and lack of
access to income during this period; and (d) expenses of enforcing its rights.
Repurchase agreements are considered to be loans by the Fund under the
Investment Company Act of 1940, as amended (the "1940 Act"). Repurchase
agreements will be secured by U.S. Treasury securities, U.S. Government agency
securities (including, but not limited to, those which have been stripped of
their interest payments and mortgage-backed securities) and commercial paper.
For additional information on the use of repurchase agreements, see the
Statement of Additional Information.
REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is the same as a repurchase
agreement, except that a Fund acts as the seller and repurchaser of the subject
security. Reverse repurchase agreements are considered to be borrowings under
the 1940 Act. A Fund will enter into a reverse repurchase agreement
12
<PAGE> 13
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. Any
investment gains made by a 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 a Fund, the net asset value of the Fund will decrease faster than would
otherwise be the case. The AGGRESSIVE GROWTH FUND and the GROWTH FUND currently
intend to enter into reverse repurchase agreements only for temporary or
emergency purposes and not as a means of increasing income. The INCOME FUND may
enter into reverse repurchase agreements to enhance portfolio returns. See
"Borrowing."
LENDING OF PORTFOLIO SECURITIES. Each Fund may from time to time lend
securities from their respective portfolios, with a value not exceeding 33 1/3%
of its total assets, to banks, brokers and other financial institutions, and
receive in return collateral in the form of cash or securities issued or
guaranteed by the U.S. Government which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. During the period of the loan, a Fund receives the income on both
the loaned securities and the collateral and thereby increases its yield. In the
event that the borrower defaults on its obligation to return loaned securities
because of insolvency or otherwise, a Fund could experience delays and costs in
gaining access to the collateral and could suffer a loss to the extent that the
value of the collateral falls below the market value of the loaned securities.
DELAYED DELIVERY AGREEMENTS AND WHEN-ISSUED SECURITIES. Each Fund may enter
into delayed delivery agreements and may purchase securities on a "when issued"
basis.
Delayed delivery agreements are commitments by a Fund to dealers or issuers
to acquire securities beyond the customary settlement date for such securities.
These commitments 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 scheduled maturities of existing portfolio
instruments or from net sales of shares of the Fund and may enter into delayed
delivery agreements to assure that the Fund will be as fully invested as
possible in instruments meeting its investment objective.
Debt securities are sometimes 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
the interest rate that will be received on the securities are fixed at the time
the buyer enters into the commitment. The Funds will only make commitments to
purchase such debt securities with the intention of actually acquiring the
securities, but a Fund may sell these securities before the settlement date if
it is deemed advisable.
If a Fund enters into a delayed delivery agreement or purchases a
when-issued security, the Fund will direct its custodian bank to segregate cash
or other high grade securities (including Money Market Obligations) in an amount
equal to its delayed delivery agreements or when-issued commitments. If the
market value of such securities declines, additional cash or securities will be
segregated on a daily basis so that the market value of the account will equal
the amount of such Fund's delayed delivery agreements and when-issued
commitments. To the extent that funds are segregated, they will not be available
for new investment or to meet redemptions. Investment in securities on a
when-issued basis and use of delayed delivery agreements may increase a Fund's
exposure to market fluctuation, or may increase the possibility that the Fund
will incur a short-term loss, if the Fund must engage in portfolio transactions
in order to honor a when-issued commitment or accept delivery of a security
under a delayed delivery agreement. The Funds will employ techniques designed to
minimize these risks. No additional delayed delivery agreements or when-issued
commitments will be made by a Fund if, as a result, more than 25% of the Fund's
net assets would become so committed.
DOLLAR ROLL TRANSACTIONS. In order to enhance portfolio returns and manage
prepayment risks, the INCOME FUND may engage in dollar roll transactions with
respect to mortgage securities issued by GNMA, FNMA and FHLMC. In a dollar roll
transaction, a Fund sells a mortgage security held in the portfolio to a
financial institution such as a bank or broker-dealer, and simultaneously agrees
to repurchase a substantially similar security (same type, coupon and maturity)
from the institution at a later date at an agreed upon price. The mortgage
securities that are repurchased will bear the same interest rate as those sold,
but generally will be collateralized by different pools of mortgages with
different prepayment histories. During the period between the sale and
repurchase, the Fund will not be entitled to receive interest and principal
payments on the securities sold. Proceeds of the sale will be invested in
short-term instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for the Fund
exceeding the yield on the sold security.
Dollar roll transactions involve the risk that the market value of the
securities retained by a Fund may decline below the price of the securities that
the Fund has sold but is obligated to repurchase under the agreement. In the
event the buyer of securities under a dollar roll transaction files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of
the securities may be restricted pending a determination by the other party, or
its trustee or receiver, whether to enforce the Fund's obligation to repurchase
the securities. See "Borrowing," below for the applicable limitation on dollar
roll transactions.
BORROWING. Each of the Funds may borrow money to a limited extent from
banks (including the Funds' custodian bank) for temporary or emergency purposes
subject to the limitations under the 1940 Act. The Funds will restrict
borrowings, reverse repurchase agreements and dollar roll transactions to an
aggregate of 33 1/3% of each Fund's respective total assets at the time of the
trans-
13
<PAGE> 14
action. Neither the AGGRESSIVE GROWTH FUND nor the GROWTH FUND will purchase
additional securities when any borrowings from banks exceed 5% of each Fund's
respective total assets.
The INCOME FUND may engage in reverse repurchase agreement transactions and
dollar roll transactions to enhance portfolio returns. Such transactions are
considered borrowings under the 1940 Act. Any investment gains made by the
INCOME FUND with the borrowed monies in excess of interest paid by the Fund will
cause the net asset value of the Fund's shares to rise faster than would
otherwise be the case. On the other hand, if the investment performance of the
additional securities purchased with the proceeds of such borrowings fails to
cover the interest paid by the money borrowed by the Fund, the net asset value
of the Fund will decrease faster than would otherwise be the case. This
speculative factor is known as "leveraging."
SHORT SALES. Each Fund may make short sales "against the box." A short sale
is a transaction in which a party sells a security it does not own in
anticipation of a decline in the market value of that security. A short sale is
"against the box" to the extent that a Fund contemporaneously owns or has the
right to obtain securities identical to those sold short without payment of any
further consideration. The Funds will enter into such transactions only to the
extent the aggregate value of all securities sold short does not represent more
than 10% of each Fund's respective assets at any given time.
ILLIQUID SECURITIES AND RULE 144A SECURITIES. Each Fund will not invest
more than 15% of its assets in illiquid securities, including restricted
securities which are illiquid. Although securities which may be resold only to
"qualified institutional buyers" in accordance with the provisions of Rule 144A
under the Securities Act of 1933 are unregistered securities, the Funds may
purchase Rule 144A securities without regard to the 15% limitation described
above provided that a determination is made that such securities have a readily
available trading market. AIM will determine the liquidity of Rule 144A
securities under the supervision of the Company's Board of Directors. The
liquidity of Rule 144A securities will be monitored by AIM and, if as a result
of changed conditions, it is determined that a Rule 144A security is no longer
liquid, each 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 assets in illiquid securities. See the Statement of
Additional Information.
- --------------------------------------------------------------------------------
RISK FACTORS
There can be no assurance that each Fund's investment objective will be
attained. Each Fund is designed for investors seeking international
diversification, and is not intended as a complete investment program. In
addition, investing in securities of foreign companies generally involves
greater risks than investing in securities of domestic companies. The INCOME
FUND may also invest in high yield securities (i.e., "junk bonds"), which entail
certain risks. Investors should consider carefully the following special factors
before investing in a Fund.
FOREIGN SECURITIES. The following considerations are risk factors
associated with the Funds' investments in foreign securities:
CURRENCY RISK. The value of a Fund's foreign investments may be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security generally decreases when the value of the U.S. dollar
rises against the foreign currency in which the security is denominated,
and tends to increase when the value of the U.S. dollar falls against such
currency.
POLITICAL AND ECONOMIC RISK. The economies of many of the countries in
which a Fund may invest are not as developed as the United States economy
and may be subject to significantly different forces. Political or social
instability, expropriation or confiscatory taxation, and limitations on the
removal of funds or other assets could also adversely affect the value of a
Fund's investments.
REGULATORY RISK. Foreign companies are generally not subject to the
regulatory controls imposed on United States issuers and, as a consequence,
there is generally less public information available about foreign
securities than is available about domestic securities. Foreign companies
are not subject to accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic
companies. Income from foreign securities owned by a Fund may be reduced by
withholding tax at the source which would reduce dividend income payable to
the Fund's shareholders.
MARKET RISK. The securities markets in many of the countries in which
a Fund invests will have substantially less trading volume than the major
United States markets. As a result, the securities of some foreign
companies may be less liquid and experience more price volatility than
comparable domestic securities. There is generally less government
regulation and supervision of foreign stock exchanges, brokers and issuers
which may make it difficult to enforce contractual obligations. Transaction
costs in foreign securities markets are likely to be higher, since
brokerage commission rates in foreign countries are likely to be higher
than in the United States. Further, the settlement period of securities
transactions in foreign markets may be longer than in domestic markets.
These considerations generally are more of a concern in developing
countries. For example, the possibility of revolution and the dependence on
foreign economic assistance may be greater in these countries than in
developed countries. The management of the Funds seeks to mitigate the
risks associated with these considerations through diversification and
active professional management.
14
<PAGE> 15
NON-INVESTMENT GRADE DEBT SECURITIES (INCOME FUND ONLY). The INCOME FUND
may invest in non-investment grade debt securities, commonly known as "junk
bonds." While generally providing greater income and opportunity for gain,
non-investment grade debt securities may be subject to greater risks than
higher-rated securities. Economic downturns tend to disrupt the market for junk
bonds and adversely affect their values. Such economic downturns may be expected
to result in increased price volatility for junk bonds and of the value of
shares of the Fund, and increased issuer defaults on junk bonds.
In addition, many issuers of junk bonds are substantially leveraged, which
may impair their ability to meet their obligations. In some cases, junk bonds
are subordinated to the prior payment of senior indebtedness, which potentially
limits a Fund's ability to fully recover principal or to receive payments when
senior securities are subject to a default.
The credit rating of a debt security does not necessarily address its
market value risk, and ratings may from time to time change to reflect
developments regarding the issuer's financial condition. Junk bonds have
speculative characteristics which are likely to increase in number and
significance with each successive lower rating category. Credit ratings evaluate
the safety of principal and interest payments, not market value risk of high
yield bonds. Also, since credit rating agencies may fail to timely change the
credit ratings to reflect subsequent events, AIM continuously monitors the
issuers of high yield bonds in the INCOME FUND'S portfolio to determine if the
issuers will have sufficient cash flow and profits to meet required principal
and interest payments, and to attempt to assure the bonds' liquidity so that the
INCOME FUND can meet redemption requests. The achievement of the INCOME FUND'S
investment objective may be more dependent on AIM's own credit analysis than
might be the case for a fund which invests in higher quality bonds. The INCOME
FUND may retain a portfolio security whose rating has been changed. See Appendix
A to this Prospectus -- "Description of Corporate Bond Ratings."
When the secondary market for junk bonds becomes more illiquid, or in the
absence of readily available market quotations for such securities, the relative
lack of reliable objective data makes it more difficult for the directors to
value a Fund's securities, and judgment plays a more important role in
determining such valuations. Increased illiquidity in the junk bond market also
may affect a Fund's ability to dispose of such securities at desirable prices.
In the event a Fund experiences an unexpected level of net redemptions, the
Fund could be forced to sell its junk bonds without regard to their investment
merits, thereby decreasing the asset base upon which the Fund's expenses can be
spread and possibly reducing the Fund's rate of return. Prices of junk bonds
have been found to be less sensitive to fluctuations in interest rates, and more
sensitive to adverse economic changes and individual corporate developments,
than those of higher-rated debt securities.
NON-DIVERSIFIED PORTFOLIO (INCOME FUND ONLY). The INCOME FUND is a
non-diversified portfolio, which means that, with respect to 50% of its total
assets, it may invest more than 5% of its assets in obligations of one issuer.
(A diversified portfolio may not invest more than 5% of its assets in
obligations of one issuer, with respect to 75% of its total assets.) Since the
INCOME FUND may invest a greater percentage of its assets in securities of fewer
issuers than a diversified portfolio, it may be subject to greater investment
and credit risks than a diversified portfolio.
EMERGING MARKETS AND DEVELOPING COUNTRIES. Investors should also be aware
that the Funds may invest in companies located within emerging or developing
countries. Investments in emerging markets or developing countries involve
exposure to economic structures that are generally less diverse and mature and
to political systems which can be expected to have less stability than those of
more developed countries. Such countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
which trade only a small number of securities. Historical experience indicates
that emerging markets have been more volatile than the markets of more mature
economies; such markets have also from time to time provided higher rates of
return and greater risks to investors. AIM believes that these characteristics
of emerging markets can be expected to continue in the future. In addition,
throughout the countries commonly referred to as the Eastern Bloc, the lack of a
capital market structure or market-oriented economy and the possible reversal of
recent favorable economic, political and social events in some of those
countries present greater risks than those associated with more developed,
market-oriented Western European countries and markets.
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
The following restrictions are matters of fundamental policy and may not be
changed without approval of a Fund's shareholders.
No Fund may:
1. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by the Fund.
2. Purchase a security if, as a result, 25% or more of the value of
the Fund's total assets, taken at market value, would be invested in the
securities of issuers having their principal business activities in the
same industry. This restriction does not apply to obligations issued or
guaranteed by the U.S. Government or by any of its agencies or
instrumentalities but will apply to foreign government obligations unless
the Securities and Exchange Commission permits their exclusion.
3. Borrow money, except that the Fund may borrow from banks (including
the Fund's custodian bank) and enter into reverse repurchase agreements and
dollar roll transactions. With respect to the AGGRESSIVE GROWTH FUND and
the GROWTH FUND, such permitted borrowings shall be used as a temporary
defensive measure for extraordinary or emergency purposes. Permitted
borrowings shall be in amounts not exceeding 33 1/3% of a Fund's total
assets, taken at market value, and the Fund may
15
<PAGE> 16
pledge amounts of up to 20% of its total assets, taken at market value, to
secure such borrowings. Whenever bank borrowings exceed 5% of the value of
the total assets of the AGGRESSIVE GROWTH FUND or the GROWTH FUND, such
Fund will not make any additional purchases of securities for investment
purposes.
Neither the AGGRESSIVE GROWTH FUND nor the GROWTH FUND will purchase a
security if, as a result, with respect to 75% of the value of the Fund's
respective total assets, taken at market value, more than 5% of the value of the
Fund's total assets, taken at market value, would be invested in securities of
any one issuer, except securities issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities.
The INCOME FUND will not purchase a security if, as a result, with respect
to 50% of the value of the Fund's total assets taken at market value, more than
5% of the value of the Fund's total assets, taken at market value, would be
invested in securities of any one issuer, except securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities.
A complete listing of investment restrictions applicable to the Funds, some
of which may be changed by the Board of Directors without shareholder approval,
is contained in the Statement of Additional Information.
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
Any particular security will be sold, and the proceeds reinvested, whenever
such action is deemed prudent from the viewpoint of a Fund's investment
objectives, regardless of the holding period of that security. It is anticipated
that the annual portfolio turnover rates of each of the AGGRESSIVE GROWTH FUND,
the GROWTH FUND and the INCOME FUND will not exceed 150%, respectively. A higher
rate of portfolio turnover may result in higher transaction costs, including
brokerage commissions. Also, to the extent that higher portfolio turnover
results in a higher rate of net realized capital gains to a Fund, the portion of
the Fund's distributions constituting taxable capital gains may increase.
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Funds are vested
with the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Funds and persons or companies furnishing
services to the Funds, including the investment advisory agreement with AIM, the
administrative services agreement with AIM, the agreement with AIM Distributors
regarding distribution of the Funds' shares, the agreements with State Street
Bank and Trust Company as custodian and accounting agent, and the agreement with
A I M Fund Services, Inc., as transfer agent. The day-to-day operations of the
Funds are delegated to the officers of the Company and to AIM, subject always to
the objective and policies of each Fund and to the general supervision of the
Board of Directors. Certain directors and officers of the Company are affiliated
with AIM and A I M Management Group Inc. ("AIM Management"), the parent
corporation of AIM. AIM Management is a holding company engaged in the financial
services business. Information concerning the Board of Directors may be found in
the Statement of Additional Information.
INVESTMENT ADVISOR. A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite
1919, Houston, Texas 77046, serves as the investment advisor to each Fund
pursuant to an investment advisory agreement, dated as of July 1, 1994 (the
"Advisory Agreement"). AIM was organized in 1976 and, together with its
affiliates, manages or advises 37 investment company portfolios. As of February
1, 1995, the total assets advised or managed by AIM or its affiliates were
approximately $27.7 billion. AIM is a wholly-owned subsidiary of AIM Management.
Under the terms of the Advisory Agreement, AIM supervises all aspects of
each Fund's operations and provides investment advisory services to the Fund.
AIM obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Funds. The Advisory
Agreement also provides that, upon the request of the Company's Board of
Directors, AIM may perform or arrange for certain accounting, shareholder
servicing and other administrative services for each Fund which are not required
to be performed by AIM under the Advisory Agreement. The Board of Directors has
made such a request. As a result, AIM and the Company have entered into an
Administrative Services Agreement dated as of July 1, 1994 (the "Administrative
Services Agreement"), pursuant to which AIM is entitled to receive from each
Fund reimbursement of its costs or such reasonable compensation as may be
approved by the Company's Board of Directors for providing specified
administrative services. Currently, AIM is reimbursed for the services of the
Company's principal financial officer and his staff, and any expenses related to
such services. In addition, pursuant to the terms of a Transfer Agency and
Service Agreement, A I M Fund Services, Inc. ("AFS"), a wholly-owned subsidiary
of AIM and a registered transfer agent, receives a fee for its provision of
shareholder services to the Funds.
For a discussion of AIM's brokerage allocation policies and practices, see
"Portfolio Transactions and Brokerage" in the Statement of Additional
Information. In accordance with policies established by the directors, AIM may
take into account sales of shares of the Funds and other funds advised by AIM in
selecting broker-dealers to effect portfolio transactions on behalf of the
Funds.
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 81 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
16
<PAGE> 17
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 who are primarily responsible for the day-to-day
management of the Funds and their titles, if any, with AIM or its affiliates and
the Fund, the length of time they have been responsible for the management,
their years of experience and prior experience are shown below:
A. Dale Griffin, III, Robert M. Kippes, Paul A. Rogge and Jonathan C.
Schoolar are responsible for the day-to-day management of the AGGRESSIVE GROWTH
FUND and the GROWTH FUND. Mr. Griffin, a Chartered Financial Analyst, is Vice
President of the Company and A I M Capital Management, Inc. ("AIM Capital"), a
wholly-owned subsidiary of AIM. Mr. Griffin has been associated with AIM and/or
its affiliates since 1989 and has nine years of experience as an investment
professional. Mr. Griffin has been responsible for the Funds since their
inception in 1994. Prior to holding such position, Mr. Griffin was an assistant
portfolio manager for other investment companies and private accounts managed by
AIM and AIM Capital, and a senior loan officer for Citicorp. Mr. Kippes is
Assistant Vice President of AIM Capital. Mr. Kippes has been associated with AIM
and/or its affiliates as an investment professional since 1989. Mr. Kippes has
been responsible for the Funds since their inception in 1994. Mr. Rogge is Vice
President of the Company and AIM Capital. Mr. Rogge has been responsible for the
Funds since their inception in 1994. Mr. Rogge previously was a global strategy
analyst with Union Bank of Switzerland and completed the University of Texas
graduate business degree program. Mr. Rogge has been associated with AIM since
1991 and has five years of experience as an investment professional. Mr.
Schoolar, a Chartered Financial Analyst, is Senior Vice President and Director
of AIM Capital, Vice President of AIM and Vice President of the Company. He
currently serves as Chief Equity Officer and has been associated with AIM and/or
its affiliates since 1986 and has 12 years of experience as an investment
professional. Mr. Schoolar has been responsible for the Funds since their
inception in 1994.
Robert G. Alley and John L. Pessarra are responsible for the day-to-day
management of the INCOME FUND. Mr. Alley, a Chartered Financial Analyst, is
Senior Vice President of AIM Capital, Vice President of AIM, and has been
affiliated with AIM and/or its affiliates since 1992. Prior to that, Mr. Alley
was the Senior Fixed Income Manager for Waddell and Reed, Inc. Mr. Alley has 23
years of experience as an investment professional and has been responsible for
the Fund since its inception in 1994. Mr. Pessarra is currently a Vice President
of AIM Capital and has been associated with AIM and/or its affiliates since
1990. Mr. Pessarra has been responsible for the Fund since its inception in
1994. Prior to that, Mr. Pessarra was a high yield investment analyst for United
Savings of Texas, FSB and has 11 years of experience as an investment
professional.
EXPENSES. The Investment Advisory Agreement provides that each Fund will
pay or cause to be paid all expenses of the Fund not assumed by AIM, including,
without limitation: brokerage commissions; taxes, legal, accounting, auditing or
governmental fees; the cost of preparing share certificates; custodian, transfer
and shareholder service agent costs; expenses of issue, sale, redemption and
repurchase of shares; expenses of registering and qualifying shares for sale;
expenses relating to directors and shareholders meetings; the cost of preparing
and distributing reports and notices to shareholders; the fees and other
expenses incurred by the Company on behalf of the Funds in connection with
membership in investment company organizations; 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.
ADVISORY FEES. Subject to reduction in accordance with expense limitations
imposed by states in which each Fund's shares are qualified for sale, AIM is
entitled to be paid by each Fund an advisory fee at the annual rates of:
AIM GLOBAL AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
----------- -----------
<S> <C>
First $1 billion................................................ 0.90%
Over $1 billion................................................. 0.85%
</TABLE>
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
----------- -----------
<S> <C>
First $1 billion................................................ 0.85%
Over $1 billion................................................. 0.80%
</TABLE>
AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $1 billion................................................ 0.70%
Over $1 billion................................................. 0.65%
</TABLE>
Although these fees are higher than that paid by most mutual funds which
invest in domestic securities, they are competitive with such fees paid by
mutual funds which invest primarily in foreign securities. The Company believes
such fees are justified due to the higher costs and additional expenses
associated with managing and operating funds holding primarily foreign
securities.
17
<PAGE> 18
AIM reimbursed AFS for providing shareholder servicing for AGGRESSIVE
GROWTH FUND, GROWTH FUND and INCOME FUND for the period September 15, 1994
through October 31, 1994 amounts which represented .10%, .06%, and .008%
(annualized) of such Fund's respective average daily net assets.
FEE WAIVERS. AIM may from time to time voluntarily waive or reduce its
fees, while retaining its ability to be reimbursed prior to the end of each
fiscal year. Fee waivers or reductions, other than those contained in the
Advisory Agreement, may be modified or terminated at any time and without notice
to investors. AIM has agreed to waive advisory fees under the Advisory Agreement
for the Funds until such time as in AIM's judgment, the Funds have achieved a
size in assets under management to bear such costs.
DISTRIBUTOR. The Company has entered into Master Distribution Agreements on
behalf of the Funds (the "Distribution Agreements") with A I M Distributors,
Inc. ("AIM Distributors"), a registered broker-dealer and a wholly-owned
subsidiary of AIM, to act as the distributor of Class A and Class B shares of
the Funds. The address of AIM Distributors is P.O. Box 4739, Houston, Texas
77210-4739. Certain directors and officers of the Company are affiliated with
AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive
right to distribute shares of the Funds directly and through institutions with
whom AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
institutions through whom Class B shares are sold a sales commission under
schedules established by AIM Distributors. The Distribution Agreement for the
Class B shares provides that AIM Distributors (or its assignee or transferee)
will receive 0.75% (of the total 1.00% payable under the distribution plan
applicable to Class B shares) of each Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges in respect of the outstanding Class B shares attributable to AIM
Distributors; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments to AIM Distributors. Termination of the Class B shares distribution
plan or Distribution Agreement does not affect the obligation of Class B
shareholders to pay Contingent Deferred Sales Charges.
DISTRIBUTION PLANS. The Company has adopted a master distribution plan
applicable to Class A shares of each Fund (the "Class A Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the Class A Plan, each Fund pays compensation of
0.50% per annum of the average daily net assets attributable to its Class A
shares to AIM Distributors for the purpose of financing any activity which is
primarily intended to result in the sale of Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs. Of the total compensation payable, each Fund pays a service fee
of 0.25% to implement a program which 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 such Fund.
Any amounts not paid as a service fee would constitute an asset based sales
charge.
The Company has also adopted a master distribution plan applicable to Class
B shares of each Fund (the "Class B Plan"). Under the Class B Plan, each Fund
pays distribution expenses at an annual rate of 1.00% of the average daily net
assets attributable to the Class B shares. Of such amount, each Fund pays a
service fee of 0.25% of the average daily net assets attributable to its Class B
shares to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own Class B
shares of such Fund. Any amounts not paid as a service fee would constitute an
asset based sales charge. Amounts paid in accordance with the Class B Plan may
be used to finance any activity primarily intended to result in the sale of
Class B shares.
Activities that may be financed under the Class A Plan and the Class B Plan
(collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, supplemental payments to dealers and other
institutions such as asset-based sales charges or as payments of service fees
under shareholder service arrangements and the cost of administering the Plans.
These amounts payable by a Fund under the Plans need not be directly related to
the expenses actually incurred by AIM Distributors on behalf of the Fund. Thus,
even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Company will not be obligated to
pay more than that fee, and, if AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee. Payments
pursuant to the Plans are subject to any applicable limitations imposed by the
rules of the National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority
of those directors who are not "interested persons" of the Company or by a vote
of the holders of the majority of the outstanding shares of the applicable
class.
Under the Plans, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its fee that has not been
assigned or transferred, while retaining its ability to be reimbursed for such
fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of a Fund on an agency basis, may
receive payments from the Fund pursuant to the Fund's Plans. AIM Distributors
does not act as principal, but rather as agent, for the Funds in making such
payments. The Funds will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one
particular class over another.
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<PAGE> 19
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE COMPANY
The Company was organized in 1991 as a Maryland corporation, and is
registered with the Securities and Exchange Commission as a diversified open-end
series management investment company. The Company currently consists of four
investment portfolios: the Funds and AIM International Equity Fund. The Board of
Directors may authorize additional portfolios in the future. Shares of the Funds
are offered to investors pursuant to this Prospectus, while shares of the AIM
International Equity Fund are offered to investors pursuant to a separate
prospectus. The authorized capital stock of the Company consists of
2,000,000,000 shares of common stock with a par value of $0.001 per share, of
which 200,000,000 shares are designated Class A shares and 200,000,000 shares
are designated Class B shares of each investment portfolio of the Company, and
the balance of which are unclassified.
Class A shares and Class B shares of the same Fund represent interests in
that Fund's assets and have identical voting, dividend, liquidation and other
rights on the same terms and conditions, except that each class of shares bears
differing class-specific expenses, is subject to differing sales loads,
conversion features and exchange privileges, and has exclusive voting rights on
matters pertaining to that class' distribution plan.
Except as specifically noted above, shareholders of each Fund are entitled
to one vote per share (with proportionate voting for fractional shares),
irrespective of the relative net asset value of the Class A shares and Class B
shares of a Fund. However, on matters affecting one portfolio of the Company or
one class of shares, a separate vote of shareholders of that portfolio or class
is required. Shareholders of a portfolio or class are not entitled to vote on
any matter which does not affect that portfolio or class but which requires a
separate vote of another portfolio or class. An example of a matter which would
be voted on separately by shareholders of a portfolio is the approval of an
advisory agreement, and an example of a matter which would be voted on
separately by shareholders of a class of shares is approval of a distribution
plan. When issued, shares of each Fund are fully paid and nonassessable, have no
preemptive or subscription rights, and are fully transferable. Other than the
automatic conversion of Class B shares to Class A shares, there are no
conversion rights. Shares do not have cumulative voting rights, which means that
in situations in which shareholders elect directors, holders of more than 50% of
the shares voting for the election of directors can elect all of the directors
of the Company, and the holders of less than 50% of the shares voting for the
election of directors will not be able to elect any directors.
Under Maryland law and the Company's By-Laws, the Company need not hold an
annual meeting of shareholders unless a meeting is otherwise required under the
1940 Act to elect directors. Shareholders may remove directors from office, and
a meeting of shareholders may be called at the request of the holders of 10% or
more of the Company's outstanding shares.
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<PAGE> 20
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<PAGE> 21
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 5:30 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS(R)
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS(R)
THE AIM FAMILY OF FUNDS(R) consists of the following mutual funds:
<TABLE>
<S> <C>
AIM AGGRESSIVE GROWTH FUND AIM INCOME FUND
AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND
AIM CHARTER FUND AIM LIMITED MATURITY TREASURY SHARES
AIM CONSTELLATION FUND AIM MONEY MARKET FUND*
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM MUNICIPAL BOND FUND
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL INCOME FUND AIM TAX-EXEMPT CASH FUND*
AIM GLOBAL UTILITIES FUND AIM TAX-FREE INTERMEDIATE SHARES
AIM GOVERNMENT SECURITIES FUND AIM VALUE FUND
AIM GROWTH FUND AIM WEINGARTEN FUND
AIM HIGH YIELD FUND
</TABLE>
* Shares of AIM TAX-EXEMPT CASH FUND, and Class C shares of AIM MONEY MARKET
FUND, are offered to investors at net asset value, without payment of a sales
charge, as described below. Other funds, including the Class A and Class B
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(R) ("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 AIM Distributors to sell shares of
the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for a spousal IRA account is $250. There are no minimum initial
investment requirements applicable to money-purchase/profit-sharing plans,
401(k) plans, IRA/SEP, 403(b) plans or 457 (state deferred compensation) plans
(except that the minimum initial investment for salary deferrals for such plans
is $25), or for investment of dividends and distributions of any of the AIM
Funds into any existing AIM Funds account.
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 A I M Fund Services, Inc. at one of the following
telephone numbers:
(713) 626-1919 Extension 5224 (in Houston)
(800) 959-4246 (elsewhere)
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246
(elsewhere).
MCF 05/95
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<PAGE> 22
HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
Texas Commerce Bank
ABA 113000609
Attn: AIM Wire Purchase
DDA 00100366807
Fund Name/Reference Number
Shareholder Name
Shareholder Account Number
If wires are received after 4:15 p.m. Eastern Time or during a bank holiday,
purchases will be confirmed at the price determined on the next business day of
the applicable AIM Fund.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GOVERNMENT SECURITIES
FUND, AIM GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND and AIM VALUE FUND
(collectively, the "Multiple Class Funds") may be purchased at their respective
net asset value plus a sales charge as indicated below, except that shares of
AIM TAX-EXEMPT CASH FUND and Class C shares (the "Class C shares") of AIM MONEY
MARKET FUND are sold without a sales charge and Class B shares (the "Class B
shares") of the Multiple Class Funds are sold at net asset value subject to a
contingent deferred sales charge payable upon certain redemptions. These
contingent deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A or Class B
shares (or, if applicable, Class C 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 (713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246
(elsewhere). As described below, the sales charge otherwise applicable to a
purchase of shares of a fund may be reduced if certain conditions are met. In
order to take advantage of a reduced sales charge, the prospective investor or
his dealer must advise AIM Distributors that the conditions for obtaining a
reduced sales charge have been met. Net asset value is determined in the manner
described under the caption "Determination of Net Asset Value." The following
tables show the sales charge and dealer concession at various investment levels
for the AIM Funds.
MCF 05/95
A-2
<PAGE> 23
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 are: AIM AGGRESSIVE GROWTH FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND and AIM WEINGARTEN FUND; and the Class A shares of each of AIM GLOBAL
UTILITIES FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET
FUND and AIM VALUE FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
----------------------------- ----------
AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. 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 end of the calendar month of the date of purchase, as described
under the caption "How to Redeem Shares -- Contingent Deferred Sales Charge
Program for Large Purchases."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: AIM TAX-EXEMPT BOND FUND OF CONNECTICUT; and the Class A
shares of each of AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GOVERNMENT SECURITIES FUND, AIM
HIGH YIELD FUND, AIM INCOME FUND and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
----------------------------- ----------
AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ---------- ---------- ----------
<S> <C> <C> <C>
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. 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 end of the calendar month of the date of purchase, as described
under the caption "How to Redeem Shares -- Contingent Deferred Sales Charge
Program for Large Purchases."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE
INTERMEDIATE SHARES.
<TABLE>
<CAPTION>
DEALER
INVESTOR'S SALES CHARGE CONCESSION
----------------------------- ----------
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF THE PUBLIC OF THE NET OF THE PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ---------- ---------- ----------
<S> <C> <C> <C>
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.
MCF 05/95
A-3
<PAGE> 24
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 will take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE
SHARES as follows: 1% of the first $2 million of such purchases, plus 0.80% of
the next $1 million of such purchases, plus 0.50% of the next $17 million of
such purchases, plus 0.25% of amounts in excess of $20 million of such
purchases.
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 4.0% 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.
In June 1992, AIM Management entered into a strategic alliance with CIGNA
Investments, Inc. ("CII"), pursuant to which AIM became the investment advisor
to certain AIM Funds formerly managed by CII, and AIM Distributors became the
principal underwriter of such funds. As part of the strategic alliance, CIGNA
Securities, Inc. ("CSI") entered into a dealer agreement with AIM Distributors
pursuant to which CSI may be entitled to one-half of the sales load retention of
AIM Distributors on the sale of shares of the AIM Funds if CSI meets certain
annual sales goals related to the sale of certain AIM Funds.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than the Money Market Funds, as described below) received by dealers
prior to 4:15 p.m. Eastern Time on any business day of an AIM Fund and either
received by AIM Distributors in its Houston, Texas office prior to 5:00 p.m.
Central Time on that day or transmitted by dealers to the Transfer Agent through
the facilities of the National Securities Clearing Corporation ("NSCC") by 7:00
p.m. Eastern Time on that day, will be confirmed at the price determined as of
the close of that day. Orders received by dealers after 4:15 p.m. Eastern Time
will be confirmed at the price determined on the next business day of the AIM
Fund. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis to AIM Distributors or to the Transfer Agent
through the facilities of NSCC. Any loss resulting from the dealer's failure to
submit an order within the prescribed time frame will be borne by that dealer.
Please see "How to Purchase Shares -- Purchases by Wire" for information on
obtaining a reference number for wire orders, which will facilitate the handling
of such orders and ensure prompt credit to an investor's account. A "business
day" of an AIM Fund is any day on which the New York Stock Exchange is open for
business, except for AIM LIMITED MATURITY TREASURY SHARES, for which a "business
day" is any day on which either the New York Stock Exchange or such fund's
custodian bank is open for business. It is expected that the New York Stock
Exchange will be closed during the next twelve months on Saturdays and Sundays
and on the days on which New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day are
observed by the New York Stock Exchange.
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 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, other than AIM MONEY MARKET FUND, currently offer two classes of shares,
and AIM MONEY MARKET FUND currently offers three classes of shares, through
separate distribution systems (the "Multiple Distribution System"). Although the
Class A and Class B shares (and with respect to AIM MONEY MARKET FUND, Class C
shares) of a particular Multiple Class Fund represent 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 Sys-
MCF 05/95
A-4
<PAGE> 25
tem, investors should consider both the applicable initial sales charge or
contingent deferred sales charge, as well as the ongoing expenses borne by Class
A or Class B shares and, if applicable, Class C shares, and other relevant
factors, such as whether his or her investment goals are long-term or
short-term.
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund.
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 Class B 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 end of the calendar month in which a purchase was
made 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 end of the calendar
month in which the purchase of Class B shares was made. Redemptions of
Class B shares and associated charges are further described under the
caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Class B Plan payments associated
with Class B shares. See "Management --Distribution Plans."
CLASS C SHARES of AIM MONEY MARKET FUND are sold without an initial sales
charge and are not subject to a contingent deferred sales charge. Such
shares are, however, subject to the other fees and expenses described in
the prospectus for AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO MONEY MARKET FUNDS. Shares of AIM MONEY MARKET
FUND or AIM TAX-EXEMPT CASH FUND (the "Money Market Funds") are purchased or
exchanged at the net asset value next determined after acceptance of an order
for purchase or exchange in proper form, except for Class A shares of AIM MONEY
MARKET FUND, which are sold with a sales charge. Net asset value is normally
determined at 12:00 noon and 4:15 p.m. Eastern Time on each business day of AIM
MONEY MARKET FUND and at 4:15 p.m. Eastern Time on each business day of AIM
TAX-EXEMPT CASH FUND. Because each Money Market Fund uses the amortized cost
method of valuing the securities it holds and rounds its per share net asset
value to the nearest whole cent, it is anticipated that the net asset value of
the shares of such funds will remain constant at $1.00 per share. However, there
is no assurance that either Money Market Fund can maintain a $1.00 net asset
value per share. In order to earn dividends with respect to AIM MONEY MARKET
FUND on the same day that a purchase is made, purchase payments in the form of
federal funds must be received by the Transfer Agent before 12:00 noon Eastern
Time on that day. See "How to Purchase Shares -- Purchases by Wire." Purchases
made by payments in any other form, or payments in the form of federal funds
received after such time, 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. Class B shares of
AIM MONEY MARKET FUND are designed for temporary investment as part of an
investment program in the Class B shares and, unlike shares of most money market
funds, are subject to a contingent deferred sales charge as well as Rule 12b-1
distribution fees and service fees.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of shares of AIM
TAX-EXEMPT CASH FUND, Class C shares of AIM MONEY MARKET FUND and Class B shares
of the Multiple Class Funds will not be taken into account in determining
whether a purchase qualifies for a reduction in initial sales charges.
MCF 05/95
A-5
<PAGE> 26
The term "purchaser" means:
- an individual and his or her spouse and minor children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an Individual Retirement Account (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, a Simplified Employee Pension (SEP), Salary Reduction and other
Elective Simplified Employee Pension Accounts ("SARSEP")) and 457 plans,
although more than one beneficiary or participant is involved;
- 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. or A I M Capital
Management, Inc.
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) AIM TAX-EXEMPT CASH FUND and Class C shares of AIM MONEY MARKET FUND and
(ii) Class B shares of the Multiple Class Funds) within the following 13
consecutive months. By marking the LOI section on the account application and by
signing the account application, the purchaser indicates that he understands and
agrees to the terms of the LOI and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attor-
MCF 05/95
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<PAGE> 27
ney to surrender for redemption any or all escrowed shares, to make up such
difference within 60 days of the expiration date. Full shares and any cash
proceeds for a fractional share remaining after such redemption will be released
from escrow.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) AIM TAX-EXEMPT CASH
FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class B 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) AIM TAX-EXEMPT CASH FUND and
Class C shares of AIM MONEY MARKET FUND and (ii) Class B 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 AIM Distributors with a list of the account
numbers and the names in which such accounts of the purchaser are registered at
the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND on
September 8, 1986, and shareholders of record of AIM CHARTER FUND on November
17, 1986, may purchase additional 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 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 shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held shares of AIM CHARTER FUND
on November 17, 1986, and have held such shares at all times subsequent to such
date, may purchase shares of the applicable AIM Fund(s) at the net asset value
of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) 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, minor
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, minor children, parents
and parents of spouse) of any such person, or of CIGNA Corporation or of any of
its affiliated companies, or of The Shareholders Services Group, Inc., a
wholly-owned subsidiary of First Data Corporation; (e) any investment company
sponsored by CIGNA Investments, Inc. or any of its affiliated companies for the
benefit of its directors' deferred compensation plans; (f) discretionary advised
clients of AIM or AIM Capital; (g) registered representatives and employees of
dealers who have entered into agreements with AIM Distributors (or financial
institutions that have arrangements with such dealers with respect to the sale
of shares of the AIM Funds) and any member of the immediate family (including
spouse, minor children, parents and parents of spouse) of any such person,
provided that purchases at net asset value are permitted by the policies of such
person's employer; and (h) certain broker-dealers, investment advisers or bank
trust departments that provide asset allocation or similar specialized
investment services to their customers, that charge a minimum annual fee for
such services, and that have entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the initial amount invested in
the fund(s) is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, or
(3) such shares are purchased by an employer-sponsored plan with at least 100
eligible employees. Section 403(b) plans sponsored by public educational
institutions
MCF 05/95
A-7
<PAGE> 28
will not be eligible for net asset value purchases based on the aggregate
investment made by the plan or number of eligible employees. Participants in
such plans will be eligible for reduced sales charges based solely on the
aggregate value of their individual investments in the applicable AIM Fund.
PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH
PLANS. AIM Distributors may pay investment dealers or other financial service
firms up to 1.00% of the net asset value of any shares of the Load Funds, up to
0.10% of the net asset value of any shares of AIM LIMITED MATURITY TREASURY
SHARES, and up to 0.25% of the net asset value of any shares of all other AIM
Funds sold at net asset value to an employee benefit plan in accordance with
this paragraph.
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 shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States Treasury
issued notes or bonds bearing no current interest ("Treasury Obligations").
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 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 shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and proceeds
of the sale of 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 shares of AIM WEINGARTEN FUND or AIM CONSTELLATION
FUND at net asset value, provided: (a) that the investment in AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND shares 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 AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND is being funded exclusively by the proceeds from
the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AIM Distributors at the address
provided under "How to Purchase Shares," or by calling the Client Services
Department of AIM Distributors at the phone numbers provided under "How to
Purchase Shares." 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 Class A shares of a Multiple Class Fund, Class C shares of AIM MONEY
MARKET FUND, or shares of another AIM Fund can arrange for monthly, quarterly or
annual checks in any amount (but not less than $50) to be drawn against the
balance of his account in the designated AIM Fund. Shareholders who own Class B
shares of a Multiple Class Fund can only arrange for monthly or quarterly
withdrawals under a Systematic Withdrawal Plan. Payment of this amount is
normally made on or about the tenth or the twenty-fifth 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. No contingent deferred sales
charge with respect to Class B shares of a Multiple Class Fund will be imposed
on withdrawals made under a Systematic Withdrawal Plan, provided that the
amounts withdrawn under such a plan do not exceed on an annual basis 12% of the
account value at the time the shareholder elects to participate in the
Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to Class B
shares 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 initial
account value.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
MCF 05/95
A-8
<PAGE> 29
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 Shares and Class C Shares of the Multiple Class Funds), it
is disadvantageous to effect such purchases while a Systematic Withdrawal Plan
is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly investments
may establish an Automatic Investment Plan. Under this plan, on or about the
tenth and/or twenty-fifth day of each month, a draft is drawn on the
shareholder's bank account in the amount specified by the shareholder (minimum
$50 per investment, per account). The proceeds of the draft are invested in
shares of the designated AIM Fund at the applicable offering price determined on
the date of the draft. An Automatic Investment Plan may be discontinued upon 10
days' prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. 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; and dividends and distributions attributable to
Class C 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 $10,000; (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 $10,000 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, provided that Class A shares may only be exchanged for Class A shares
of another Multiple Class Fund or for shares of another AIM Fund which is not a
Multiple Class Fund, Class B shares may only be exchanged for Class B shares of
another Multiple Class Fund, and Class C shares of AIM MONEY MARKET FUND may
only be exchanged for Class A shares of another Multiple Class Fund or for
shares of another AIM Fund. The account from which exchanges are to be made must
have a value of at least $5,000 when a shareholder elects to begin this program,
and the exchange minimum is $50 per transaction. All of the accounts that are
part of this program must have identical registrations. The net asset value of
shares purchased under this program may vary, and may be more or less
advantageous than if shares were not exchanged automatically. There is no charge
for entering the Dollar Cost Averaging program. Sales charges may apply, as
described under the caption "Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype
retirement plans available to corporations, individuals and employees of
non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; Individual Retirement Account
("IRA") plans; and Simplified Employee Pension ("SEP") plans (collectively,
"retirement accounts"). Information concerning these plans, including the
custodian's fees and the forms necessary to adopt such plans, can be obtained by
calling or writing the AIM Funds or AIM Distributors. Shares of the AIM Funds
are also available for investment through existing 401(k) plans (for both
individuals and employers) adopted under the Code. The plan custodian currently
imposes an annual $10 maintenance fee with respect to each retirement account
for which it serves as the custodian. This fee is generally charged in December.
Each AIM Fund and/or the custodian reserve the right to change this maintenance
fee and to initiate an establishment fee (not to exceed its cost).
MCF 05/95
A-9
<PAGE> 30
- --------------------------------------------------------------------------------
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, referred to
herein as the "Load Funds," are sold at a public offering price that includes a
maximum sales charge of 5.50% or 4.75% of the public offering price of such
shares; shares of certain of the AIM Funds, referred to herein as the "Lower
Load Funds," are sold at a public offering price that includes a maximum sales
charge of 1.00% of the public offering price of such shares; and shares of
certain other funds, including the Class C shares of AIM MONEY MARKET FUND,
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge. In the event shares of any AIM Fund (other than Class
B shares of the Multiple Class Funds) sold at net asset value are subject to a
contingent deferred sales charge of 1% for 18 months from the end of the
calendar month of the date of purchase, and subsequently are exchanged for
shares of any other AIM Fund, the 18-month period shall be computed from the end
of the calendar month of the date of the first purchase subject to this charge.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
<TABLE>
<CAPTION>
LOAD FUNDS: LOWER LOAD FUNDS:
----------- -----------------
<S> <C> <C>
AIM AGGRESSIVE GROWTH AIM GROWTH FUND -- CLASS A AIM LIMITED MATURITY TREASURY SHARES
FUND AIM HIGH YIELD AIM TAX-FREE INTERMEDIATE SHARES
AIM BALANCED FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND AIM INCOME FUND -- CLASS A NO LOAD FUNDS:
AIM CONSTELLATION FUND AIM INTERNATIONAL EQUITY --------------
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A AIM MONEY MARKET FUND
FUND -- CLASS A AIM MONEY MARKET -- CLASS C
AIM GLOBAL GROWTH FUND -- CLASS A AIM TAX-EXEMPT CASH FUND
FUND -- CLASS A AIM MUNICIPAL BOND
AIM GLOBAL INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL UTILITIES OF CONNECTICUT
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GOVERNMENT SECURITIES AIM WEINGARTEN FUND
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund,
except that Class A shares and shares of all other AIM Funds may not be
exchanged for Class B shares; Class B shares may be exchanged only for Class B
shares; and Class C shares of AIM MONEY MARKET FUND may not be exchanged for
Class A shares of AIM MONEY MARKET FUND or for Class B shares. 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
LOWER LOAD NO LOAD FUNDS:
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B
- ---------------- ------------------------------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not Applicable
Lower Load
Funds......... Net Asset Value if shares were held Net Asset Value Net Asset Value Not Applicable
for at least 30 days; or if shares
were acquired upon exchange of any
Load Fund; or if shares were acquired
upon exchange from any Lower Load
Fund and such shares were held for at
least 30 days. (No exchange privilege
is available for the first 30 days
following the purchase of the Lower
Load Fund shares.)
</TABLE>
(Table continued on following page)
MCF 05/95
A-10
<PAGE> 31
<TABLE>
<CAPTION>
MULTIPLE CLASS
LOWER LOAD NO LOAD FUNDS:
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B
- ---------------- ------------------------------------- --------------------- ---------------- --------------
<S> <C> <C> <C> <C>
No Load Funds............ Offering Price if No Load shares were Net Asset Value if No Net Asset Value Not Applicable
directly purchased. Net Asset Value Load shares were
if No Load shares were acquired upon acquired upon
exchange of shares of any Load Fund exchange of shares of
or any Lower Load Fund; Net Asset any Load Fund or any
Value if No Load shares were acquired Lower Load Fund;
upon exchange of Lower Load Fund otherwise,
shares and were held for at least 30 Offering Price.
days following the purchase of the
Lower Load Fund shares. (No exchange
privilege is available for the first
30 days following the acquisition of
the Lower Load Fund shares.)
Multiple Class
Funds:
Class B................ Not Applicable Not Applicable Not Applicable Net Asset Value
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
Lower Load Funds......... Net Asset Value if shares were Net Asset Value Net Asset Value 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 were Net Asset Value if No Net Asset Value Not Applicable
directly purchased. Net Asset Value Load shares were
if No Load shares were acquired upon acquired upon
exchange of shares of any Load Fund. exchange of shares of
Difference in sales charge will apply any Load Fund or any
if No Load shares were acquired upon Lower Load Fund;
exchange of Lower Load Fund shares. otherwise, Offering
Price.
Multiple Class
Funds:
Class B................ 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 and Class B shares of a Multiple Class Fund cannot be
exchanged for each other), except that Class C 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 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.
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.
There is no fee for exchanges among the AIM Funds. A service fee of $5 per
transaction will, however, be charged by AIM Distributors on accounts of market
timing investment firms to help to defray the costs of maintaining an automated
exchange service. This service fee will be charged against the market timing
account from which shares are being exchanged.
Shares to be exchanged are redeemed at their net asset value as determined at
the close of business on the day that an exchange request in proper form
(described below) is received by AFS in its Houston, Texas office, provided that
such request is received prior to 4:15 p.m. Eastern Time. Exchange requests
received after this time will result in the redemption of shares at their net
asset value as determined at the close of business on the next business day.
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 by AIM Distributors, 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
MCF 05/95
A-11
<PAGE> 32
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 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 AIM Distributors. 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 AIM Distributors at the appropriate telephone number
indicated under the caption "How to Purchase Shares." If a shareholder is unable
to reach AIM Distributors 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 applicable fund(s) as long
as such request is received prior to 4:15 p.m. Eastern Time. 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. 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.
EXCHANGES OF CLASS B SHARES. A contingent deferred sales charge will not be
imposed in connection with exchanges among Class B shares of Multiple Class
Funds. For purposes of determining a shareholder's holding period of Class B
shares in the calculation of the applicable contingent deferred sales charge,
the period of time during which Class B shares were held prior to an exchange
will be added to the holding period of Class B 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 who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares 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 end of the calendar month in
which 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>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
------------- ---------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends
MCF 05/95
A-12
<PAGE> 33
and distributions; third, of shares held for more than six years following the
end of the calendar month in which the purchase was made; and fourth, of shares
held less than six years following the end of the calendar month in which the
purchase was made. The applicable sales charge will be applied against the
lesser of the current market value of shares redeemed or their original cost.
Contingent deferred sales charges on Class B shares will be waived on
redemptions (1) following the registered shareholder's (or in the case of joint
accounts, all registered joint owners') death or disability, as defined in
Section 72(m)(7) of the Code (provided AIM Distributors is notified of such
death or disability at the time of the redemption request and is provided with
satisfactory evidence of such death or disability), (2) in connection with
certain distributions from individual retirement accounts, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B 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 and (5) effected by AIM of its investment
in Class B shares. Waiver category (1) above applies only to redemptions: (i)
made within one year following death or initial determination of disability and
(ii) of Class B shares held at the time of death or initial determination of
disability. Waiver category (2) above applies only to redemptions resulting
from: (i) required minimum distributions to plan participants or beneficiaries
who are age 70 1/2 or older, and only with respect to that portion of such
distributions which does not exceed 12% annually of the participant's or
beneficiary's account value; (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 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 shares of a Multiple Class Fund and purchases of shares of
the No Load Funds, a contingent deferred sales charge of 1% applies to purchases
of $1,000,000 or more that are redeemed within 18 months of the end of the
calendar month of the date of purchase. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. No such
charge will be imposed upon exchanges unless the shares acquired by exchange are
redeemed within 18 months of the end of the calendar month in which the shares
were purchased. 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
reinvestment of dividends and capital gains distributions and amounts
representing increases from capital appreciation), and then other shares are
redeemed in the order of purchase. The charge will be waived in the following
circumstances:
(1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under
Section 403(b) of the Code and sponsored by nonprofit organizations as
defined under Section 501(c)(3) of the Code, where (a) the initial amount
invested by a Plan in one or more of the AIM Funds is at least $1,000,000,
(b) the sponsor of a Plan signs a letter of intent to invest at least
$1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100
eligible employees; provided, however, that Plans created under Section
403(b) of the Code which are sponsored by public educational institutions
shall qualify under (a), (b) or (c) above on the basis of the value of each
Plan participant's aggregate investment in the AIM Funds, and not on the
aggregate investment made by the Plan or on the number of eligible
employees;
(2) redemptions of shares following the registered shareholder's (or
in the case of joint accounts, all registered joint owners') death or
disability, as defined in Section 72(m)(7) of the Code; and
(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.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to either
the Transfer Agent or AIM Distributors. 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 days before the redemption proceeds are sent. See "Timing of Purchase
Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
MCF 05/95
A-13
<PAGE> 34
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information; and (e) the proceeds
of the redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA-SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth at that item of the account application if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions. 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.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to 4:15 p.m. Eastern Time, the redemption will be made at the net asset
value determined at 4:15 p.m. Eastern Time and payment will generally be
transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and Class C Shares of AIM MONEY
MARKET FUND). After completing the appropriate authorization form, shareholders
may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND and the Class
C Shares of AIM MONEY MARKET FUND. This privilege does not apply to retirement
accounts or qualified plans. Checks may be drawn in any amount of $250 or more.
Checks drawn against insufficient shares in the account or against shares held
less than ten days, or in amounts of less than the applicable minimum will be
returned to the payee. The payee of the check may cash or deposit it in the same
way as an ordinary bank check. When a check is presented to the Transfer Agent
for payment, the Transfer Agent will cause a sufficient number of shares of such
fund to be redeemed to cover the amount of the check. Shareholders are entitled
to dividends on the shares redeemed through the day on which the check is
presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds 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 AIM Distributors,
except that Class B shares of the Multiple Class Funds, and Class A shares of
the Multiple Class Funds and shares of the other AIM Funds that are subject to
the contingent deferred sales charge program for large purchases described
above, may be subject to the imposition of deferred sales charges that will be
deducted from the redemption proceeds. See "Multiple Distribution System" and
"Contingent Deferred Sales Charge Program for Large Purchases." Orders for the
redemption of shares received in proper form by dealers prior to 4:15 p.m.
Eastern Time on any business day of an AIM Fund and either received by AIM
Distributors in its Houston, Texas office prior to 5:00 p.m. Central Time on
that day or transmitted by dealers to the Transfer Agent through the facilities
of NSCC by 7:00 p.m. Eastern Time on that day, will be confirmed at the price
determined as of the close of that day. Orders received by dealers after 4:15
p.m. Eastern Time will be confirmed at the price determined on the next business
day of an AIM Fund. It is the responsibility of the dealer to ensure that all
orders are transmitted on a timely basis to AIM Distributors or to the Transfer
Agent through the facilities of NSCC. Any resulting loss from the dealer's
failure to submit a request for redemption within the prescribed time frame will
be borne by that dealer. Telephone redemption requests must be made by 4:15 p.m.
Eastern Time on any business day of an AIM Fund and will be confirmed at the
price determined as of the close of that day. No AIM Fund will accept requests
which specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "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 New York Stock Exchange
is restricted or suspended. Payment of the proceeds of redemptions relating to
shares for which checks sent in payment have not yet cleared will be delayed
until it is determined that the check has cleared, which may take up to ten
business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when
MCF 05/95
A-14
<PAGE> 35
signature guarantees are required are: (1) redemptions by mail in excess of
$50,000; (2) redemptions by mail if the proceeds are to be paid to someone other
than the name(s) in which the account is registered; (3) written redemptions
requesting proceeds to be sent by wire to other than the bank of record for the
account; (4) redemptions requesting proceeds to be sent to a new address or an
address that has been changed within the past 30 days; (5) requests to transfer
the registration of shares to another owner; (6) telephone exchange and
telephone redemption authorization forms; (7) changes in previously designated
wiring instructions; and (8) written redemptions or exchanges of shares
previously reported as lost, whether or not the redemption amount is under
$50,000 or the proceeds are to be sent to the address of record. These
requirements may be waived or modified upon notice to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission, 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 New York Stock Exchange 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 AIM Distributors.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in shares of the
AIM Fund from which the redemption was made at the net asset value next computed
after receipt by AIM Distributors of the funds to be reinvested. The shareholder
must ask AIM Distributors for such privilege at the time of reinvestment. A
realized gain on the redemption is taxable, and reinvestment will not alter any
capital gains payable. If there has been a loss on the redemption, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in (or exchanged for) shares of the same fund
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.
Each AIM Fund may amend, suspend or cease offering this privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares of the Multiple Class Funds or shares of
any other AIM Fund, and who subsequently reinvest a portion or all of the value
of the redeemed shares in shares of the same 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 AIM Distributors of his or
her intent to do so at the time of reinvestment. This reinvestment privilege
does not apply to Class B shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:15 p.m. Eastern Time (12:00 noon and 4:15 p.m. Eastern Time with respect
to AIM MONEY MARKET FUND), on each "business day" of a fund as previously
defined. In the event the New York Stock Exchange 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 15 minutes following the close of the New York Stock
Exchange on such day. The net asset value per share is calculated by subtracting
a fund's liabilities from its assets and dividing the result by the total number
of fund shares outstanding. The determination of each fund's net asset value per
share is made in accordance with generally accepted accounting principles. Among
other items, a fund's liabilities include accrued expenses and dividends
payable, and its total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE SHARES value variable
rate securities that have an unconditional demand or put feature exercisable
within seven days or less at par, which reflects the market value of such
securities.
Generally, trading in foreign securities, as well as corporate bonds, U.S.
Government securities and money market instruments, is substantially completed
each day at various times prior to the close of the New York Stock Exchange. 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 New York Stock Exchange.
Occasionally, events affecting the values of such securities and such exchange
rates may occur between the times at which they are determined and the close of
the New York Stock Exchange
MCF 05/95
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<PAGE> 36
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.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---------------------------------------- ----------------------- --------------- ---------------
<S> <C> <C> <C>
AIM AGGRESSIVE GROWTH FUND.............. declared and paid annually annually annually
AIM BALANCED FUND....................... declared and paid quarterly quarterly annually
AIM CHARTER FUND........................ declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND....... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................. declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................. declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND............... declared daily; paid monthly annually annually
AIM GOVERNMENT SECURITIES FUND.......... declared daily; paid monthly annually annually
AIM GROWTH FUND......................... declared and paid annually annually annually
AIM HIGH YIELD FUND..................... declared daily; paid monthly annually annually
AIM INCOME FUND......................... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND........... declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY SHARES.... declared daily; paid monthly quarterly annually
AIM MONEY MARKET FUND................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................. declared daily; paid monthly annually annually
IM 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 SHARES........ declared daily; paid monthly annually annually
AIM VALUE FUND.......................... declared and paid annually annually annually
AIM WEINGARTEN FUND..................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Class A, Class B or Class C shares
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 Class A or Class B 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 AIM
Distributors, 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 A shares may not be reinvested in Class B
shares, and (iii) dividends and distributions attributable to the Class C shares
of AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that
Fund or in any Class B shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact AIM Distributors
at any time to obtain a form to authorize such reinvestments in another AIM
Fund. Such reinvestments into the AIM Funds are not subject to sales charges,
and shares so purchased are automatically credited to the account of the
shareholder.
Dividends on Class B shares are expected to be lower than those for Class A or
Class C shares because of higher distribution fees paid by Class B shares.
Dividends on Class A, Class B and Class C 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 AIM Distributors and are effective as to
any subsequent payment if such notice is received by AIM Distributors prior to
the record date of such pay-
MCF 05/95
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<PAGE> 37
ment. Any dividend and distribution election remains in effect until AIM
Distributors receives a revised written election by the shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gain net income that are distributed to
shareholders. Each fund, for purposes of determining taxable income,
distribution requirements and other requirements of Subchapter M, is treated as
a separate corporation. Therefore, no fund may offset its gains against another
fund's losses and each fund must individually comply with all of the provisions
of the Code which are applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE
INTERMEDIATE SHARES (the "Tax-Exempt Funds") which are exempt from federal tax.
Dividends paid by a fund (other than capital gain distributions) may qualify for
the federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM
GOVERNMENT SECURITIES FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY SHARES, AIM MONEY
MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT,
AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE SHARES will qualify for
this dividends received deduction. Shortly after the end of each year,
shareholders will receive information regarding the amount and federal income
tax treatment of all distributions paid during the year. No gain or loss will be
recognized by shareholders upon the automatic conversion of Class B shares of a
Multiple Class Fund into Class A shares of such Fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on income dividends and distributions (other than
exempt-interest dividends and capital gain dividends). Under applicable treaty
law, residents of treaty countries may qualify for a reduced rate of withholding
or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and other taxable securities. For additional
information concerning the alternative minimum tax and certain collateral tax
consequences of the receipt of exempt-interest dividends, see the Statements of
Additional Information applicable to the Tax-Exempt Funds.
MCF 05/95
A-17
<PAGE> 38
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually and will be applied uniformly to all dividends declared
during the year. This percentage may differ from the actual percentages for any
particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM GOVERNMENT SECURITIES FUND and AIM LIMITED MATURITY TREASURY
SHARES -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. Government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND and AIM GLOBAL INCOME FUND -- SPECIAL TAX INFORMATION. For taxable
years in which it is eligible to do so, each of these funds may elect to pass
through to shareholders credits for foreign taxes paid. If the fund makes such
an election, a shareholder who receives a distribution (1) will be required to
include in gross income his proportionate share of foreign taxes allocable to
the distribution and (2) may claim a credit or deduction for such share for his
taxable year in which the distribution is received, subject to the general
limitations imposed on the allowance of foreign tax credits and deductions.
Shareholders should also note that certain gains or losses attributable to
fluctuations in exchange rates or foreign currency forward contracts may
increase or decrease the amount of income of the fund available for distribution
to shareholders, and should note that if such losses exceed other income during
a taxable year, the fund would not be able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM LIMITED MATURITY
TREASURY SHARES, for which The Bank of New York, 110 Washington Street, New
York, New York 10286, serves as custodian. Texas Commerce Bank National
Association, P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian
for retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a
wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and
dividend payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and has passed
upon the legality of the shares offered pursuant to this Prospectus.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (713) 626-1919 (extension 5224) (in Houston), or toll-free at (800)
959-4246 (elsewhere). The Transfer Agent may impose certain copying charges for
requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. A Statement of Additional Information has been filed with the Securities
and Exchange Commission and is available upon request and without charge, by
writing or calling AIM Distributors. This Prospectus omits certain information
contained in the registration statement filed with the Securities and Exchange
Commission. Copies of the registration statement, including items omitted from
this Prospectus, may be obtained from the Securities and Exchange Commission by
paying the charges prescribed under its rules and regulations.
MCF 05/95
A-18
<PAGE> 39
APPENDIX A
- --------------------------------------------------------------------------------
DESCRIPTION OF CORPORATE BOND RATINGS
Investment grade debt securities are those rating categories indicated by
an asterisk (*).
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS ARE AS FOLLOWS:
*AAA -- Bonds which are rated 'Aaa' are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
*AA -- Bonds which are rated 'Aa' are judged to be of high quality by all
standards. Together with the 'Aaa' group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in 'Aaa' securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in 'Aaa'
securities.
*A -- Bonds which are rated 'A' possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
*BAA -- Bonds which are rated 'Baa' are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA -- Bonds which are rated 'Ba' are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated 'B' generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
CAA -- Bonds which are rated 'Caa' are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
CA -- Bonds which are rated 'Ca' represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated 'C' are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from 'Aa' through 'B' in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
STANDARD AND POOR'S CORPORATION CLASSIFICATIONS ARE AS FOLLOWS:
*AAA -- Debt rated 'AAA' has the highest rating assigned by Standard &
Poor's ("S&P"). Capacity to pay interest and repay principal is extremely
strong.
*AA -- Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
*A -- Debt rated 'A' has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
*BBB -- Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher categories.
BB, B, CCC, CC, C -- Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
'BB' indicates the lowest degree of speculation and 'C' the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
A-19
<PAGE> 40
BB -- Debt rated 'BB' has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'BBB-' rating.
B -- Debt rated 'B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The 'B' rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
'BB' or 'BB-' rating.
CCC -- Debt rated 'CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The 'CCC' rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied 'B' or 'B-' rating.
CC -- The rating 'CC' is typically applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
C -- The rating 'C' is typically applied to debt subordinated to senior
debt which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating
may be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
C1 -- The rating 'C1' is reserved for income bonds on which no interest is
being paid.
D -- Debt rated 'D' is in payment default. The 'D' rating category is used
when interest payments or principal or principal payments are not made on the
date due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The 'D'
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
PLUS (+) OR MINUS (-): The rating from 'AA' to 'CCC' may be modified by the
addition of a plus or minus sign to show relative standing within the major
categories.
DUFF & PHELPS FIXED-INCOME RATINGS ARE FOLLOWS:
*AAA -- Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
*AA+, AA, AA- -- High credit quality. Protection factors are strong. Risk
is modest but may vary slightly from time to time because of economic
conditions.
*A+, A, A- -- Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.
*BBB+, BB, BB- -- Below average protection factors but sill considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
BB+, BB, BB- -- Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial protection factors
fluctuate according to industry conditions or company fortunes. Overall quality
may move up or down frequently within this category.
B+, B, B- -- Below investment grade and possessing risk that obligations
will not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in quality rating within this category or
into a higher or lower quality rating grade.
CCC -- Well below investment grade securities. May be in default or have
considerable uncertainty as to timely payment of interest, preferred dividends
and/or principal. Protection factors are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with unfavorable company
developments.
FITCH INVESTORS SERVICE, INC.'S BOND RATINGS ARE AS FOLLOWS:
*AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
*AA -- Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated 'AAA'. Because bonds rated
in the 'AAA' and 'AA' categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated 'F-1+'.
*A -- Bonds considered to be investment grade and high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be vulnerable to adverse changes in economic conditions and
circumstances than bonds with high ratings.
A-20
<PAGE> 41
*BBB -- Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.
BB -- Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B -- Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC -- Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC -- Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C -- Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D -- Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on the basis
of their ultimate recovery value in liquidation or reorganization of the
obligor. 'DDD' represents the highest potential for recovery on these bonds, and
'D' represents the lowest potential for recovery.
PLUS(+) MINUS (-) -- Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the 'AAA', 'DDD', 'DD', or 'D' categories.
A-21
<PAGE> 42
APPENDIX B
- --------------------------------------------------------------------------------
DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED BY
U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES
The following list includes certain common securities, issued or guaranteed
by U.S. Government Agencies or Instrumentalities and does not purport to be
exhaustive.
EXPORT-IMPORT BANK CERTIFICATES -- are certificates of beneficial interest
and participation certificates issued and guaranteed by the Export-Import Bank
of the United States.
FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS -- are bonds issued by a
cooperatively owned, nationwide system of banks and associations supervised by
the Farm Credit Administration, an independent agency of the U.S. Government.
FEDERAL HOME LOAN BANK NOTES AND BONDS -- are notes and bonds issued by the
Federal Home Loan Bank System.
FHA DEBENTURES -- are debentures issued by the Federal Housing Authority of
the U.S. Government.
FHA INSURED NOTES -- are bonds issued by the Farmers Home Administration of
the U.S. Government.
FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS -- are bonds issued
and guaranteed by FHLMC, a corporate instrumentality of the U.S. Government. The
Federal Home Loan Banks own all the capital stock of FHLMC, which obtains its
funds by selling mortgages (as well as participation interests in the mortgages)
and by borrowing funds through the issuance of debentures and otherwise.
FHLMC PARTICIPATION CERTIFICATES OR "FREDDIE MACS" -- represent undivided
interests in specified groups of conventional mortgage loans (and/or
participation interests in those loans) underwritten and owned by FHLMC. At
least 95% of the aggregate principal balance of the whole mortgage loans and/or
participations in a group formed by FHLMC typically consists of single-family
mortgage loans, and not more than 5% consists of multi-family loans. FHLMC
Participation Certificates are not guaranteed by, and do not constitute a debt
or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC
Participation Certificates are issued in fully registered form only, in original
unpaid principal balances of $25,000, $100,000, $200,000, $500,000, $1 million
and $5 million. FHLMC guarantees to each registered holder of a Participation
Certificate, to the extent of such holder's pro rata share (i) the timely
payment of interest accruing at the applicable certificate rate on the unpaid
principal balance outstanding on the mortgage loans, and (ii) collection of all
principal on the mortgage loans without any offset or deductions. Pursuant to
these guaranties, FHLMC indemnifies holders of Participation Certificates
against any reduction in principal by reason of charges for property repairs,
maintenance, and foreclosure.
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") BONDS -- are bonds issued
and guaranteed by FNMA, a federally chartered and privately-owned corporation.
FNMA PASS-THROUGH CERTIFICATES OR "FANNIE MAES" -- are mortgage
pass-through certificates issued and guaranteed by FNMA. FNMA Certificates
represent a fractional undivided ownership interest in a pool of mortgage loans
either provided from FNMA's own portfolio or purchased from primary lenders. The
mortgage loans included in the pool are conventional, insured by the Federal
Housing Administration or guaranteed by the Veterans Administration. FNMA
Certificates are not backed by, nor entitled to, the full faith and credit of
the U.S. Government.
Loans not provided from FNMA's own portfolio are purchased only from
primary lenders that satisfy certain criteria developed by FNMA, including depth
of mortgage origination experience, servicing experience and financial capacity.
FNMA may purchase an entire loan pool from a single lender, and issue
Certificates backed by that loan pool alone, or may package a pool made up of
loans purchased from various lenders.
Various types of mortgage loans, and loans with varying interest rates, may
be included in a single pool, although each pool will consist of mortgage loans
related to one-family or two-to-four family residential properties.
Substantially all FNMA mortgage pools currently consist of fixed interest rate
and growing equity mortgage loans, although FNMA mortgage pools may also consist
of adjustable interest rate mortgage loans or other types of mortgage loans.
Each mortgage loan must conform to FNMA's published requirements or guidelines
with respect to maximum principal amount, loan-to-value ratio, loan term,
underwriting standards and insurance coverage.
All mortgage loans are held by FNMA as trustee pursuant to a trust
indenture for the benefit of Certificate holders. The trust indenture gives FNMA
responsibility for servicing and administering the loans in a pool. FNMA
contracts with the lenders or other servicing institutions to perform all
services and duties customary to the servicing of mortgages, as well as duties
specifically prescribed by FNMA, all under FNMA supervision. FNMA may remove
service providers for cause.
The pass-through rate on FNMA Certificates is the lowest annual interest
rate borne by an underlying mortgage loan in the pool, less a fee to FNMA as
compensation for servicing and for FNMA's guarantee. Lenders servicing the
underlying mortgage loans receive as compensation a portion of the fee paid to
FNMA, the excess yields on pooled loans with coupon rates above the lowest rate
borne by any mortgage loan in the pool and certain other amounts collected, such
as late charges.
A-22
<PAGE> 43
The minimum size of a FNMA pool is $1 million of mortgage loans. Registered
holders purchase Certificates in amounts not less than $25,000.
FNMA Certificates are marketed by the servicing lender banks, usually
through securities dealers. The lender of a single lender pool typically markets
all Certificates based on that pool, and lenders of multiple lender pools market
Certificates based on a pro rata interest in the aggregate pool. The amount of
FNMA Certificates currently outstanding is limited.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR "GINNIE
MAES" -- are mortgage-backed securities which represent a partial ownership
interest in a pool of mortgage loans issued by lenders such as mortgage bankers,
commercial banks and savings and loan associations. Each mortgage loan included
in the pool is either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled, and, after being approved by GNMA, is offered to investors through
securities dealers. GNMA is a U.S. Government corporation within the Department
of Housing and Urban Development.
GNMA Certificates differ from bonds in that the principal is paid back
monthly by the borrower over the term of the loan rather than returned in a lump
sum at maturity. GNMA Certificates are called "modified pass-through" securities
because they entitle the holder to receive its proportionate share of all
interest and principal payments owed on the mortgage pool, net of fees paid to
the issuer and GNMA, regardless of whether or not the mortgagor actually makes
the payment. Payment of principal of and interest on GNMA Certificates of the
"modified pass-through" type is guaranteed by GNMA and backed by the full faith
and credit of the U.S. Government.
The average life of a GNMA Certificate is likely to be substantially less
than the original maturity of the mortgage pools underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return on the greater part of principal invested far in advance of
the maturity of the mortgages in the pool. Foreclosures impose little risk to
principal investment because of the GNMA guarantee.
As the prepayment rates of individual mortgage pools will vary widely, it
is not possible to accurately predict the average life of a particular issue of
GNMA Certificates. However, statistics published by the Federal Housing
Authority indicate that the average life of a single-family dwelling mortgage
with 25- to 30-year maturity, the type of mortgage which backs the vast majority
of GNMA Certificates, is approximately 12 years. It is therefore customary
practice to treat GNMA Certificates as 30-year mortgage-backed securities which
prepay fully in the twelfth year.
As a consequence of the fees paid to GNMA and the issuer of GNMA
Certificates, the coupon rate of interest of GNMA Certificates is lower than the
interest paid on the VA-guaranteed or FHA-insured mortgages underlying the
Certificates.
The yield which will be earned on GNMA Certificates may vary from their
coupon rates for the following reasons: (i) Certificates may be issued at a
premium or discount, rather than at par; (ii) Certificates may trade in the
secondary market at a premium or discount after issuance; (iii) interest is
earned and compounded monthly which has the effect of raising the effective
yield earned on the Certificates; and (iv) the actual yield of each Certificate
is affected by the prepayment of mortgages included in the mortgage pool
underlying the Certificates and the rate at which principal so prepaid is
reinvested. In addition, prepayment of mortgages included in the mortgage pool
underlying a GNMA Certificate purchased at a premium may result in a loss to the
Fund.
Due to the large amount of GNMA Certificates outstanding and active
participation in the secondary market by securities dealers and investors, GNMA
Certificates are highly liquid instruments. Prices of GNMA Certificates are
readily available from securities dealers and depend on, among other things, the
level of market rates, the Certificate's coupon rate and the prepayment
experience of the pool of mortgages backing each Certificate.
GENERAL SERVICES ADMINISTRATION ("GSA") PARTICIPATION CERTIFICATES -- are
participation certificates issued by the General Services Administration of the
U.S. Government.
MARITIME ADMINISTRATION BONDS -- are bonds issued and provided by the
Department of Transportation of the U.S. Government.
NEW COMMUNITIES DEBENTURES -- are debentures issued in accordance with the
provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which is guaranteed by the U.S. Government.
PUBLIC HOUSING NOTES AND BONDS -- are short-term project notes and
long-term bonds issued by public housing and urban renewal agencies in
connection with programs administered by the Department of Housing and Urban
Development of the U.S. Government, the payment of which is secured by the U.S.
Government.
SBA DEBENTURES -- are debentures fully guaranteed as to principal and
interest by the Small Business Administration of the U.S. Government.
SLMA DEBENTURES -- are debentures backed by the Student Loan Marketing
Association.
TITLE XI BONDS -- are bonds issued in accordance with the provisions of
Title XI of the Merchant Marine Act of 1936, as amended, the payment of which is
guaranteed by the U.S. Government.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BONDS -- are bonds issued by
the Washington Metropolitan Area Transit Authority and are guaranteed by the
Secretary of Transportation of the U.S. Government.
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<PAGE> 48
[AIM LOGO]
THE AIM FAMILY OF FUNDS(R)
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, Texas 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Building
Houston, TX 77002
For more complete information about any other Fund in The AIM
Family of Funds(R), including charges and expenses, please call
(800) 347-1919, (713) 626-1919 or write to A I M Distributors,
Inc. and request a free prospectus. Please read the prospectus
carefully before you invest or send money.
<PAGE> 49
STATEMENT OF
ADDITIONAL INFORMATION
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
(SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.)
11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
(713) 626-1919
_________________________
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS,
AND IT SHOULD BE READ IN CONJUNCTION WITH
A PROSPECTUS OF THE ABOVE-NAMED FUNDS,
A COPY OF WHICH MAY BE OBTAINED FROM AUTHORIZED DEALERS
OR BY WRITING
A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TEXAS 77210-4739,
OR BY CALLING (713) 626-1919 (IN HOUSTON)
OR (800) 347-4246 (ELSEWHERE)
_________________________
Statement of Additional Information Dated: March 1, 1995 as revised May 2, 1995
Relating to the Prospectus Dated: March 1, 1995 as revised May 2, 1995
<PAGE> 50
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Yield Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Historical Portfolio Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Brokerage Commissions Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Hedging Foreign Currency Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Writing Covered Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Writing Covered Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purchasing Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purchasing Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Combined Option Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Stock Index Options and Futures and Financial Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Restrictions on the Use of Futures Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Restrictions on OTC Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Asset Coverage for Futures and Options Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Risk Factors in Options, Futures, Forward and Currency Transactions . . . . . . . . . . . . . . . . . . . . 13
Repurchase Agreements and Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Remuneration of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 22
Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Investment Advisory and Administrative Services Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 23
THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
i
<PAGE> 51
<TABLE>
<S> <C>
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
ii
<PAGE> 52
INTRODUCTION
AIM International Funds, Inc. (the "Company") is a series mutual fund.
The rules and regulations of the 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, which relates to the following portfolios of the Company: AIM
Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income
Fund (individually, a "Fund" and collectively, the "Funds"), is included in a
Prospectus, dated March 1, 1995 as revised May 2, 1995 (the "Prospectus").
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, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box
4739, Houston, Texas 77210-4739, or by calling (713) 626-1919 (in Houston) or
(800) 347-4246 (elsewhere). Investors must receive a Prospectus before they
invest in the Funds.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds. Some
of the information required to be in this Statement of Additional Information
is also included in the Funds' current Prospectus, and in order to avoid
repetition, reference will be made herein to sections of the Prospectus.
Additionally, the Prospectus and this Statement of Additional Information omit
certain information contained in the Company's Registration Statement filed
with the SEC. Copies of the Registration Statement, including items omitted
from the Prospectus and this Statement of Additional Information, may be
obtained from the SEC by paying the charges prescribed under its rules and
regulations.
GENERAL INFORMATION ABOUT THE COMPANY
THE COMPANY AND ITS SHARES
The Company was organized in 1991 as a Maryland corporation, and is
registered with the SEC as an open-end, series, management investment company.
The Company currently consists of four separate portfolios: AIM International
Equity Fund ("Equity Fund"), AIM Global Aggressive Growth Fund ("Aggressive
Growth Fund"), AIM Global Growth Fund ("Growth Fund") and AIM Global Income
Fund ("Income Fund"). Each portfolio of the Company offers both Class A and
Class B shares. This Statement of Additional Information and the associated
Prospectus relate solely to the Funds. Shares of the Equity Fund are offered
through a separate prospectus and statement of additional information.
As used in the Prospectus, the term "majority of the outstanding
shares" of the Company, of a particular Fund or of a class of a Fund means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Company, such Fund or such class present at a meeting of shareholders, if the
holders of more than 50% of the outstanding shares of the Company, such Fund or
such class are present or represented by proxy or (ii) more than 50% of the
outstanding shares of the Company, such Fund or such class.
Each share of a Fund is entitled to one vote, to participate equally
in dividends and distributions declared by the Board of Directors with respect
to such Fund and, upon liquidation of the Fund, to participate proportionately
in the Fund's net assets remaining after satisfaction of the Fund's outstanding
liabilities. Fractional shares have proportionately the same rights, including
voting rights, as are provided for full shares.
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<PAGE> 53
PERFORMANCE
Total return and yield figures for the Funds are neither fixed nor
guaranteed, and no Fund's principal is insured. Performance quotations reflect
historical information and should not be considered representative of a Fund's
performance for any period in the future. Performance is a function of a
number of factors and can be expected to fluctuate. The Funds may provide
performance information in reports, sales literature and advertisements. The
Funds may also, from time to time, quote information about the Funds published
or aired by publications or other media entities which contain articles or
segments relating to investment results or other data about one or more of the
Funds. The following is a list of such publications or media entities:
<TABLE>
<S> <C> <C>
Advertising Age Financial World Nation's Business
Barron's Forbes New York Times
Best's Review Fortune Pension World
Broker World Hartford Courant Inc. Pensions & Investments
Business Week Institutional Investor Personal Investor
Changing Times Insurance Forum Philadelphia Inquirer
Christian Science Monitor Insurance Week USA Today
Consumer Reports Investor's Daily U.S. News & World Report
Economist Journal of the American Wall Street Journal
FACS of the Week Society of CLU & ChFC Washington Post
Financial Planning Kiplinger Letter CNN
Financial Product News Money CNBC
Financial Services Week Mutual Fund Forecaster PBS
</TABLE>
Each Fund may also compare its performance to performance data of
similar mutual funds as published by the following services:
<TABLE>
<S> <C>
Bank Rate Monitor Stanger
Donoghue's Weisenberger
Mutual Fund Values (Morningstar) Lipper Analytical Services
</TABLE>
Although performance data may be useful to prospective investors when
comparing a Fund's performance with other funds and other potential
investments, investors should note that the methods of computing performance of
other potential investments are not necessarily comparable to the methods
employed by a Fund.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the
applicable Fund's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in such Fund's net asset value per
share over the period. Average annual total returns are calculated by
determining the growth or decline in value of a hypothetical investment in a
particular Fund over a stated period of time, 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 total 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
total returns do not represent the actual year-to-year performance of such
Fund.
In addition to average annual total returns, each 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
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<PAGE> 54
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 and other performance information may be quoted numerically or in
tables, graphs or similar illustrations. Total returns may be quoted with or
without taking the Class A shares' 4.75% maximum sales charge, or the Class B
shares' 5% maximum contingent deferred sales charge ("CDSC") into account.
Excluding sales charges from a total return calculation produces a higher total
return figure.
YIELD QUOTATIONS
The standard formula for calculating yield for the Income Fund, as
described in the Prospectus, is as follows:
YIELD = 2[((a-b)/(c x d) + 1)6-1]
Where a = dividends and interest earned during a stated 30-day
period. For purposes of this calculation, dividends
are accrued rather than recorded on the ex-dividend
date. Interest earned under this formula must
generally be calculated based on the yield to maturity
of each obligation (or, if more appropriate, based on
yield to call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during
the period.
d = the maximum offering price per share on the last day of
the period.
The yields for the Class A and Class B shares of the Income Fund for
the 30-day period ended October 31, 1994 were as follows:
Class A . . . . . . . . . . . 5.90%
Class B . . . . . . . . . . . 5.00%
HISTORICAL PORTFOLIO RESULTS
The total returns for Class A and Class B shares of Aggressive Growth
Fund, Growth Fund and Income Fund for the period September 15, 1994 (date
operations commenced) through October 31, 1994 were as follows:
<TABLE>
<CAPTION>
Class A shares Class A shares Class B shares Class B shares
Average Annual Cumulative Average Annual Cumulative
09/15/94-10/31/94 Total Return* Return Total Return* Return
- ----------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Aggressive Growth Fund - -2.67% - -2.90%
Growth Fund - -2.57% - -2.80%
Income Fund - -3.87% - -4.21%
</TABLE>
During the period September 15, 1994 (date operations commenced)
through October 31, 1994, a hypothetical $1,000 investment in the Class A
shares of the Aggressive Growth Fund, Growth Fund and Income Fund at the
beginning of such period would have been worth $973.33, $974.28 and $961.26,
respectively. During the period September 15, 1994 (date operations commenced)
through October 31, 1994, a hypothetical $1,000 investment in the Class B
shares of the Aggressive Growth Fund, Growth Fund and Income Fund at the
beginning of such period would have been worth $971.00, $972.00 and $957.92,
respectively.
__________________________________
* The Funds do not provide average annual total return for periods of less
than one year.
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<PAGE> 55
Each Fund's performance may be compared in advertising to the
performance of other mutual funds in general, or of particular types of mutual
funds, especially those with similar objectives. Such performance data may be
prepared by Lipper Analytical Services, Inc. and other independent services
which monitor the performance of mutual funds. The Funds may also advertise
mutual fund performance rankings which have been assigned to each respective
Fund by such monitoring services. Each Fund's performance may also be compared
in advertising to the performance of comparative benchmarks such as indices of
stocks comparable to those in which the Funds invest, as well as the following:
<TABLE>
<S> <C>
Standard & Poor's 500 Stock Index Morgan Stanley Capital International
Dow Jones Industrial Average Indices, including:
Consumer Price Index EAFE Index
Bond Buyer Index Pacific Basin Index
NASDAQ Pacific Ex Japan Index (a widely
COFI recognized series of indices in
First Boston High Yield Index international market
The Financial Times - Actuaries World Indices (a performance)
wide range of comprehensive measures of stock
price performance for the world's major stock
markets and regional areas)
</TABLE>
Each Fund may also compare its performance to rates on Certificates of
Deposit and other fixed rate investments such as the following:
10 year Treasuries
30 year Treasuries
90 Day Treasury Bills
Advertising for the Income Fund may from time to time include
discussions of general economic conditions and interest rates. From time to
time, sales literature and/or advertisements for any of the Funds may disclose
the largest holdings in the Fund's portfolios.
From time to time, each Fund's advertising may include discussions of
general domestic and international economic conditions and interest rates, and
may make reference to international economic sources such as The Bundesbank
(the German equivalent of the U.S. Federal Reserve Board). Each Fund's
advertising may also include references to the use of the Fund as part of an
individual's overall retirement investment program.
From time to time, each Fund's sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. This
includes, but is not limited to, literature addressing general information
about mutual funds, variable annuities, dollar-cost averaging, stocks, bonds,
money markets, certificates of deposit, retirement, retirement plans, asset
allocation, tax-free investing, college planning and inflation.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
Subject to policies established by the Board of Directors of the
Company, A I M Advisors, Inc. ("AIM") is responsible for decisions to buy and
sell securities for each Fund, for the selection of broker-dealers, for the
execution of the Funds' investment portfolio transactions, for the allocation
of brokerage fees in connection with such transactions, and where applicable,
for the negotiation of commissions and spreads on transactions. AIM's primary
consideration in effecting a security transaction
4
<PAGE> 56
is to obtain the best net price and the most favorable execution of the order.
While AIM generally seeks reasonably competitive commission rates, the Funds do
not necessarily pay the lowest commission or spread available.
A portion of the securities in which the Funds invest are traded in
over-the-counter ("OTC") markets, and in such transactions, a Fund deals
directly with the dealers who make markets in the securities involved, except
in those circumstances where better prices and executions are available
elsewhere. Portfolio transactions placed through dealers serving as primary
market makers are effected at net prices, generally without commissions as
such, but which include compensation in the form of mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. In recent years, however, an increasing
number of overseas stock markets have adopted a system of negotiated rates,
although a number of markets continue to be subject to an established schedule
of minimum commission rates.
Foreign equity securities may be held by certain Funds in the form of
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") or
other securities representing underlying securities of foreign issuers, or
securities convertible into foreign equity securities. These securities may
not necessarily be denominated in the same currency as the securities into
which they may be converted. ADRs are receipts typically issued by a United
States bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs are receipts issued in Europe which
evidence a similar ownership arrangement. Generally, ADRs, in registered
form, are designed for use in the United States securities markets, and EDRs,
in bearer form, are designed for use in European securities markets. ADRs and
EDRs may be listed on stock exchanges, or traded in OTC markets in the United
States or Europe, as the case may be. ADRs, like other securities traded in
the United States, will be subject to negotiated commission rates.
AIM may from time to time determine target levels of commission
business for AIM to transact with various brokers on behalf of its clients
(including the Funds) over a certain time period. The target levels will be
determined 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 attitude toward and 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. No specific
formula will be used in connection with any of the foregoing considerations in
determining the target levels. However, if a broker has indicated a certain
level of desired commissions in return for certain research services provided
by the broker, this factor will be taken into consideration by AIM.
Subject to the overall objective of obtaining best net price and most
favorable execution for the Funds, AIM may also consider sales of the Funds and
of the other AIM Funds as a factor in the selection of broker-dealers to
execute portfolio transactions for a Fund.
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 may be recaptured are the
soliciting dealer fees on the tender of a Fund's portfolio securities in a
tender or exchange offer.
The Funds are not under any obligation to deal with any broker or
group of brokers in the execution of transactions in portfolio securities.
Brokers who provide supplemental investment research to AIM may receive orders
for transactions by a Fund. Information so received will be in addition to and
not in lieu of the services required to be performed by AIM under its
agreements with such Fund, and the expenses of AIM will not necessarily be
reduced as a result of the receipt of such supplemental information. Certain
research services furnished by broker-dealers may be useful to AIM in
connection with its services to other
5
<PAGE> 57
advisory clients, including the other AIM Funds. Also, a Fund may pay a higher
price for securities or higher commissions in recognition of research services
furnished by broker-dealers.
Provisions of the 1940 Act and rules and regulations thereunder have
been construed to prohibit the Funds from purchasing securities or instruments
from, or selling securities or instruments to, any holder of 5% or more of the
voting securities of any investment company managed or advised by AIM. The
Funds have obtained an order of exemption from the SEC which permits a Fund to
engage in certain transactions with such 5% holders, if a Fund complies with
conditions and procedures designed to ensure that such transactions are
executed at fair market value and present no conflicts of interest.
AIM and its affiliates manage several other investment accounts, some
of which may have investment objectives similar to those of the Funds. It is
possible that, at times, identical securities will be appropriate for
investment by one of the Funds and by another Fund or one or more of such
investment accounts. The position of each account, however, in the securities
of the same issue may vary and the length of time that each account may choose
to hold its investment in the securities of the same issue may likewise vary.
The timing and amount of purchase by each account will also be determined by
its cash position. If the purchase or sale of securities 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, transactions in such securities will be
allocated among the Fund(s) and such accounts in a manner deemed equitable by
AIM. AIM may combine such transactions, in accordance with applicable laws and
regulations, in order to obtain the best net price and most favorable
execution. Simultaneous transactions could, however, adversely affect the
ability of a Fund to obtain or dispose of the full amount of a security which
it seeks to purchase or sell.
In some cases 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, the main factors considered by AIM are the respective
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.
From time to time, an identical security may be sold by an AIM Fund or
another investment account advised by AIM or A I M Capital Management, Inc.
("AIM Capital") and simultaneously purchased by another investment account
advised by AIM or AIM Capital, when such transactions comply with applicable
rules and regulations and are deemed consistent with the investment
objective(s) and policies of the investment accounts advised by AIM or AIM
Capital. Procedures pursuant to Rule 17a-7 under the Investment Company Act of
1940, as amended (the "1940 Act") regarding transactions between investment
accounts advised by AIM or AIM Capital have been adopted by the Boards of
Directors/Trustees of the various AIM Funds, including the Company. Although
such transactions may result in custodian, tax or other related expenses, no
brokerage commissions or other direct transaction costs are generated by
transactions among the investment accounts advised by AIM or AIM Capital.
SECTION 28(E) STANDARDS
Under Section 28(e) of the Securities Exchange Act of 1934, AIM shall
not be deemed to have acted unlawfully or to have breached its fiduciary duty
solely because under certain circumstances it has caused an account to pay a
higher commission than the lowest available. To obtain the benefit of 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," and that the services provided by a broker provide AIM
with lawful and appropriate assistance in the performance of its investment
decision-making responsibilities. Accordingly, the price to a Fund in any
transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered.
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<PAGE> 58
Broker-dealers utilized by AIM may furnish statistical, research and
other information or services which are deemed by AIM to be beneficial to the
Funds' investment programs. Research services received from brokers supplement
AIM's own research (and the research of sub-advisors to other clients of AIM),
and may include the following types of information: statistical and background
information on industry groups and individual companies; forecasts and
interpretations with respect to United States and foreign economies,
securities, markets, specific industry groups and individual companies;
information on political developments; portfolio management strategies;
performance information on securities and information concerning prices of
securities; and information supplied by specialized services to AIM and to the
Company's directors with respect to the performance, investment activities and
fees and expenses of other mutual funds. Such information may be communicated
electronically, orally or in written form. Research services may also include
the providing of equipment used to communicate research information, the
arranging of meetings with management of companies and the providing of access
to consultants who supply research information.
The outside research assistance is useful to AIM since the brokers
utilized by AIM as a group tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, this research provides
AIM with a diverse perspective on financial markets. Research services which
are provided to AIM by brokers are available for the benefit of all accounts
managed or advised by AIM or by sub-advisors to accounts managed or advised by
AIM. In some cases, the research services are available only from the broker
providing such services. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM is of the
opinion that because the broker research supplements rather than replaces its
research, the receipt of such research does not tend to decrease its expenses,
but tends to improve the quality of its investment advice. However, to the
extent that AIM would have purchased any such research services had such
services not been provided by brokers, the expenses of such services to AIM
could be considered to have been reduced accordingly. Certain research
services furnished by broker-dealers may be useful to AIM in advising clients
other than the Funds. Similarly, any research services received by AIM through
the placement of portfolio transactions of other clients may be of value to AIM
in fulfilling its obligations to the Funds. AIM is of the opinion that this
material is beneficial in supplementing AIM's research and analysis; and,
therefore, it may benefit the Funds by improving the quality of AIM's
investment advice. The advisory fee paid by the Funds is not reduced because
AIM receives such services.
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.
With respect to the Income Fund, purchase and sales of portfolio
securities are generally transacted with the issuer or a primary market maker
for the securities on a net basis, without any brokerage commission being paid
by the Fund for such purchases. Purchases from dealers serving as primary
market makers reflect the spread between the bid and asked prices. Purchases
and sales for the Aggressive Growth Fund and Growth Fund generally involve a
broker, and consequently involve the payment of commissions.
BROKERAGE COMMISSIONS PAID
For the period September 15, 1994 (date operations commenced) through
October 31, 1994, the Aggressive Growth Fund, Growth Fund and Income Fund paid
brokerage commissions of $59,076, $9,933 and $0, respectively. The Aggressive
Growth Fund and Growth Fund directed certain brokerage transactions to
broker-dealers that provided AIM with research, statistical and other
information. The aggregate amount of such transactions for the period
September 15, 1994 through October 31, 1994 for the Aggressive Growth and
Growth Fund was $190,364 and $20,105 respectively, including related brokerage
commissions of $379 and $38, respectively.
7
<PAGE> 59
HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES
The following discussion of certain investment strategies supplements
the discussion set forth in the Prospectus under the heading "Hedging
Strategies and Other Investment Techniques."
Each Fund may seek to hedge its portfolio against movements in the
equity markets, interest rates and exchange rates between currencies through
the use of options, futures transactions, options on futures and foreign
forward exchange transactions. Each Fund has authority to write (sell) covered
call and put options on its portfolio securities, purchase put and call options
on securities and engage in transactions in stock index options, stock index
futures and financial futures, and related options on such futures. The Funds
may also deal in certain forward contracts, including forward foreign exchange
transactions, foreign currency options and futures, and related options on such
futures. The Funds are authorized to enter into such options and futures
transactions either on exchanges or in the OTC markets. Although certain risks
are involved in options and futures transactions (as discussed in the
Prospectus and below), AIM believes that, because the Funds will only engage in
these transactions for hedging purposes, the options and futures portfolio
strategies of the Funds will not subject the Funds to the risks frequently
associated with the speculative use of options and futures transactions. While
the Funds' use of hedging strategies is intended to reduce the volatility of
the respective net asset value of each Fund's shares, a Fund's net asset value
will nevertheless fluctuate. There can be no assurance that the hedging
transactions of any of the Funds will be effective.
HEDGING FOREIGN CURRENCY RISKS
Generally, the foreign exchange transactions of a Fund will be
conducted on a spot (cash) basis at the spot rate then prevailing for
purchasing or selling currency in the foreign exchange market. However, the
Funds have authority to deal in forward foreign exchange between currencies
(including the U.S. dollar) as a hedge against possible variations in the
foreign exchange rate between such currencies. This is accomplished through
individually negotiated contractual agreements to purchase or to sell a
specified currency at a specified future date and price set at the time of the
contract. A Fund's dealings in forward foreign exchange may be with respect to
a specific purchase or sale of a security, or with respect to its portfolio
positions generally.
The Funds may not position hedge with respect to the currency of a
particular country to an extent greater than the aggregate market value (at the
time of making such sale) of the securities held in any such Fund's portfolio
denominated or quoted in that particular foreign currency. The Funds will not
attempt to hedge all of their respective portfolio positions and will enter
into such transactions only to the extent, if any, deemed appropriate by AIM.
None of the Funds will enter into a position hedging commitment if, as a result
thereof, (1) the Aggressive Growth Fund or the Growth Fund would have more than
10% of the value of their respective total assets committed to such contracts,
or (2) the Income Fund would have more than 40% of the value of its total
assets committed to such contracts. None of the Funds will enter into a
forward contract with a term of more than one year.
In addition to the forward exchange contracts, the Funds may also
purchase or sell listed or OTC foreign currency options, foreign currency
futures and related options as a short or long hedge against possible
variations in foreign exchange rates. The cost to a Fund of engaging in
foreign currency transactions varies with such factors as the currencies
involved, the length of the contract period and the market conditions then
prevailing. Since transactions in foreign currency exchange usually are
conducted on a principal basis, no fees or commissions are involved.
Transactions involving forward exchange contracts and futures contracts and
options thereon are subject to certain risks. A detailed discussion of such
risks appears under the caption "Risk Factors in Options, Futures, Forward and
Currency Transactions."
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WRITING COVERED CALL OPTIONS
Each Fund is authorized to write (sell) covered call options on the
securities in which it may invest and to enter into closing purchase
transactions with respect to such options. Writing a call option obligates a
Fund to sell or deliver the option's underlying security, in return for the
strike price, upon exercise of the option. By writing a call option, a Fund
receives an option premium from the purchaser of the call option. Writing
covered call options is generally a profitable strategy if prices remain the
same or fall. Through receipt of the option premium, a Fund would seek to
mitigate the effects of a price decline. By writing covered call options,
however, a Fund gives up the opportunity, while the option is in effect, to
profit from any price increase in the underlying security above the option
exercise price. In addition, a Fund's ability to sell the underlying security
will be limited while the option is in effect unless the Fund effects a closing
purchase transaction.
WRITING COVERED PUT OPTIONS
Each Fund is authorized to write (sell) covered put options on its
portfolio securities and to enter into closing transactions with respect to
such options.
When a Fund writes a put option, it takes the opposite side of the
transaction from the option's purchaser. In return for receipt of the premium,
a Fund assumes the obligation to pay the strike price for the option's
underlying instrument if the other party to the option chooses to exercise it.
A Fund may seek to terminate its position in a put option it writes before
exercise by closing out the option in the secondary market at its current
price. If the secondary market is not liquid for an option a Fund has written,
however, the Fund must continue to be prepared to pay the strike price while
the option is outstanding, regardless of price changes, and must continue to
set aside assets to cover its position.
Each Fund may write put options as an alternative to purchasing actual
securities. If security prices rise, a Fund would expect to profit from a
written put option, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it is
likely that a Fund will also profit, because it should be able to close out the
option at a lower price. If security prices fall, a Fund would expect to
suffer a loss. This loss should be less than the loss a Fund would have
experienced from purchasing the underlying instrument directly, however,
because the premium received for writing the option should mitigate the effects
of the decline.
PURCHASING PUT OPTIONS
Each Fund is authorized to purchase put options to hedge against a
decline in the market value of its portfolio securities. By buying a put
option a Fund has the right (but not the obligation) to sell the underlying
security at the exercise price, thus limiting the Fund's risk of loss through a
decline in the market value of the security until the put option expires. The
amount of any appreciation in the value of the underlying security will be
partially offset by the amount of the premium paid by a Fund for the put option
and any related transaction costs. Prior to its expiration, a put option may
be sold in a closing sale transaction and profit or loss from the sale will
depend on whether the amount received is more or less than the premium paid for
the put option plus the related transaction costs. A closing sale transaction
cancels out a Fund's position as the purchaser of an option by means of an
offsetting sale of an identical option prior to the expiration of the option it
has purchased. None of the Funds will purchase put options on securities
(including stock index options discussed below) if as a result of such
purchase, the aggregate cost of all outstanding options on securities held by a
Fund would exceed 5% of the market value of the Fund's total assets.
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PURCHASING CALL OPTIONS
Each Fund is also authorized to purchase call options. The features
of call options are essentially the same as those of put options, except that
the purchaser of a call option obtains the right to purchase, rather than sell,
the underlying instrument at the option's strike price (call options on futures
contracts are settled by purchasing the underlying futures contract). The
Funds will purchase call options only in connection with "closing purchase
transactions."
COMBINED OPTION POSITIONS
Each Fund, for hedging purposes, may purchase and write options in
combination with each other to adjust the risk and return characteristics of
the Fund's overall position. For example, a Fund may purchase a put option and
write a covered call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics are similar
to selling a futures contact. This technique, called a "straddle," enables a
Fund to offset the cost of purchasing a put option with the premium received
from writing the call option. However, by selling the call option, a Fund
gives up the ability for potentially unlimited profit from the put option.
Another possible combined position would involve writing a covered call option
at one strike price and buying a call option at a lower price, in order to
reduce the risk of the written covered call option in the event of a
substantial price increase. Because combined options positions involve
multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.
STOCK INDEX OPTIONS AND FUTURES AND FINANCIAL FUTURES
Each Fund is authorized to engage in transactions in stock index
options and futures and financial futures, and related options. A Fund may
purchase or write put and call options on stock indices to hedge against the
risks of market-wide stock price movements in the securities in which the Fund
invests. Options on indices are similar to options on securities except that
on exercise or assignment, the parties to the contract pay or receive an amount
of cash equal to the difference between the closing value of the index and the
exercise price of the option times a specified multiple. A Fund may invest in
stock index options based on a broad market index, such as the S&P 500 Index,
or on a narrow index representing an industry or market segment, such as the
AMEX Oil & Gas Index. The Funds' investments in foreign stock index futures
contracts and foreign interest rate futures contracts, and related options, are
limited to only those contracts and related options that have been approved by
the Commodities Futures Trading Commission ("CFTC") for investment by United
States investors. Additionally, with respect to a Fund's investments in
foreign options, unless such options are specifically authorized for investment
by order of the CFTC or meet the definition of "trade option" as set forth in
CFTC Regulation 32.4, a Fund will not make such investments.
Each Fund may also purchase and sell stock index futures contracts and
other financial futures contracts ("futures contracts") as a hedge against
adverse changes in the market value of its portfolio securities as described
below. A futures contract is an agreement between two parties which obligates
the purchaser of the futures contract to buy and the seller of a futures
contract to sell a security for a set price on a future date. Unlike most
other futures contracts a stock index futures contract does not require actual
delivery of securities, but results in cash settlement based upon the
difference in value of the index between the time the contract was entered into
and the time of its settlement. A Fund may effect transactions in stock index
futures contracts in connection with equity securities in which it invests and
in financial futures contracts in connection with the debt securities in which
it invests, if any. Transactions by a Fund in stock index futures and
financial futures are subject to limitations as described below under
"Restrictions on the Use of Futures Transactions."
A Fund may sell futures contracts in anticipation of or during a
market decline to attempt to offset the decrease in market value of the Fund's
securities portfolio that might otherwise result. When a Fund
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is not fully invested in the securities markets and anticipates a significant
market advance, the Fund may purchase futures in order to gain rapid market
exposure that may in part or entirely offset increases in the cost of
securities that the Fund intends to purchase. As such purchases are made, an
equivalent amount of futures contracts will be terminated by offsetting sales.
The Funds do not consider purchases of futures contracts to be a speculative
practice under these circumstances. It is anticipated that, in a substantial
majority of these transactions, the Fund will purchase such securities upon
termination of the long futures position, whether the long position results
from the purchase of a futures contract or the purchase of a call option, but
under unusual circumstances (e.g., the Fund experiences a significant amount of
redemptions) a long futures position may be terminated without the
corresponding purchase of securities.
The Funds are also authorized to purchase and write call and put
options on futures contracts and stock indices in connection with their hedging
activities. Generally, these strategies would be utilized under the same
market and market sector conditions (i.e., conditions relating to specific
types of investments) in which a Fund enters into futures transactions. A Fund
may purchase put options or write call options on futures contracts and stock
indices rather than selling the underlying futures contract in anticipation of
a decrease in the market value of securities. Similarly, a Fund can purchase
call options, or write put options on futures contracts and stock indices, as a
substitute for the purchase of such futures to hedge against the increased cost
resulting from an increase in the market value of securities which the Fund
intends to purchase.
Each Fund is also authorized to engage in options and futures
transactions on U.S. and foreign exchanges and in options in the OTC markets
("OTC options"). In general, exchange traded contracts are third-party
contracts (i.e., performance of the parties' obligations is guaranteed by an
exchange or clearing corporation) with standardized strike prices and
expiration dates. OTC options transactions are two-party contracts with price
and terms negotiated by the buyer and seller. See "Restrictions on OTC
Options" below for information as to restrictions on the use of OTC options.
Each Fund is authorized to purchase or sell listed or OTC foreign
security or currency options, foreign security or currency futures and related
options as a short or long hedge against possible variations in foreign
exchange rates and market movements. Such transactions could be effected with
respect to hedges on non-U.S. dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated to be
purchased by the Fund. As an illustration, a Fund may use such techniques to
hedge the stated value in U.S. dollars of an investment in a yen-denominated
security. In such circumstances, for example, the Fund can purchase a foreign
currency put option enabling it to sell a specified amount of yen for U.S.
dollars at a specified price by a future date. To the extent the hedge is
successful, a loss in the value of the yen relative to the U.S. dollar will
tend to be offset by an increase in the value of the put option.
Certain differences exist between these hedging instruments. For
example, foreign currency options provide the holder thereof the rights to buy
or sell a currency at a fixed price on a future date. A futures contract on a
foreign currency is an agreement between two parties to buy and sell a
specified amount of a currency for a set price on a future date. Futures
contracts and options on futures contracts are traded on boards of trade or
futures exchanges. The Funds will not speculate in foreign security or
currency options, futures or related options. None of the Funds will hedge a
currency substantially in excess of the market value of securities which any
such Fund has committed or anticipates to purchase which are denominated in
such currency, and in the case of securities which have been sold by such Fund
but not yet delivered, the proceeds thereof in its denominated currency. None
of the Funds will incur potential net liabilities of more than 25% of its total
assets from foreign security or currency options, futures or related options.
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RESTRICTIONS ON THE USE OF FUTURES TRANSACTIONS
The purchase or sale of a futures contract differs from the purchase
or sale of a security in that no price or premium is paid or received.
Instead, an amount of cash or securities acceptable to the broker and the
relevant contract market, which varies, but is generally about 5% of the
contract amount, must be deposited with the broker. This amount is known as
"initial margin" and represents a "good faith" deposit assuring the performance
of both the purchaser and seller under the futures contract. Subsequent
payments to and from the broker, called "variation margin," are required to be
made on a daily basis as the price of the futures contract fluctuates making
the long and short positions in the futures contracts more or less valuable, a
process known as "marking to market." At any time prior to the settlement date
of the futures contract, the position may be closed out by taking an opposite
position which will operate to terminate the position in the futures contract.
A final determination of variation margin is then made, additional cash is
required to be paid to or released by the broker and the purchaser realizes a
loss or gain. In addition, a nominal commission is paid on each completed sale
transaction.
Regulations of the CFTC applicable to the Funds require that all of
the Funds' futures and options on futures transactions constitute bona fide
hedging transactions and that the Funds not enter into such transactions if,
immediately thereafter, the sum of the amount of initial margin deposits on a
Fund's existing futures positions and premiums paid for related options would
exceed 5% of the market value of such Fund's total assets. However, if an
option is "in-the-money" (the price of the option exceeds the strike price),
the in-the-money portion may be excluded in computing the 5% limit.
RESTRICTIONS ON OTC OPTIONS
The Funds will engage in transactions involving OTC options, including
over-the-counter stock index options, over-the-counter foreign security and
currency options and options on foreign security and currency futures, only
with member banks of the Federal Reserve System and primary dealers in U.S.
Government securities or with affiliates of such banks or dealers which have
capital of at least $50 million or whose obligations are guaranteed by an
entity having capital of at least $50 million. The Funds will acquire only
those OTC options for which AIM believes a Fund can receive on each business
day at least two independent bids or offers (one of which will be from an
entity other than a party to the option).
The Staff of the SEC has taken the position that purchased OTC options
and the assets used as cover for written OTC options are illiquid securities.
Therefore, the Funds have each adopted an operating policy pursuant to which
each Fund will not purchase or sell OTC options (including OTC options on
futures contracts) if, as a result of such transaction, the sum of (i) the
market value of OTC options currently outstanding which are held by a Fund,
(ii) the market value of the underlying securities covered by OTC call options
currently outstanding which were sold by such Fund, (iii) margin deposits on
the Fund's existing OTC options on futures contracts, and (iv) the market value
of all other assets of the Fund which are illiquid or are not otherwise readily
marketable, would exceed 10% of the net assets of such Fund, taken at market
value. However, if an OTC option is sold by a Fund to a primary U.S.
Government securities dealer recognized by the Federal Reserve Bank of New
York, and the Fund has the unconditional contractual right to repurchase such
OTC option from the dealer at a predetermined price, then such Fund will treat
as illiquid such amount of the underlying securities as is equal to the
repurchase price less the amount by which the option is "in-the-money" (current
market value of the underlying security minus the option's strike price). The
repurchase price with primary dealers is typically a formula price which is
generally based on a multiple of the premium received for the option, plus the
amount by which the option is "in-the-money." This policy as to OTC options is
not a fundamental policy of the Funds and may be amended by the Board of
Directors of the Company without approval of the Funds' respective
shareholders. However, the Funds will not change or modify this policy prior
to the change or modification by the SEC staff of its position.
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ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS
The Funds will not use leverage in their options and futures
strategies. Such investments will be made for hedging purposes only. The
Funds will hold securities or other options or futures positions whose values
are expected to offset their obligations under the hedge strategies. None of
the Funds will enter into an option or futures position that exposes a Fund to
an obligation to another party unless it owns either (i) an offsetting position
in securities or other options or futures contracts or (ii) cash, receivables
and short-term debt securities with a value sufficient to cover its potential
obligations. The Funds will comply with guidelines established by the SEC with
respect to coverage of options and futures strategies by mutual funds, and if
the guidelines so require will segregate cash and high grade liquid debt
securities with its custodian bank in the amount prescribed. The Funds'
custodian shall maintain the value of such segregated securities equal to the
prescribed amount by adding or removing additional cash or liquid securities to
account for fluctuations in the value of the segregated securities. The
segregated securities will not be sold while the futures or option strategy is
outstanding, unless they are replaced with similar securities. As a result,
there is a possibility that segregation of a large percentage of a Fund's
assets could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
RISK FACTORS IN OPTIONS, FUTURES, FORWARD AND CURRENCY TRANSACTIONS
The use of options and futures transactions to hedge a Fund's
portfolio involves the risk of imperfect correlation in movements in the price
of options and futures and movements in the price of securities or currencies
which are the subject of the hedge. If the price of the option or future moves
more or less than the price of hedged securities or currencies, the Fund will
experience a gain or loss which will not be completely offset by movements in
the price of the subject of the hedge. The successful use of options and
futures also depends on AIM's ability to correctly predict price movements in
the market involved in a particular options or futures transaction. To
compensate for imperfect correlations, the Funds may purchase or sell stock
index options or futures contracts in a greater dollar amount than the hedged
securities if the volatility of the hedged securities is historically greater
than the volatility of the stock index options or futures contracts.
Conversely, the Funds may purchase or sell fewer stock index options or futures
contracts, if the historical price volatility of the hedged securities is less
than that of the stock index options or futures contracts. The risk of
imperfect correlation generally tends to diminish as the maturity date of the
stock index option or futures contract approaches. Options are also subject to
the risks of an illiquid secondary market, particularly in strategies involving
writing options, which a Fund cannot terminate by exercise. In general,
options whose strike prices are close to their underlying instruments' current
value will have the highest trading volume, while options whose strike prices
are further away may be less liquid.
The Funds intend to enter into options and futures transactions, on an
exchange or in the OTC market, only if there appears to be a liquid secondary
market for such options or futures or, in the case of OTC transactions, AIM
believes a Fund can receive on each business day at least two independent bids
or offers. However, there can be no assurance that a liquid secondary market
will exist at any specific time. Thus, it may not be possible to close an
options or futures position. The inability to close options and futures
positions also could have an adverse impact on a Fund's ability to effectively
hedge its portfolio. There is also the risk of loss by a Fund of margin
deposits or collateral in the event of bankruptcy of a broker with whom the
Fund has an open position in an option, a futures contract or related option.
The exchanges on which options on portfolio securities and currency
options are traded have generally established limitations governing the maximum
number of call or put options on the same underlying security or currency
(whether or not covered) which may be written by a single investor, whether
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written in one or
more account or through one or more brokers). "Trading limits" are imposed on
the maximum number of contracts which any person may trade on a particular
trading day. AIM does not believe that these trading and position limits will
have any adverse impact on the portfolio strategies for hedging the Funds'
portfolios.
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Because the Funds will engage in the options and futures transactions
described above solely in connection with their hedging activities, AIM does
not believe such options and futures transactions necessarily will have any
significant effect on the portfolio turnover rate of any of the Funds.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements and reverse repurchase
agreements. A repurchase agreement is an instrument under which a Fund
acquires ownership of a debt security and the seller (usually a broker or bank)
agrees, at the time of the sale, to repurchase the obligation at a mutually
agreed upon time and price, thereby determining the yield during the Fund's
holding period. In the event of bankruptcy or other default of a seller of a
repurchase agreement, the Fund may experience both delays in liquidating the
underlying securities and losses, including: (a) a possible decline in the
value of the underlying security during the period in which the Fund seeks to
enforce its rights thereto; (b) a possible subnormal level of income and lack
of access to income during this period; and (c) expenses of enforcing its
rights. A repurchase agreement is collateralized by the security acquired by
the Fund and its value is marked to market daily in order to minimize the
Fund's risk. Repurchase agreements usually are for short periods, such as one
or two days, but may be entered into for longer periods of time.
A reverse repurchase agreement involves the sale of securities held by
a 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 Aggressive Growth Fund and the Growth Fund to enter into reverse
repurchase agreements (which are considered to be borrowings under the 1940
Act) only for temporary or emergency purposes and not as a means to increase
income. The Income Fund may enter into such transactions as a means to enhance
portfolio returns. The Funds will enter into reverse repurchase agreements
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 applicable
Fund will segregate U.S. Treasury obligations having a value equal to the
repurchase price under such reverse repurchase agreement. Any investment gains
made by a 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.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Funds may make
secured loans of portfolio securities amounting to not more than 33-1/3% of
each Fund's respective total assets. Securities loans are made to banks,
brokers and other financial institutions pursuant to agreements requiring that
the loans be continuously secured by collateral at least equal at all times to
the value of the securities lent marked to market on a daily basis. The
collateral received will consist of cash, U.S. Government securities, letters
of credit or such other collateral as may be permitted under the applicable
Fund's investment program. While the securities are being lent, the Fund will
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. The Funds have a right to call each of
their respective loans and obtain the securities on five business days' notice
or, in connection with securities trading on foreign markets, within such
longer period of time which coincides with the normal settlement period for
purchases and sales of such securities in such foreign markets. The Funds will
not have the right to vote securities while they are being lent, but each Fund
will call a loan in anticipation of any important vote. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral should the borrower
fail financially. Loans will only be made to persons deemed by AIM to be of
good standing and will not be made unless, in the judgment of AIM, the
consideration to be earned from such loans would justify the risk.
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SHORT SALES
Each Fund may from time to time enter into short sales transactions.
A Fund will not make short sales of securities or 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." Such short sales will be used by the
Funds for the purpose of deferring recognition of gain or loss for federal
income tax purposes. In no event may more than 10% of the value of a Fund's
total assets be deposited or pledged as collateral for such sales at any time.
RULE 144A SECURITIES
Each Fund may purchase securities which, while privately placed, are
eligible for purchase and sale pursuant to Rule 144A under the Securities Act
of 1933 (the "1933 Act"). This Rule permits certain qualified institutional
buyers, such as the Funds, to trade in privately placed securities even though
such securities are not registered under the 1933 Act. AIM, under the
supervision of the Company's Board of Directors, will consider whether
securities purchased under Rule 144A are illiquid and thus subject to each
Fund's restriction of investing no more than 15% of its total 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 marketplace 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, a 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 total 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. At the present time, it is not possible
to predict with certainty how the market for Rule 144A securities will develop.
INVESTMENT RESTRICTIONS
The following fundamental policies and investment restrictions have
been adopted by the Funds and, except as noted, such policies cannot be changed
without approval by the vote of a majority of the outstanding voting securities
of the applicable Fund, as defined in the 1940 Act.
The Funds may not:
1. Purchase or sell real estate or interests in real
estate (except that this restriction does not preclude
investments in marketable securities of companies
engaged in real estate activities).
2. Purchase or sell commodities or commodity contracts,
except that the Funds may purchase and sell stock
index and currency options, stock index futures,
interest rate futures, financial futures and currency
futures contracts and related options on such futures.
3. Purchase any security on margin, except that the Funds
may obtain such short-term credits as may be necessary
for the clearance of purchases and sales
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of portfolio securities. The payment by the Fund of
initial or variation margin in connection with futures
or related options transactions shall not be
considered the purchase of a security on margin.
4. Make loans, although the Funds may (a) purchase money
market securities and enter into repurchase
agreements, (b) acquire bonds, debentures, notes and
other debt securities, governmental obligations and
certificates of deposit, and (c) lend portfolio
securities.
5. Issue senior securities, except to the extent
permitted by the 1940 Act, including permitted
borrowings.
6. Underwrite securities of other persons, except to the
extent that a Fund may be deemed to be an underwriter
within the meaning of the 1933 Act in connection with
the purchase and sale of its portfolio securities in
the ordinary course of pursuing its investment
program.
7. Purchase or sell interests in oil, gas or other
mineral exploration or development programs.
8. Purchase the securities of any issuer if, as a result,
more than 25% of the value of a Fund's total assets,
taken at market value, would be invested in the
securities of issuers having their principal business
activities in the same industry. This restriction
does not apply to obligations issued or guaranteed by
the U.S. Government or by any of its agencies or
instrumentalities but will (unless and until SEC
changes its position) apply to foreign government
obligations unless the SEC permits their exclusion.
9. Purchase a security if, as a result, with respect to
75% of the value of a Fund's total assets, taken at
market value, more than 5% of a Fund's total assets,
taken at market value, would be invested in the
securities of any one issuer (including repurchase
agreements with any one entity), except securities
issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities. This restriction
does not apply to the Income Fund.
10. Purchase a security if, as a result, with respect to
50% of the value of the Fund's total assets taken at
market value, more than 5% of the value of the Fund's
total assets, taken at market value, would be invested
in securities of any one issuer, except securities
issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities. This restriction
applies only to the Income Fund.
11. Purchase a security if, as a result, more than 10% of
the outstanding voting securities of any issuer would
be held by a Fund.
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, the Funds will
not:
12. Invest in securities of an issuer (including
predecessors and unconditional guarantors) which has a
record of less than three years of continuous
operations.
13. Make investments for the purpose of exercising control
or management.
16
<PAGE> 68
14. Lend portfolio securities in excess of 33-1/3% of
total assets, taken at market value; provided that
loans of portfolio securities shall be made in
accordance with the guidelines set forth under the
heading "Lending of Portfolio Securities."
15. Invest in securities which are illiquid if more than
15% of a Fund's total assets, taken at market value,
would be invested in such securities.
16. Effect short sales of securities, except that a Fund
may make short sales "against the box" to the extent
that the value of the securities sold short, in the
aggregate, does not represent more than 10% of the
Fund's total assets, taken at market value, at any
given time.
Percentage restrictions apply as of the time of investment without
regard to later increases or decreases in the values of securities or total
assets.
Subject to investment restriction number 14 above, the Funds may from
time to time lend securities from their respective portfolios to brokers,
dealers and financial institutions such as banks and trust companies and
receive collateral in cash or securities issued or guaranteed by the U.S.
Government which will be maintained in an amount equal to at least 100% of the
current market value of the loaned securities. Such cash will be invested in
short-term securities, which will increase the current income of the applicable
Fund. Such loans will not be for more than 30 days and will be terminable at
any time. The Funds will have the right to regain record ownership of loaned
securities to exercise beneficial rights such as voting rights, subscription
rights and rights to dividends, interest or other distributions. The Funds may
pay reasonable fees to persons unaffiliated with the Funds for services in
arranging such loans. With respect to the lending of portfolio securities,
there is the risk of failure by the borrower to return the securities involved
in such transactions. See the information under the caption "Hedging
Strategies and Other Investment Techniques -- Lending Portfolio Securities"
above.
The Funds may each invest in warrants, valued at the lower of cost or
market, to the extent that the value of such warrants, in the aggregate, does
not exceed 5% of the value of a Fund's net assets. Included in that amount, but
not to exceed 2% of the value of a Fund's net assets, may be warrants which are
not listed on national exchanges.
In order to permit the sale of the Funds' shares in certain states, the
Funds may from time to time make commitments that are more restrictive than the
restrictions described above. For example, as of the date of this Statement of
Additional Information, the Funds have undertaken (1) not to invest more than
10% of their respective total assets in restricted securities (Arkansas), (2)
to provide investors with written notification at least 30 days prior to any
change in the investment objective of any Fund (Missouri), (3) not to invest in
real estate limited partnerships (Texas), (4) not to purchase or retain
securities of any issuer if the directors and officers of the Company and AIM
who own more than 0.5% of the securities of such issuer together beneficially
own more than 5% of the securities of such issuer (Ohio), (5) not to invest any
assets of the Funds in the securities of other investment companies, except by
purchase in the open market where no commission or profit to a sponsor or
dealer results from the purchase other than the customary broker's commission,
or except when the purchase is part of a plan of merger, consolidation,
reorganization, or acquisition (Ohio) and (6) not to engage in writing put and
call options on securities unless the options are issued by the Options
Clearing Corporation, and the aggregate value of the securities underlying the
calls or obligations underlying the puts determined as of the date the options
are sold shall not exceed 25% of the Funds' respective total net assets
(California).Should a Fund determine that any such commitment is no longer in
the best interests of the Fund and its shareholders, the Fund will revoke the
commitment by terminating sales of its shares in the states involved.
Each Fund's ability and decisions to purchase or sell portfolio
securities may be affected by laws or regulations relating to the
convertibility and repatriation of assets. Because the shares of a Fund are
17
<PAGE> 69
redeemable on a daily basis in U.S. dollars, the Funds intend to manage their
portfolios so as to give reasonable assurance that they will be able to obtain
U.S. dollars to the extent necessary to meet anticipated redemptions. Under
present conditions, it is not believed that these considerations will have any
significant effect on the Funds' portfolio strategies.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during the last five years are set forth below. Unless otherwise
indicated, the address of each director and officer is 11 Greenway Plaza, Suite
1919, Houston, Texas 77046.
* CHARLES T. BAUER, Director and Chairman (76)
Director and Chairman and Chief Executive Officer, A I M Management
Group Inc.; Chairman of the Board of Directors, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc.,
A I M Global Associates, Inc., A I M Global Holdings, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company; and Director, AIM Global
Advisors Limited, A I M Global Management Company Limited and AIM Global
Ventures Co.
BRUCE L. CROCKETT, Director (51)
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Director, President and Chief Executive Officer, COMSAT Corporation
(includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises, COMSAT RSI and COMSAT International Ventures). Previously,
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT; (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services company).
OWEN DALY II, Director (70)
Six Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly, Director,
CF & I Steel Corp., Monumental Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of Equitable Bancorporation.
__________________________________
* A director who is an "interested person" of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
18
<PAGE> 70
**CARL FRISCHLING, Director (58)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel (law firm).
Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling (law firm).
* ROBERT H. GRAHAM, Director and President (48)
Director, President and Chief Operating Officer, A I M Management Group
Inc.; Director and President, A I M Advisors, Inc.; Director and Executive Vice
President, A I M Distributors, Inc.; Director and Senior Vice President, A I M
Capital Management, Inc., A I M Fund Services, Inc., A I M Global Associates,
Inc., A I M Global Holdings, Inc., AIM Global Ventures Co., A I M Institutional
Fund Services, Inc. and Fund Management Company; and Senior Vice President, AIM
Global Advisors Limited.
JOHN F. KROEGER, Director (70)
Box 464
24875 Swan Road - Martingham
St. Michaels, MD 21663
Trustee, Flag Investors International Trust; and Director, Flag
Investors Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund,
Inc., Flag Investors Quality Growth Fund, Inc., Flag Investors Total Return
U.S. Treasury Fund, Inc., Flag Investors Intermediate Term Income Fund, Inc.,
Managed Municipal Fund, Inc., Flag Investors Value Builder Fund, Inc., Flag
Investors Maryland Intermediate Tax-Free Income Fund, Inc., Alex. Brown Cash
Reserve Fund, Inc. and North American Government Bond Fund, Inc. (investment
companies). Formerly, Consultant, Wendell & Stockel Associates, Inc.
(consulting firm).
LEWIS F. PENNOCK, Director (52)
8955 Katy Freeway, Suite 204
Houston, TX 77024
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Director (72)
183 River Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Services, Inc. (provider of centralized management services
to telephone companies); Executive Vice President, Bell Atlantic Corporation
(parent of seven telephone companies); and Vice President and Chief Financial
Officer, Bell Telephone Company of Pennsylvania and Diamond State Telephone
Company.
__________________________________
** A director who is an "interested person" of the Company as defined in the
1940 Act.
* A director who is an "interested person" of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
19
<PAGE> 71
LOUIS S. SKLAR, Director (55)
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
JOHN J. ARTHUR, Senior Vice President and Treasurer (50)
Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice
President and Treasurer, A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company; and Vice President, AIM Global
Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc.,
and AIM Global Ventures Co.
GARY T. CRUM, Senior Vice President (47)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc., AIM
Global Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings,
Inc., and AIM Global Ventures Co.; and Director, A I M Distributors, Inc.
WILLIAM H. KLEH, Senior Vice President (49)
Director, Chairman and President, AIM Global Ventures Co.; Director and
Managing Director, AIM Global Advisors Limited; Director and President, A I M
Global Associates, Inc. and A I M Global Holdings, Inc.; Director and Senior
Vice President, A I M Advisors, Inc.; Director and Vice President, A I M
Capital Management, Inc. and Fund Management Company; Director, A I M Global
Management Company Limited; Senior Vice President, A I M Management Group Inc.;
and Vice President, A I M Distributors, Inc. and A I M Fund Services, Inc.
CAROL F. RELIHAN, Vice President and Secretary (40)
Vice President, General Counsel and Secretary, A I M Advisors, Inc., A
I M Fund Services, Inc., A I M Institutional Fund Services, Inc., A I M
Management Group Inc. and Fund Management Company; Vice President and
Secretary, A I M Distributors, Inc., A I M Global Associates, Inc., and A I M
Global Holdings, Inc.; Vice President and Assistant Secretary, AIM Global
Advisors Limited and AIM Global Ventures Co.; and Secretary, A I M Capital
Management, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (36)
Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant
Vice President and Assistant Treasurer, Fund Management Company.
ROBERT G. ALLEY, Vice President (46)
Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc. Formerly, Senior Fixed Income Money Manager,
Waddell and Reed, Inc.
20
<PAGE> 72
MELVILLE B. COX, Vice President (51)
Vice President, A I M Advisors, Inc., A I M Capital Management, Inc., A
I M Fund Services, Inc. and A I M Institutional Fund Services, Inc.; and
Assistant Vice President, A I M Distributors; Inc. and Fund Management Company.
Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary,
Charles Schwab Family of Funds and Schwab Investments; Chief Compliance
Officer, Charles Schwab Investment Management, Inc.; and Vice President,
Integrated Resources Life Insurance Co. and Capitol Life Insurance Co.
A. DALE GRIFFIN III, Vice President (36)
Vice President, A I M Capital Management, Inc.
PAUL A. ROGGE, Vice President (28)
Vice President, A I M Capital Management, Inc. Formerly, Global Strategy
Analyst, Union Bank of Switzerland; Assistant Portfolio Manager, Economic
Researcher, Commerce Investment Management, Inc.; and prior thereto attended
University of Texas.
JONATHAN C. SCHOOLAR, Vice President (33)
Director and Senior Vice President, A I M Capital Management, Inc.; and
Vice President, A I M Advisors, Inc.
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger (Chairman),
Pennock and Robinson. The Audit Committee is responsible for meeting with the
Company'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 directors
as a whole with respect to the Company's fund accounting or its internal
accounting controls, and for considering such matters as may from time to time
be set forth in a charter adopted by the Board of Directors and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible
for reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating
individuals to stand for election as directors who are not interested persons
as long as the Company maintains a distribution plan pursuant to Rule 12b-1
under the 1940 Act, reviewing from time to time the compensation payable to the
disinterested directors, and considering such matters as may from time to time
be set forth in a charter adopted by the Board of Directors and such committee.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in attending each
meeting of the Board of Directors or any committee thereof. Each director who
is not also an officer of the Company is compensated for his or her services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other AIM Funds advised or managed by AIM.
Each such
21
<PAGE> 73
director receives a fee, allocated among the AIM Funds, which consists of an
annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended October 31, 1994 for each director of the Company:
<TABLE>
<CAPTION>
===========================================================================================================
Director AGGREGATE RETIREMENT TOTAL
-------- COMPENSATION BENEFITS COMPENSATION
FROM COMPANY(1) ACCRUED FROM ALL AIM FUNDS(3)
--------------- BY ALL AIM ---------------------
FUNDS(2)
----------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------
Bruce L. Crockett 1,320.99 2,814.00 45,093.75
- -----------------------------------------------------------------------------------------------------------
Owen Daly II 1,300.46 14,375.00 45,843.75
- -----------------------------------------------------------------------------------------------------------
Carl Frischling 1,309.53 7,542.00 45,093.75
- -----------------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- -----------------------------------------------------------------------------------------------------------
John F. Kroeger 1,300.46 20,517.00 45,843.75
- -----------------------------------------------------------------------------------------------------------
Lewis F. Pennock 1,300.46 5,093.00 45,843.75
- -----------------------------------------------------------------------------------------------------------
Ian W. Robinson 1,323.85 10,396.00 45,093.75
- -----------------------------------------------------------------------------------------------------------
Louis S. Sklar 1,309.53 4,682.00 45,093.75
===========================================================================================================
</TABLE>
________________
(1) The total amount of compensation deferred by all Directors of the
Company during the fiscal year ended October 31, 1994, including interest
earned thereon, was $5,414.39.
(2) During the fiscal year ended October 31, 1994, the total amount of
expenses allocated to the Company in respect of such retirement benefits was
$1,294.60.
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as Director
or Trustee of a total of 11 AIM Funds. Messrs. Crockett, Frischling, Robinson
and Sklar each serves as Director or Trustee of a total of 10 AIM Funds. Data
reflect total compensation earned during the calendar year ended December 31,
1994.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not a employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "AIM
Funds"). Each eligible director is entitled to receive an annual benefit from
the AIM Funds commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to 5% of such Director's
compensation paid by the AIM Funds multiplied by the number of such Director'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 director in
quarterly installments for a period of no more than five years. If an eligible
director dies after
22
<PAGE> 74
attaining the normal retirement date but before receipt of any benefits under
the Plan commences, the director's surviving spouse (if any) shall receive a
quarterly survivor's benefit equal to 50% of the amount payable to the deceased
director, for no more than five years beginning the first day of the calendar
quarter following the date of the director's death. Payments under the Plan
are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming various compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar
are 7, 8, 17, 17, 13, 7 and 5 years, respectively.
<TABLE>
<CAPTION>
Annual Compensation Paid By All AIM Funds
$40,000 $45,000 $50,000 $55,000
==================================================================================
<S> <C> <C> <C> <C> <C>
10 $20,000 $22,500 $25,000 $27,500
Number of ----------------------------------------------------------------------------------
Years of 9 $18,000 $20,250 $22,500 $24,750
Service With ----------------------------------------------------------------------------------
the AIM Funds 8 $16,000 $18,000 $20,000 $22,000
----------------------------------------------------------------------------------
7 $14,000 $15,750 $17,500 $19,250
----------------------------------------------------------------------------------
6 $12,000 $13,500 $15,000 $16,500
----------------------------------------------------------------------------------
5 $10,000 $11,250 $12,500 $13,750
==================================================================================
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Company, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of his deferral account shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will
be paid in cash, in generally equal quarterly installments over a period of
five years beginning on the date the deferring director's retirement benefits
commence under the Plan. The Company's Board of Directors, in its sole
discretion, may accelerate or extend the distribution of such deferral accounts
after the deferring director's termination of service as a director of the
Company. If a deferring director dies prior to the distribution of amounts in
his 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 director's death. The Agreements are not
funded and, with respect to the payments of amounts held in the deferral
accounts, the deferring directors have the status of unsecured creditors of the
Company and of each other AIM Fund from which they are deferring compensation.
Effective September 1994, Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel was appointed as counsel to the Board of Directors. Mr. Frischling, a
partner of counsel to the Board of Directors, is also a Director.
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS
AIM is a wholly-owned subsidiary of A I M Management Group Inc., a
holding company that has been engaged in the financial services business since
1976.
23
<PAGE> 75
AIM and the Company have adopted a Code of Ethics which requires
investment personnel (a) to pre-clear all personal securities transactions, (b)
to file reports regarding such transactions, and (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. The Code also prohibits investment personnel from
purchasing securities in an initial public offering. Personal trading reports
are reviewed periodically by AIM, and the Board of Directors reviews annually
such reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.
The Company, on behalf of the Funds, has entered into an Investment
Advisory Agreement and an Administrative Services Agreement with AIM. See
"Management" in the Prospectus.
The Investment Advisory Agreement provides that each Fund will pay or
cause to be paid all expenses of the Fund not assumed by AIM, including,
without limitation: brokerage commissions; taxes, legal, accounting, auditing
or governmental fees; the cost of preparing share certificates; custodian,
transfer and shareholder service agent costs; expenses of issue, sale,
redemption and repurchase of shares; expenses of registering and qualifying
shares for sale; expenses relating to directors and shareholders meetings; the
cost of preparing and distributing reports and notices to shareholders; the
fees and other expenses incurred by the Company on behalf of a Fund in
connection with membership in investment company organizations; the cost of
printing copies of prospectuses and statements of additional information
distributed to each Fund's shareholders; and all other charges and costs of a
Fund's operations unless otherwise expressly provided.
The Investment Advisory Agreement provides that if, for any fiscal year,
the total of all ordinary business expenses of each Fund, including all
investment advisory fees, but excluding brokerage commissions and fees, taxes,
interest and extraordinary expenses, such as litigation costs, exceed the
applicable expense limitations imposed by state securities regulations in any
state in which the Fund's shares are qualified for sale, as such limitations
may be raised or lowered from time to time, the aggregate of all such
investment advisory fees shall be reduced by the amount of such excess. The
amount of any such reduction to be borne by AIM shall be deducted from the
monthly investment advisory fee otherwise payable to AIM during such fiscal
year. If required pursuant to such state securities regulations, AIM will
reimburse each Fund no later than the last day of the first month of the next
succeeding fiscal year for any such annual operating expenses (after reduction
of all investment advisory fees in excess of such limitation).
The Investment Advisory Agreement for the Funds provides that such
agreement will continue in effect until June 30, 1996, and from year to year
thereafter only if such continuance is specifically approved at least annually
by the Company's Board of Directors and by the affirmative vote of a majority
of the directors who are not parties to the agreement or "interested persons"
of any such party (the "Non-Interested Directors") by votes cast in person at a
meeting called for such purpose. The Investment Advisory Agreement was
initially approved by the Company's Board of Directors (including the
affirmative vote of all of the Non-Interested Directors) on June 15, 1994. The
agreement became effective as of July 1, 1994. The agreement provides that the
Funds or AIM may terminate such agreement on sixty (60) days' written notice
without penalty. The Investment Advisory Agreement terminates automatically in
the event of its assignment. Under the agreement, AIM is entitled to receive
from each Fund a fee calculated at the annual rates of:
AIM GLOBAL AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.90%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.85%
</TABLE>
24
<PAGE> 76
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.85%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.80%
</TABLE>
AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.70%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.65%
</TABLE>
AIM has voluntarily agreed to waive advisory fees under the Investment
Advisory Agreement for each Fund until such time as in AIM's judgment, the
Funds have achieved a size in assets under management to bear such costs.
For the period September 5, 1994 through October 31, 1994 (date
operations commenced) AIM waived advisory fees for Aggressive Growth Fund,
Growth Fund and Income Fund in the amount of $13,551, $2,816 and $2,099,
respectively.
The Administrative Services Agreement for the Funds provides that AIM
may perform, or arrange for the performance of, certain accounting, shareholder
servicing and other administrative services to each Fund which are not required
to be performed by AIM under the Investment Advisory Agreement. For such
services, AIM is entitled to receive from each Fund reimbursement of AIM's
costs or such reasonable compensation as may be approved by the Company's Board
of Directors. The Administrative Services Agreement provides that such
agreement will continue in effect until June 30, 1996, and shall continue in
effect from year to year thereafter only if such continuance is specifically
approved at least annually by the Company's Board of Directors, including the
Non-Interested Directors, by votes cast in person at a meeting called for such
purpose. The Administrative Services Agreement was approved by the Company's
Board of Directors (including the Non-Interested Directors) on June 15, 1994.
The agreement became effective as of July 1, 1994.
For the period September 5, 1994 through October 31, 1994 (date
operations commenced) AIM received reimbursement of administrative services
cost from Aggressive Growth Fund, Growth Fund and Income Fund in the amount of
$3,939, $2,686 and $2,508, respectively.
In addition, the Transfer Agency and Service Agreement for the Funds
provides that A I M Fund Services, Inc. ("AFS"), a registered transfer agent
and wholly-owned subsidiary of AIM, will perform certain shareholder services
for the Funds for a fee per account serviced. The Transfer Agency and Service
Agreement provides that AFS will process orders for purchases, redemptions and
exchanges of shares, prepare and transmit payments for dividends and
distributions declared by the Funds, maintain shareholder accounts and provide
shareholders with information regarding the Funds and their accounts. The
Transfer Agency and Service Agreement became effective on November 1, 1994.
AIM reimbursed AFS pursuant to a services agreement which was
terminated during the fourth quarter of 1994 for providing shareholder
servicing for the Aggressive Growth Fund, Growth Fund and
25
<PAGE> 77
Income Fund for the period September 15, 1994 (date operations commenced)
through October 31, 1994 in the amounts of $1,439, $186 and $24, respectively.
THE DISTRIBUTION PLANS
THE CLASS A PLAN. The Company has adopted a Master Distribution Plan
pursuant to Rule 12b-1 under the 1940 Act relating to the Class A shares of the
Funds (the "Class A Plan"). The Class A Plan provides that the Class A shares
pay 0.50% per annum of their average daily net assets as compensation to AIM
Distributors for the purpose of financing any activity which is primarily
intended to result in the sale of Class A shares. Of such amount, each Fund
pays a service fee of 0.25% of the average daily net assets attributable to
Class A shares to selected dealers and other institutions which furnish
continuing personal shareholder services to their customers who purchase and
own Class A shares. Activities appropriate for financing under the Class A
Plan include, but are not limited to, the following: printing of prospectuses
and statements of additional information and reports for other than existing
shareholders; overhead; preparation and distribution of advertising material
and sales literature; expenses of organizing and conducting sales seminars;
supplemental payments to dealers and other institutions such as asset-based
sales charges or as payments of service fees under shareholder service
arrangements; and costs of administering the Class A Plan.
THE CLASS B PLAN. The Company has also adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of
the Funds (the "Class B Plan", and collectively with the Class A Plan, the
"Plans"). Under the Class B Plan, each Fund pays compensation to AIM
Distributors at an annual rate of 1.00% of the average daily net assets
attributable to Class B shares. Of such amount, each Fund pays a service fee of
0.25% of the average daily net assets attributable to Class B shares to
selected dealers and other institutions which furnish continuing personal
shareholder services to their customers who purchase and own Class B shares.
Amounts paid in accordance with the Class B Plan may be used to finance any
activity primarily intended to result in the sale of Class B shares, including
but not limited to printing of prospectuses and statements of additional
information and reports for other than existing shareholders; overhead;
preparation and distribution of advertising material and sales literature;
expenses of organizing and conducting sales seminars; supplemental payments to
dealers and other institutions such as asset-based sales charges or as payments
of service fees under shareholder service arrangements; and costs of
administering the Class B Plan. AIM Distributors may transfer and sell its
rights to payments under the Class B Plan in order to finance distribution
expenditures in respect of Class B shares.
BOTH PLANS. Pursuant to an incentive program, AIM Distributors may
enter into agreements ("Shareholder Service Agreements") with investment
dealers selected from time to time by AIM Distributors for the provision of
distribution assistance in connection with the sale of the Funds' shares to
such dealers' customers, and for the provision of continuing personal
shareholder services to customers who may from time to time directly or
beneficially own shares of the Funds. The distribution assistance and
continuing personal shareholder services to be rendered by dealers under the
Shareholder Service Agreements may include, but shall not be limited to, the
following: distributing sales literature; answering routine customer inquiries
concerning the Funds; assisting customers in changing dividend options, account
designations and addresses, and in enrolling in any of 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
26
<PAGE> 78
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 Company; performing sub-accounting;
establishing and maintaining shareholder accounts and records; processing
customer purchase and redemption transactions; providing periodic statements
showing a shareholder's account balance and the integration of such statements
with those of other transactions and balances in the shareholder's other
accounts serviced by the bank; forwarding applicable prospectuses, proxy
statements, reports and notices to bank clients who hold 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 generally will be calculated at the end of each payment
period for each business day of the Funds during such period at the annual rate
of 0.25% of the average daily net asset value of the Funds' shares purchased or
acquired through exchange. Fees calculated in this manner shall be paid only
to those selected dealers or other institutions who are dealers or institutions
of record at the close of business on the last business day of the applicable
payment period for the account in which the Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the National Association of Securities Dealers,
Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments made
to dealers and other financial institutions who provide continuing personal
shareholder services to their customers who purchase and own shares of the
Funds to no more than 0.25% per annum of the average daily net assets of the
funds attributable to the customers of such dealers or financial institutions,
and by imposing a cap on the total sales charges, including asset based sales
charges, that may be paid by the Funds and their respective classes.
AIM Distributors does not act as principal, but rather as agent for
the Fund, in making dealer incentive and shareholder servicing payments under
the Plans. These payments are an obligation of the Fund and not of AIM
Distributors.
For the period September 15, 1994 (date operations commenced) through
October 31, 1994, the Funds paid the following amounts under the Class A Plan
and the Class B Plan:
<TABLE>
<CAPTION>
% of Class'
average daily
net assets *
Class A Plan Class B Plan Class A Class B
------------ ------------ ------- -------
<S> <C> <C> <C> <C>
Aggressive Growth Fund $5,846 $3,365 0.50% 1.00%
Growth Fund 1,217 880 0.50% 1.00%
Income Fund 1,434 132 0.50% 1.00%
</TABLE>
The fees paid by the Aggressive Growth Fund under the Class A Plan and Class B
Plan during the year ended October 31, 1994 were allocated as follows:
__________________________________
* annualized
27
<PAGE> 79
<TABLE>
<CAPTION>
Class A Plan Class B Plan
------------ ------------
<S> <C> <C>
Advertising . . . . . . . . . . . . . . . . . . . . . . . . $ 6 $ -0-
Printing and mailing prospectuses (other than to
current shareholders . . . . . . . . . . . . . . . . $ 631 $ -0-
Seminars . . . . . . . . . . . . . . . . . . . . . . . . . . $ -0- $ -0-
Compensation to Underwriters . . . . . . . . . . . . . . . . $ -0- $ 2,524
Compensation to Dealers . . . . . . . . . . . . . . . . . . . $ 5,209 $ 841
Compensation to Sales Personnel . . . . . . . . . . . . . . . $ -0- $ -0-
</TABLE>
The fees paid by the Growth Fund under the Class A Plan and Class B Plan during
the year ended October 31, 1994 were allocated as follows:
<TABLE>
<CAPTION>
Class A Plan Class B Plan
------------ ------------
<S> <C> <C>
Advertising . . . . . . . . . . . . . . . . . . . . . . . . $ -0- $ -0-
Printing and mailing prospectuses (other than to
current shareholders . . . . . . . . . . . . . . . . $ 494 $ -0-
Seminars . . . . . . . . . . . . . . . . . . . . . . . . . . $ -0- $ -0-
Compensation to Underwriters . . . . . . . . . . . . . . . . $ -0- $ 660
Compensation to Dealers . . . . . . . . . . . . . . . . . . . $ 723 $ 220
Compensation to Sales Personnel . . . . . . . . . . . . . . . $ -0- $ -0-
</TABLE>
The fees paid by the Income Fund under the Class A Plan and Class B Plan during
the year ended October 31, 1994 were allocated as follows:
<TABLE>
<CAPTION>
Class A Plan Class B Plan
------------ ------------
<S> <C> <C>
Advertising . . . . . . . . . . . . . . . . . . . . . . . . $ -0- $ -0-
Printing and mailing prospectuses (other than to
current shareholders . . . . . . . . . . . . . . . . $ 1,132 $ -0-
Seminars . . . . . . . . . . . . . . . . . . . . . . . . . . $ -0- $ -0-
Compensation to Underwriters . . . . . . . . . . . . . . . . $ -0- $ 99
Compensation to Dealers . . . . . . . . . . . . . . . . . . . $ 302 $ 33
Compensation to Sales Personnel . . . . . . . . . . . . . . . $ -0- $ -0-
</TABLE>
The Plans require AIM Distributors to provide the Board of Directors 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
Directors reviews these reports in connection with their decisions with respect
to the Plans.
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Directors, including a
majority of the directors who are not "interested persons" (as defined in the
1940 Act) of the Company and who have no direct or indirect financial interest
in the operation of the Plans or in any agreements related to the Plans
("Qualified Directors"). In approving the Plans in accordance with the
requirements of Rule 12b-1, the directors considered various factors and
determined that there is a reasonable likelihood that the Plans would benefit
each class of the Funds and their respective shareholders.
The Plans do not obligate the Funds to reimburse AIM Distributors for the
actual expenses AIM Distributors may incur in fulfilling its obligations under
the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Funds will not be
28
<PAGE> 80
obligated to pay more than that fee. If AIM Distributors' expenses are less
than the fee it receives, AIM Distributors will retain the full amount of the
fee.
Unless terminated earlier in accordance with their terms, the Plans
continue in effect until June 30, 1995 and each year thereafter, as long as
such continuance is specifically approved at least annually by the Board of
Directors, including a majority of the Qualified Directors.
The Plans may be terminated by the vote of a majority of the Independent
Directors, or, with respect to a particular class, by the vote of a majority of
the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution
expenses paid by the applicable class requires shareholder approval; otherwise,
it may be amended by the directors, including a majority of the Qualified
Directors, by votes cast in person at a meeting called for the purpose of
voting upon such amendment. As long as the Plans are in effect, the selection
or nomination of the Qualified Directors is committed to the discretion of the
Qualified Directors. In the event the Class A Plan is amended in a manner
which the Board of Directors determines would materially increase the charges
paid under the Class A Plan, the Class B shares of the Funds will no longer
convert into Class A shares of the same Funds unless the Class B shares, voting
separately, approve such amendment. If the Class B shareholders do not approve
such amendment, the Board of Directors will (i) create a new class of shares of
the Funds which is identical in all material respects to the Class A shares as
they existed prior to the implementation of the amendment and (ii) ensure that
the existing Class B shares of the Funds will be exchanged or converted into
such new class of shares no later than the date the Class B shares were
scheduled to convert into Class A shares.
The principal differences between the Class A Plan, on the one hand,
and the Class B Plan, on the other hand, are: (i) the Class A Plan allows
payment to AIM Distributors or to dealers or financial institutions of up to
0.50% of average daily net assets of each Fund's Class A shares as compared to
1.00% of such assets of each Fund's Class B 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 DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Funds' shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A
Master Distribution Agreement with AIM Distributors relating to the Class A
shares of the Funds was approved by the Board of Directors on September 10,
1994. A Master Distribution Agreement with AIM Distributors relating to the
Class B shares of the Funds was also approved by the Board of Directors on
September 10, 1994. Both such Master Distribution Agreements are hereinafter
collectively referred to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing the Funds'
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the 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.
29
<PAGE> 81
AIM Distributors expects to pay sales commissions from its own resources
to dealers and institutions who sell Class B shares of the Funds at the time of
such sales. Payments with respect to Class B shares will equal 4.0% of the
purchase price of the Class B shares sold by the dealer or institution, and
will consist of a sales commission equal to 3.75% of the purchase price of the
Class B shares sold plus an advance of the first year service fee of 0.25% with
respect to such shares. The portion of the payments to AIM Distributors under
the Class B Plan which constitutes an asset-based sales charge (0.75%) is
intended in part to permit AIM Distributors to recoup a portion of such sales
commissions plus financing costs. AIM Distributors anticipates that it will
require a number of years to recoup from Class B Plan payments the sales
commissions paid to dealers and institutions in connection with sales of Class
B shares. In the future, if multiple distributors serve a Fund, each such
distributor (or if assignee or transferee) would receive a share of the
payments under the Class B Plan based on the portion of the Fund's Class B
shares sold by or attributable to the distribution efforts of that distributor.
The Company (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 to AIM Distributors. Termination of the
Class B Plan or Distribution Agreement does not affect the obligation of the
Funds and their Class B shareholders to pay Contingent Deferred Sales Charges.
For the period September 15, 1994 (date operations commenced) through
October 31, 1994, the total sales charges paid in connection with the sale of
Class A shares of Aggressive Growth Fund, Growth Fund and Income Fund were
$436,203, $46,883 and $13,085, respectively. AIM Distributors retained
$43,586, $5,382 and $2,102 of such sales charges for Aggressive Growth, Growth
Fund and Income Fund, respectively.
During the period September 15, 1994 (date operations commenced) through
October 31, 1994, AIM Distributors received commissions of $79, $880 and $0 in
contingent deferred sales charges imposed on redemptions of Class B shares of
Aggressive Growth Fund, Growth Fund and Income Fund, respectively.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of each Fund may be
purchased appears in the Prospectus under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
The sales charge normally deducted on purchases of Class A shares of each
Fund is used to compensate AIM Distributors and participating dealers for their
expenses incurred in connection with the distribution of the Fund's 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., because
of the size of the transaction and shareholder records required), AIM
Distributors believes that it is appropriate and in the Funds' best interest
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 Prospectus.
Complete information concerning the method of exchanging shares of the
Funds for shares of the other AIM Funds is set forth in the Prospectus under
the heading "Exchange Privilege."
30
<PAGE> 82
Information concerning redemption of the Funds' shares is set forth in
the Prospectus under the heading "How to Redeem Shares." In addition to the
Funds' obligation to redeem shares, AIM Distributors may also repurchase shares
as an accommodation to shareholders. To effect a repurchase, those dealers who
have executed Selected Dealer Agreements with AIM Distributors must phone
orders to the order desk of the Fund (Telephone: (713) 626-1919 (Houston) or
(800) 959-4246 (elsewhere)) and guarantee delivery of all required documents in
good order. A repurchase is effected at the net asset value per share of a
Fund next determined after the repurchase order is received. Such arrangement
is subject to timely receipt by A I M Fund Services, Inc. (a wholly-owned
subsidiary of A I M Advisors, Inc.), the Funds' transfer agent, of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation. While there is no charge imposed by the Funds or by AIM
Distributors (other than any applicable CDSC) when shares are redeemed or
repurchased, dealers may charge a fair service fee for handling the
transaction.
The right of redemption may be suspended or the date of payment postponed
when (a) trading on the New York Stock Exchange is restricted, as determined by
applicable rules and regulations of the SEC, (b) the New York Stock Exchange is
closed for other than customary weekend and holiday closings, (c) the SEC has
by order permitted such suspension, or (d) an emergency as determined by the
SEC exists making disposition of portfolio securities or the valuation of the
net assets of a Fund not reasonably practicable.
NET ASSET VALUE DETERMINATION
In accordance with current SEC rules and regulations, the net asset value
per share of a Fund is determined once daily as of 4:15 p.m. Eastern time on
each business day of the Fund. In the event the New York Stock Exchange 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 15 minutes following the close of the New
York Stock Exchange on such day. Each Fund's net asset value per share is
determined by subtracting the Fund's liabilities (e.g., the expenses) from the
Fund's assets, and dividing the result by the total number of Fund shares
outstanding. Determination of each Fund's net asset value per share is made in
accordance with generally accepted accounting principles.
Securities listed or traded on U.S. or foreign securities exchanges or
included in a national market system are valued at the last quoted sales price.
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
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Short-term obligations having 60 days or less to
maturity are valued at amortized cost, which approximates fair market value.
Generally, trading in foreign securities, as well as corporate bonds,
U.S. Government securities and money market instruments, is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing the net asset value
of a Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York Stock
Exchange. Occasionally, events affecting the values of such securities and
such exchange rates may occur between the times at which they are determined
and the close of the New York Stock Exchange which will not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Directors.
31
<PAGE> 83
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 each 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,
subject to the terms and conditions set forth in the Prospectus under the
caption "Special Plans -- Automatic Dividend Investment Plan." If a
shareholder's account does not have any shares in it on a dividend or capital
gains distribution payment date, the dividend or distribution will be paid
in cash whether or not the shareholder has elected to have such dividends
or distributions reinvested.
TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting each Fund and its shareholders that are not described in
the Funds' Prospectus. No attempt is made to present a detailed explanation of
the tax treatment of each Fund or its shareholders, and the discussion here and
in the Funds' Prospectus is not intended as a substitute for careful tax
planning. Investors are urged to consult their tax advisers with specific
reference to their own tax situation.
Qualification as a Regulated Investment Company. As stated in the Funds'
Prospectus, each Fund intends to qualify each year as a regulated investment
company under Part I of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). In order to qualify for tax treatment as a regulated
investment company under the Code, each Fund is required, among other things,
to derive at least 90% of its gross income in each taxable year from dividends,
interest, certain payments with respect to securities loans, gains from the
sale or other disposition of stock or securities or foreign currencies and
other income (including but not limited to gains from options, futures or
forward contracts derived with respect to the Fund's business of investing in
such stock, securities or currencies) (the "Income Requirement"); and derive
less than 30% of its gross income (exclusive of certain gains from designated
hedging transactions that are offset by realized or unrealized losses on
offsetting positions) in each taxable year from the sale or other disposition
of any of the following investments, if such investments are held for less than
three months (the "Short-Short Gain Test"): (a) stock or securities (as
defined in Section 2(a)(36) of the 1940 Act); (b) options, futures or forward
contracts (other than options, futures or forward contracts on foreign
currencies); and (c) foreign currencies (or options, futures or forward
contracts on foreign currencies), but only if such currencies (or options,
futures or forward contracts) are not directly related to the Fund's principal
business of investing in stock or securities (or options and futures with
respect to stock or securities). Foreign currency gains (including gains from
options, futures or forward contracts on foreign currencies) that are not
"directly related" to a Fund's principal business may, under regulations not
yet issued, not be qualifying income for purposes of the Income Requirement.
At the close of each quarter of its taxable year, at least 50% of the
value of each 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 its 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 (the "Asset Diversification Test"). For purposes
of the Asset Diversification Test, it is unclear under present law who should
be treated as the issuer of forward foreign currency exchange contracts, of
options on foreign currencies, or of foreign currency futures and related
options. It has been suggested that the issuer in each case may be the foreign
central bank or foreign government backing the particular currency.
Consequently, a Fund may find it necessary to seek
32
<PAGE> 84
a ruling from the Internal Revenue Service on this issue or to curtail its
trading in forward foreign currency exchange contracts in order to stay within
the limits of the Asset Diversification Test.
If for any taxable year a Fund does not qualify as a regulated investment
company, all of its taxable income 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 will be
eligible for the dividends received deduction in the case of corporate
shareholders.
Fund Distributions. Under the Code, each Fund is exempt from U.S.
federal income tax on its net investment income and realized capital gains
which it distributes to shareholders, provided that it distributes at least 90%
of its investment company taxable income (net investment income and the excess
of net short-term capital gain over net long-term capital loss) and its net
exempt-interest income for the year. Distributions of investment company
taxable income will be taxable to shareholders as ordinary income, regardless
of whether such distributions are paid in cash or are reinvested in shares.
Each Fund also intends to distribute to shareholders substantially all of
the excess of its net long-term capital gain over net short-term capital loss
as a capital gain dividend. Capital gain dividends are taxable to shareholders
as a long-term capital gain, regardless of the length of time a shareholder has
held his shares.
Treasury regulations permit a regulated investment company in determining
its investment company taxable income and undistributed net capital gain for
any taxable year to elect 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.
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 their ordinary taxable income for the calendar year plus 98% of their
"capital gain net income" (excess of capital gains over capital losses) for the
one-year period ending on October 31 of such calendar year. 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)
offset a net ordinary loss for any calendar year in determining its capital
gain net income for the one-year period ending on October 31 of such calendar
year and (2) exclude foreign currency gains and losses incurred after October
31 of any year in determining the amount of ordinary taxable income for the
current calendar year (and, instead, to 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 in order to make sufficient distributions to avoid excise
tax liability and that such liquidation may affect the ability of the Fund to
satisfy the Short-Short Gain Test.
Investment in Foreign Financial Instruments. Under Code Section 988,
gains or losses from certain foreign currency forward contracts or fluctuations
in exchange rates will generally be treated as ordinary income or loss. Such
Code Section 988 gains or losses will increase or decrease the amount of a
Fund's investment company taxable income available to be distributed to
shareholders as ordinary income, rather than increasing or decreasing the
amount of the Fund's net capital gains. Additionally, if Code Section 988
losses exceed other investment company taxable income during a taxable year,
the Fund would not be able to pay any ordinary income dividends, and any such
dividends paid before the losses were realized, but
33
<PAGE> 85
in the same taxable year, would be recharacterized as a return of capital to
shareholders, thereby reducing the tax basis of Fund shares.
Some of the forward foreign currency exchange contracts, options and
futures contracts that the Funds may enter into will be subject to special tax
treatment as "Section 1256 contracts." Section 1256 contracts are treated as
if they are sold for their fair market value on the last business day of the
taxable year, regardless of whether a taxpayer's obligations (or rights) under
such contracts have terminated (by delivery, exercise, entering into a closing
transaction or otherwise) as of such date. Any gain or loss recognized as a
consequence of the year-end deemed disposition of Section 1256 contracts is
combined with any other gain or loss that was previously recognized upon the
termination of Section 1256 contracts during that taxable year. The net amount
of such gain or loss for the entire taxable year (including gain or loss
arising as a consequence of the year-end deemed sale of such contracts) is
deemed to be 60% long-term and 40% short-term gain or loss. However, in the
case of Section 1256 contracts that are forward foreign currency exchange
contracts, the net gain or loss is separately determined and (as discussed
above) treated as ordinary income or loss.
Generally, the hedging transactions in which the Funds may engage may
result in "straddles" or "conversion transactions" for U.S. federal income tax
purposes. The straddle and conversion transaction rules may affect the
character of gains (or in the case of the straddle rules, losses) realized by
the Funds. In addition, losses realized by the Funds on positions that are
part of a straddle may be deferred under the straddle rules, rather than being
taken into account in calculating the taxable income for the taxable year in
which the losses are realized. Because only a few regulations implementing the
straddle rules and no regulations implementing the conversion transaction rules
have been promulgated, the tax consequences to the Funds of hedging
transactions are not entirely clear. The hedging transactions may increase the
amount of short-term capital gain realized by the Funds which is taxed as
ordinary income when distributed to shareholders.
Each Fund may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character, and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of the straddle and conversion transaction rules may
affect the character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected straddle positions, the amount
which must be distributed to shareholders and which will be taxed to
shareholders as ordinary income or long-term capital gain may be increased or
decreased as compared to a fund that did not engage in such hedging
transactions.
Requirements relating to each Fund's tax status as a regulated investment
company, including (in particular) the Short-Short Gain Test, may limit the
extent to which a Fund will be able to engage in transactions in options and
futures contracts.
PFIC Investments. Each Fund may invest in stocks of foreign companies
that are classified under the Code as passive foreign investment companies
("PFICs"). In general, a foreign company is classified as a PFIC if at least
one-half of its assets constitute investment-type assets or 75% or more of its
gross income is investment-type income. Under the PFIC rules, an "excess
distribution" received with respect to PFIC stock is treated as having been
realized ratably over the period during which the Fund held the PFIC stock.
The Fund itself will be subject to tax on the portion, if any, of the excess
distribution that is allocated to the Fund's holding period in prior taxable
years (and an interest factor will be added to the tax, as if the tax had
actually been payable in such prior taxable years) even though the Fund
distributes the corresponding income to shareholders. Excess distributions
include any gain from the sale of PFIC stock as well as certain distributions
from a PFIC. All excess distributions are taxable as ordinary income.
34
<PAGE> 86
Each Fund may be able to elect alternative tax treatment with respect to
PFIC stock. Under one such election, a Fund generally would be required to
include in its gross income its share of the earnings of a PFIC on a current
basis, regardless of whether any distributions are received from the PFIC. If
this election is made, the special rules, discussed above, relating to the
taxation of excess distributions, would not apply. In addition, other
elections may become available that would affect the tax treatment of PFIC
stock held by the Fund. The Funds' intentions to qualify annually as regulated
investment companies may limit their elections with respect to PFIC stock.
Because the application of the PFIC rules may affect, among other things,
the character of gains, the amount of gain or loss and the timing of the
recognition of income with respect to PFIC stock, as well as subject the Funds
themselves to tax on certain income from PFIC stock, the amount that must be
distributed to shareholders, and which will be taxed to shareholders as
ordinary income or long-term capital gains, may be increased or decreased
substantially as compared to a fund that did not invest in PFIC stock.
Redemption or Exchange of Shares. Upon a redemption or exchange of
shares, a shareholder will recognize a taxable gain or loss depending upon his
or her basis in the shares. Such gain or loss will be treated as capital gain
or loss if the shares are capital assets in the shareholder's hands and will be
long-term or short-term, depending upon the shareholder's holding period for
the shares. Any loss recognized by a shareholder on the sale of Fund shares
held six months or less will be treated as a long-term capital loss to the
extent of any distributions of net capital gains received by the shareholder
with respect to such shares.
If a shareholder exercises the exchange privilege within 90 days of
acquiring Class A shares, then the loss such shareholder recognizes on the
exchange will be reduced (or the gain increased) to the extent the sales charge
paid upon the purchase of Class A shares reduces any charge such shareholder
would have owed upon purchase of the new Class A shares in the absence of the
exchange privilege. Instead, such sales charge will be treated as an amount
paid for the new Class A shares. In addition, any loss recognized on a sale or
exchange will be disallowed to the extent that disposed Class A shares or Class
B shares are replaced within the 61-day period beginning 30 days before and
ending 30 days after the disposition of such shares. In such a case, the basis
of the shares acquired will be increased to reflect the disallowed loss.
Shareholders should particularly note that this loss disallowance rule applies
even where shares are automatically replaced under the dividend reinvestment
plan.
Foreign Income Taxes. Investment income received by each Fund from
sources within foreign countries may be subject to foreign income taxes
withheld at the source. The United States has entered into tax treaties with
many foreign countries which entitle the Funds to a reduced rate of, or
exemption from, taxes on such income. It is impossible to determine the
effective rate of foreign tax in advance since the amount of a Fund's assets to
be invested in various countries is not known.
If more than 50% of the value of a Fund's total assets at the close of
each taxable year consists of the stock or securities of foreign corporations,
the Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant
to the Foreign Tax Election, shareholders will be required (i) to include in
gross income, even though not actually received, their respective pro-rata
shares of the foreign income taxes paid by the Fund that are attributable to
any distributions they receive; and (ii) either to deduct their pro-rata share
of foreign taxes in computing their taxable income, or to use it (subject to
various Code limitations) as a foreign tax credit against Federal income tax
(but not both). No deduction for foreign taxes may be claimed by a
non-corporate shareholder who does not itemize deductions or who is subject to
alternative minimum tax.
Generally, a credit for foreign taxes is subject to the limitation that
it may not exceed the shareholder's U.S. tax (determined without regard to the
availability of the credit) attributable to the shareholder's foreign source
taxable income. In determining the source and character of distributions
received from a Fund for
35
<PAGE> 87
this purpose, shareholders will be required to allocate Fund distributions
according to the source of the income realized by the Fund. Each Fund's gains
from the sale of stock and securities and certain currency fluctuation gains
and losses will generally be treated as derived from U.S. sources. In
addition, the limitation on the foreign tax credit is applied separately to
foreign source "passive" income, such as dividend income. Because of these
limitations, shareholders may be unable to claim a credit for the full amount
of their proportionate shares of the foreign income taxes paid by a Fund.
Backup Withholding. Under certain provisions of the Code, the Funds may
be required to withhold 31% of reportable dividends, capital gains
distributions and redemption payments ("backup withholding"). Generally,
shareholders subject to backup withholding will be those for whom a certified
taxpayer identification number is not on file with the Company or who, to the
Company's knowledge, have furnished an incorrect number, or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. When establishing an account, an investor must provide his or her
taxpayer identification number and certify under penalty of perjury that such
number is correct and that he or she is not otherwise subject to backup
withholding. Corporate shareholders and other shareholders specified in the
Code are exempt from backup withholding. Backup withholding is not an
additional tax. Any amounts withheld may be credited against a shareholder's
U.S. federal income tax liability.
Foreign Shareholders. Dividends from a Fund's investment company taxable
income paid to a nonresident alien individual, a foreign trust or estate,
foreign corporation, or foreign partnership (a "foreign shareholder") generally
will be subject to U.S. withholding tax at a rate of 30% (or lower treaty rate)
upon the gross amount of the dividend. Foreign shareholders may be subject to
U.S. withholding tax at a rate of 30% on the income resulting from the Fund's
election to treat any foreign income taxes paid by it as paid by its
shareholders, but may not be able to claim a credit or deduction with respect
to the withholding tax for the foreign taxes treated as having been paid by
them.
A foreign shareholder generally will not be subject to U.S. taxation on
gain realized upon the redemption or exchange of shares of a Fund or on capital
gain dividends. In the case of a foreign shareholder who is a nonresident
alien individual, however, gain realized upon the sale of shares of a Fund and
capital gain dividends ordinarily will be subject to U.S. income tax at a rate
of 30% (or lower applicable treaty rate) if such individual is physically
present in the U.S. for 183 days or more during the taxable year and certain
other conditions are met. In the case of a foreign shareholder who is a
nonresident alien individual, the Funds may be required to withhold U.S.
federal income tax at a rate of 31% unless proper notification of such
shareholder's foreign status is provided.
Notwithstanding the foregoing, if distributions by the Funds are
effectively connected with a U.S. trade or business of a foreign shareholder,
then dividends from such Fund's investment company taxable income, capital
gains, and any gains realized upon the sale of shares of the Fund will be
subject to U.S. income tax at the graduated rates applicable to U.S. citizens
or domestic corporations.
Transfers by gift of shares of a Fund by a foreign shareholder who is a
nonresident alien individual will not be subject to U.S. federal gift tax. An
individual who, at the time of death, is a foreign shareholder will
nevertheless be subject to U.S. federal estate tax with respect to shares at
the graduated rates applicable to U.S. citizens and residents, unless a treaty
exception applies. In the absence of a treaty, there is a $13,000 statutory
estate tax credit.
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 any of
the Funds.
Miscellaneous Considerations; Effect of Future Legislation. The
foregoing general discussion of federal income tax consequences is based on the
Code and the regulations issued thereunder as in effect on the date of this
Statement of Additional Information. Future legislative or administrative
changes or court
36
<PAGE> 88
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 dividend and capital gain
distributions from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. Shareholders are urged to
consult their tax advisors as to the consequences of these and other U.S. state
and local tax rules affecting investments in the Funds.
MISCELLANEOUS INFORMATION
AUDIT REPORTS
The Board of Directors will issue to shareholders at least semi-annually
the Funds' financial statements. Financial statements, audited by independent
auditors, will be issued annually. The firm of KPMG Peat Marwick LLP serves as
the auditors of each Fund.
LEGAL MATTERS
Legal matters for the Company are passed upon by Ballard Spahr Andrews &
Ingersoll, Philadelphia, Pennsylvania.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin
Street, Boston, Massachusetts 02110, is custodian of all securities and cash of
the Funds. Under its contract with the Company relating to each Fund, the
Custodian is authorized to establish separate accounts in foreign currencies
and to cause foreign securities owned by each Fund to be held in its offices
outside the United States and with certain foreign banks and securities
depositories. The Custodian attends to the collection of principal and income,
pays and collects all monies for securities bought and sold by each Fund, and
performs certain other ministerial duties. A I M Fund Services, Inc. (the
"Transfer Agent"), a wholly-owned subsidiary of A I M Advisors, Inc., P.O. Box
4739, Houston, Texas 77210-4739, is a transfer and dividend disbursing agent
for the Class A and Class B shares of each of the Funds. Each Fund pays the
Custodian and the Transfer Agent such compensation as may be agreed upon from
time to time.
Texas Commerce Bank National Association, P. O. Box 2558, Houston, Texas
77252-8084, serves as Sub-Custodian for retail purchases of the AIM Funds.
SHAREHOLDER INQUIRIES
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.
PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Company, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of each of the
Company's portfolios as of February 1, 1995, and the amount of outstanding
shares held by such holders are set forth below:
37
<PAGE> 89
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address Owned of and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ----------- ------------
<S> <C> <C> <C>
AIM International Equity Fund - Merrill Lynch, Pierce, 33.3%** -0-%
Class A shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Global Growth Fund - A I M Advisors, Inc. -0-% 7.4%
Class A shares 11 Greenway Plaza
Houston, TX 77046
AIM Global Income Fund - A I M Advisors, Inc. -0-% 45.3%**
Class A shares 11 Greenway Plaza
Houston, TX 77046
AIM International Equity Fund - Merrill, Lynch, Pierce, 14.9% -0-%
Class B shares Fenner & Smith
Mutual Fund Operations
P. O. Box 45286
Jacksonville, FL 32232-5286
AIM Global Income Fund - Jody Reed 12.9% -0-%
Class B shares Michelle K. Reed
6310 MacLaurin Drive
Tampa, FL 33647
Vernon O. Williams 5.4% -0-%
15114 Dayton Street
Omaha, NE 68137
Cowen & Co. 5.0% -0-%
Financial Square
New York, NY 10005
</TABLE>
As of February 1, 1995, the directors and officers of the Company as a
group owned less than 1% of the outstanding shares of the Fund and the other
portfolios of the Company.
__________________________________
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined
in the 1940 Act.
38
<PAGE> 90
OTHER INFORMATION
The Prospectus and this Statement of Additional Information omit
certain information contained in the Registration Statement which the
portfolios of the Company have filed with the SEC under the 1933 Act and the
1940 Act, and reference is hereby made to the Registration Statement for
further information with respect to each portfolio of the Company and the
securities offered hereby. The Registration Statement is available for
inspection by the public at the Securities and Exchange Commission in
Washington, D.C.
39
<PAGE> 91
APPENDIX A
________________________________________________________________________________
DESCRIPTION OF MONEY MARKET OBLIGATIONS
The following list does not purport to be an exhaustive list of all
Money Market Obligations, and the Funds reserve the right to invest in Money
Market Obligations other than those listed below:
1. GOVERNMENT OBLIGATIONS.
U.S. GOVERNMENT DIRECT OBLIGATIONS -- Bills, notes, and bonds issued
by the U.S. Treasury.
U.S. GOVERNMENT AGENCIES SECURITIES -- Certain federal agencies such
as the Government National Mortgage Association have been established as
instrumentalities of the U. S. Government to supervise and finance certain
types of activities. Issues of these agencies, while not direct obligations of
the U. S. Government, are either backed by the full faith and credit of the
United States or are guaranteed by the Treasury or supported by the issuing
agencies' right to borrow from the Treasury.
FOREIGN GOVERNMENT OBLIGATIONS -- These are U.S. dollar denominated
obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by the Fund's investment advisor to be of comparable quality to the other
obligations in which the Fund may invest. Such securities also include debt
obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank. The percentage of the Fund's assets invested
in securities issued by foreign governments will vary depending on the relative
yields of such securities, the economic and financial markets of the countries
in which the investments are made and the interest rate climate of such
countries.
2. BANK INSTRUMENTS.
BANKERS' ACCEPTANCES -- A bill of exchange or time draft drawn on and
accepted by a commercial bank. It is used by corporations to finance the
shipment and storage of goods and to furnish dollar exchange. Maturities are
generally six months or less.
CERTIFICATES OF DEPOSIT -- A negotiable interest-bearing instrument
with a specific maturity. Certificates of deposit are issued by banks and
savings and loan institutions in exchange for the deposit of funds and normally
can be traded in the secondary market, prior to maturity.
TIME DEPOSITS -- A non-negotiable receipt issued by a bank in exchange
for the deposit of funds. Like a certificate of deposit, it earns a specified
rate of interest over a definite period of time; however, it cannot be traded
in the secondary market.
EURODOLLAR OBLIGATIONS -- A Eurodollar obligation is a U.S.
dollar-denominated obligation issued by a foreign branch of a domestic bank.
YANKEE DOLLAR OBLIGATIONS -- A Yankee dollar obligation is a U.S.
dollar-denominated obligation issued by a domestic branch of a foreign bank.
40
<PAGE> 92
3. COMMERCIAL INSTRUMENTS.
COMMERCIAL PAPER -- The term used to designate unsecured short-term
promissory notes issued by corporations and other entities. Maturities on
these issues vary from a few days to nine months.
VARIABLE RATE MASTER DEMAND NOTES -- Variable rate master demand notes
are unsecured demand notes that permit investment of fluctuating amounts of
money at variable rates of interest pursuant to arrangements with the issuers.
The interest rate on a variable amount master demand note is periodically
redetermined according to a prescribed formula. Although there is no secondary
market in master demand notes, the payee may demand payment of the principal
amount of the note on relatively short notice.
4. REPURCHASE AGREEMENTS -- A repurchase agreement is a contractual
undertaking whereby the seller of securities (limited to U.S. Government
securities, including securities issued or guaranteed by the U.S. Treasury or
the various agencies and instrumentalities of the U.S. Government) agrees to
repurchase the securities at a specified price on a future date determined by
negotiations.
41
<PAGE> 93
FINANCIAL STATEMENTS
FS
<PAGE> 94
The Board of Directors and Shareholders of
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of the AIM
Global Aggressive Growth Fund (a portfolio of AIM International Funds, Inc.),
including the schedule of investments, as of October 31, 1994, and the related
statements of operations, changes in net assets and financial highlights for
the period September 15, 1994 (date operations commenced) through October 31,
1994. 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
audit.
We conducted our audit 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
October 31, 1994, by correspondence with the custodian and brokers. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of AIM Global Aggressive Growth Fund as of October 31, 1994, the
results of its operations, changes in its net assets and the financial
highlights for the period September 15, 1994 (date operations commenced)
through October 31, 1994, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
December 9, 1994
FS-1
<PAGE> 95
SCHEDULE OF INVESTMENTS
October 31, 1994
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS - 25.97%
BASIC INDUSTRY - 0.21%
CHEMICALS - 0.21%
1,600 Wellman Inc. $52,600
- --------------------------------------------------------------------------------------------
Total Basic Industry 52,600
- --------------------------------------------------------------------------------------------
BUSINESS SERVICES - 5.47%
COMPUTER SOFTWARE & SERVICES - 4.55%
1,500 Adobe Systems, Inc. 54,281
- --------------------------------------------------------------------------------------------
100 Affiliated Computer Services Inc. (a) 2,137
- --------------------------------------------------------------------------------------------
8,000 Cadence Design Systems, Inc. (a) 160,000
- --------------------------------------------------------------------------------------------
2,400 Cerner Inc. (a) 98,700
- --------------------------------------------------------------------------------------------
200 Epic Design Technology Inc. (a) 4,450
- --------------------------------------------------------------------------------------------
3,000 Frame Technology Corp. (a) 43,500
- --------------------------------------------------------------------------------------------
6,000 HBO & Co. 195,750
- --------------------------------------------------------------------------------------------
2,600 Microsoft Corp. (a) 163,962
- --------------------------------------------------------------------------------------------
2,200 Oracle System Corp. (a) 101,063
- --------------------------------------------------------------------------------------------
2,000 Parametric Technology Corp. (a) 72,500
- --------------------------------------------------------------------------------------------
3,500 Sybase, Inc. (a) 183,313
- --------------------------------------------------------------------------------------------
2,500 VMARK Software, Inc. (a) 39,688
- --------------------------------------------------------------------------------------------
1,119,344
- --------------------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES - 0.41%
2,500 ALC Communcations Corp. (a) 94,688
- --------------------------------------------------------------------------------------------
400 IPC Information Systems, Inc. (a) 5,900
- --------------------------------------------------------------------------------------------
100,588
- --------------------------------------------------------------------------------------------
MISCELLANEOUS - 0.50%
3,000 American Management Systems, Inc. 47,438
- --------------------------------------------------------------------------------------------
1,800 Equifax Inc. 52,425
- --------------------------------------------------------------------------------------------
600 Value Health, Inc. (a) 23,250
- --------------------------------------------------------------------------------------------
123,113
- --------------------------------------------------------------------------------------------
MULTIPLE INDUSTRY - 0.01%
200 U.S. Xpress Enterprises, Inc. (a) 2,925
- --------------------------------------------------------------------------------------------
Total Business Services 1,345,970
- --------------------------------------------------------------------------------------------
CAPITAL GOODS - 12.35%
COMPUTER & OFFICE EQUIPMENT - 3.21%
2,800 American Power Conversion Corp. (a) 51,975
- --------------------------------------------------------------------------------------------
1,500 COMPAQ Computer Corp. (a) 60,188
- --------------------------------------------------------------------------------------------
2,000 Cyrix Corp. (a) 82,375
- --------------------------------------------------------------------------------------------
5,200 EMC Corp (a) 111,800
- --------------------------------------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 96
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER & OFFICE EQUIPMENT - CONTINUED
2,500 Exabyte Corp. (a) $55,156
- --------------------------------------------------------------------------------------------
1,400 Komag, Inc. (a) 34,825
- --------------------------------------------------------------------------------------------
1,800 Network General Corp. 38,588
- --------------------------------------------------------------------------------------------
1,900 Read Rite Corp. (a) 32,894
- --------------------------------------------------------------------------------------------
2,900 Sequent Computer Systems, Inc. (a) 55,463
- --------------------------------------------------------------------------------------------
4,300 Silicon Graphics Inc.(a) 130,613
- --------------------------------------------------------------------------------------------
2,400 Sun Microsystems Inc. (a) 78,900
- --------------------------------------------------------------------------------------------
1,400 3Com Corp. (a) 56,525
- --------------------------------------------------------------------------------------------
789,302
- --------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.25%
1,700 Harman International Industries, Inc. 60,775
- --------------------------------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.34%
4,000 Cypress Semiconductor Corp. (a) 83,500
- --------------------------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS/COMPONENTS) - 6.18%
300 Adflex Solutions, Inc. (a) 5,888
- --------------------------------------------------------------------------------------------
3,000 Altera Corp. (a) 118,312
- --------------------------------------------------------------------------------------------
2,500 Applied Materials, Inc. (a) 129,688
- --------------------------------------------------------------------------------------------
1,800 Atmel Corp. (a) 66,600
- --------------------------------------------------------------------------------------------
2,500 Augat, Inc. 49,688
- --------------------------------------------------------------------------------------------
2,000 Credence Systems Corp. (a) 50,500
- --------------------------------------------------------------------------------------------
3,500 International Rectifier Co. (a) 81,375
- --------------------------------------------------------------------------------------------
1,500 LAM Research Corp. (a) 67,687
- --------------------------------------------------------------------------------------------
100 Mattson Technology Inc. (a) 2,075
- --------------------------------------------------------------------------------------------
2,500 Micron Technology Inc. 99,063
- --------------------------------------------------------------------------------------------
1,500 Motorola, Inc. 88,313
- --------------------------------------------------------------------------------------------
2,000 Novellus Systems, Inc. (a) 109,250
- --------------------------------------------------------------------------------------------
5,000 Oak Industries Inc. (a) 128,750
- --------------------------------------------------------------------------------------------
12,000 OPTI, Inc. (a) 171,000
- --------------------------------------------------------------------------------------------
200 Pri Automation Inc. (a) 3,100
- --------------------------------------------------------------------------------------------
3,500 Silicon Valley Group, Inc. (a) 68,250
- --------------------------------------------------------------------------------------------
3,800 Teradyne Inc. (a) 124,925
- --------------------------------------------------------------------------------------------
5,000 Three-Five Systems, Inc. 155,625
- --------------------------------------------------------------------------------------------
1,520,089
- --------------------------------------------------------------------------------------------
MACHINE TOOLS & RELATED PRODUCTS - 0.21%
1,900 Cincinnati Milacron, Inc. 52,012
- --------------------------------------------------------------------------------------------
MACHINERY - 0.22%
1,000 AGCO Corp. 55,000
- --------------------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT - 1.40%
300 ADC Telecommunications, Inc. (a) 14,137
- --------------------------------------------------------------------------------------------
2,200 California Microwave, Inc. (a) 68,475
- --------------------------------------------------------------------------------------------
200 Ortel Corp. (a) 5,500
- --------------------------------------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 97
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT - CONTINUED
2,400 Scientific - Atlanta Inc. $51,900
- --------------------------------------------------------------------------------------------
7,000 Summa Four Inc. (a) 145,250
- --------------------------------------------------------------------------------------------
1,200 Tellabs, Inc. (a) 58,800
- --------------------------------------------------------------------------------------------
344,062
- --------------------------------------------------------------------------------------------
TRANSPORTATION EQUIPMENT - 0.52%
5,300 Allen Group Inc. 128,525
- --------------------------------------------------------------------------------------------
MISCELLANEOUS - 0.02%
300 Aspen Technology Inc. (a) 5,119
- --------------------------------------------------------------------------------------------
Total Capital Goods 3,038,384
- --------------------------------------------------------------------------------------------
CONSUMER DURABLES - 1.01%
AUTO PARTS - 0.01%
100 Edelbrock Corp. (a) 1,300
- --------------------------------------------------------------------------------------------
HOUSEHOLD APPLIANCES/FURNISHINGS - 0.20%
2,000 Sunbeam Oster Co., Inc. 49,500
- --------------------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES - 0.02%
200 Isolyser Inc. (a) 3,825
- --------------------------------------------------------------------------------------------
RESIDENTIAL CONSTRUCTION - 0.18%
2,500 Clayton Homes, Inc. 45,313
- --------------------------------------------------------------------------------------------
TOYS & SPORTING GOODS - 0.60%
2,900 Callaway Golf Co. 110,925
- --------------------------------------------------------------------------------------------
1,000 Cobra Golf Inc. 37,125
- --------------------------------------------------------------------------------------------
148,050
- --------------------------------------------------------------------------------------------
Total Consumer Durables 247,988
- --------------------------------------------------------------------------------------------
CONSUMER NONDURABLES - 2.37%
DRUGS - 1.40%
300 Homedco Group, Inc. (a) 10,800
- --------------------------------------------------------------------------------------------
2,500 Mariner Health Group, Inc. (a) 56,406
- --------------------------------------------------------------------------------------------
5,500 Mylan Laboratories, Inc. 154,000
- --------------------------------------------------------------------------------------------
300 Revco D. S. Inc. 6,712
- --------------------------------------------------------------------------------------------
2,600 Sun Healthcare Group, Inc. (a) 59,800
- --------------------------------------------------------------------------------------------
2,200 Wason Pharmaceuticals, Inc. (a) 57,750
- --------------------------------------------------------------------------------------------
345,468
- --------------------------------------------------------------------------------------------
PUBLISHING - 0.27%
300 Belo (A. H.) Corp. 16,425
- --------------------------------------------------------------------------------------------
200 Washington Post Co. 49,000
- --------------------------------------------------------------------------------------------
65,425
- --------------------------------------------------------------------------------------------
SHOES - 0.30%
3,000 Wolverine World Wide, Inc. 73,500
- --------------------------------------------------------------------------------------------
</TABLE>
FS-4
<PAGE> 98
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TEXTILES - 0.36%
2,000 Tommy Hilfiger Corp. (a) $88,250
- --------------------------------------------------------------------------------------------
MULTIPLE INDUSTRY - 0.04%
500 Corporate Express Inc. (a) 11,250
- --------------------------------------------------------------------------------------------
Total Consumer Nondurables 583,893
- --------------------------------------------------------------------------------------------
CONSUMER SERVICES - 1.47%
BROADCAST MEDIA - 0.20%
1,700 Media General, Inc. 48,237
- --------------------------------------------------------------------------------------------
ENTERTAINMENT - 0.38%
3,000 MGM Grand, Inc. (a) 92,625
- --------------------------------------------------------------------------------------------
HEALTH CARE, EXCLUDING HOSPITAL MANAGEMENT - 0.77%
2,000 Health Systems International Inc. (a) 53,750
- --------------------------------------------------------------------------------------------
1,200 Mid-Atlantic Medical Services, Inc.(a) 27,750
- --------------------------------------------------------------------------------------------
1,000 United Healthcare Corp. 52,750
- --------------------------------------------------------------------------------------------
1,200 U. S. Healthcare Inc. 56,550
- --------------------------------------------------------------------------------------------
190,800
- --------------------------------------------------------------------------------------------
HOSPITAL MANAGEMENT - 0.12%
1,200 Humana Inc. (a) 29,250
- --------------------------------------------------------------------------------------------
Total Consumer Services 360,912
- --------------------------------------------------------------------------------------------
FINANCIAL - 0.21%
MISCELLANEOUS - 0.21%
2,500 Money Store, Inc. 51,250
- --------------------------------------------------------------------------------------------
Total Financial 51,250
- --------------------------------------------------------------------------------------------
RETAIL - 2.10%
SPECIALTY STORES - 2.10%
1,300 Ann Taylor Stores Corp. (a) 53,950
- --------------------------------------------------------------------------------------------
100 Baby Superstore Inc. (a) 4,537
- --------------------------------------------------------------------------------------------
900 Best Buy Co., Inc. 33,975
- --------------------------------------------------------------------------------------------
2,000 Circuit City Stores, Inc. 51,000
- --------------------------------------------------------------------------------------------
2,000 Eckerd Corp. (a) 62,000
- --------------------------------------------------------------------------------------------
3,600 Gateway 2000 Inc. (a) 84,600
- --------------------------------------------------------------------------------------------
2,000 General Nutrition, Inc. (a) 50,500
- --------------------------------------------------------------------------------------------
1,200 Michaels Stores, Inc. (a) 48,750
- --------------------------------------------------------------------------------------------
2,400 Staples, Inc. 55,500
- --------------------------------------------------------------------------------------------
500 Sunglass Hut International (a) 20,813
- --------------------------------------------------------------------------------------------
1,500 Talbots Inc. 52,125
- --------------------------------------------------------------------------------------------
Total Retail 517,750
- --------------------------------------------------------------------------------------------
</TABLE>
FS-5
<PAGE> 99
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TRANSPORTATION - 0.40%
TRUCKING - 0.40%
100 Covenant Transport, Inc. (a) $1,912
- --------------------------------------------------------------------------------------------
200 Knight Transportation, Inc. (a) 2,925
- --------------------------------------------------------------------------------------------
4,000 M.S. Carriers, Inc. (a) 93,500
- --------------------------------------------------------------------------------------------
Total Transportation 98,337
- --------------------------------------------------------------------------------------------
UTILITIES - 0.13%
TELEPHONE - 0.13%
1,300 LCI International, Inc. (a) 31,525
- --------------------------------------------------------------------------------------------
Total Utilities 31,525
- --------------------------------------------------------------------------------------------
OTHER - 0.25%
MISCELLANEOUS - 0.25%
5,500 Hechinger Co. 61,875
- --------------------------------------------------------------------------------------------
Total Other 61,875
- --------------------------------------------------------------------------------------------
Total Common Stocks 6,390,484
- --------------------------------------------------------------------------------------------
FOREIGN STOCKS - 50.31%
ARGENTINA - 0.36%
1,600 Banco de Galicia y Buenos Aires (Banking) 43,400
- --------------------------------------------------------------------------------------------
7,400 Telecom Argentina S.A.- Class B (Telecommunications
Equipment) 45,001
- --------------------------------------------------------------------------------------------
Total Argentina 88,401
- --------------------------------------------------------------------------------------------
AUSTRALIA - 1.68%
51,000 Pacific BBA Ltd. (Electrical Equipment) 142,771
- --------------------------------------------------------------------------------------------
52,000 Pioneer International Ltd. (Building Materials) 125,492
- --------------------------------------------------------------------------------------------
41,496 QBE Insurance Group, Ltd. (Insurance) 144,822
- --------------------------------------------------------------------------------------------
Total Australia 413,085
- --------------------------------------------------------------------------------------------
AUSTRIA - 1.08%
3,600 Austria Mikro Systeme International AG
(Electronics-Semiconductors/Components) 266,365
- --------------------------------------------------------------------------------------------
Total Austria 266,365
- --------------------------------------------------------------------------------------------
CANADA - 1.03%
1,500 Canandaigua Wine Inc. (a) (Beverages) 49,125
- --------------------------------------------------------------------------------------------
3,750 Corel Corp. (a) (Computer Software & Services ) 58,125
- --------------------------------------------------------------------------------------------
9,600 Finning Ltd. (Wholesale-Durable Goods) 147,272
- --------------------------------------------------------------------------------------------
Total Canada 254,522
- --------------------------------------------------------------------------------------------
CHILE - 0.40%
500 Compania de Telefonos de Chile - ADR (Telephone) 47,063
- --------------------------------------------------------------------------------------------
2,400 Cristalerias de Chile S.A. - ADR (Containers-Metal & Glass) 51,600
- --------------------------------------------------------------------------------------------
Total Chile 98,663
- --------------------------------------------------------------------------------------------
</TABLE>
FS-6
<PAGE> 100
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DENMARK - 1.42%
695 Bang & Olufsen Holdings A/S (Electronics) $145,887
- --------------------------------------------------------------------------------------------
2,800 Det Danske Traelastkompagni (a) (Building Materials) 204,640
- --------------------------------------------------------------------------------------------
Total Denmark 350,527
- --------------------------------------------------------------------------------------------
FINLAND - 1.83%
6,700 Finnlines Oy (Transportation) 157,065
- --------------------------------------------------------------------------------------------
8,000 Kesko (Specialty Stores) 97,764
- --------------------------------------------------------------------------------------------
3,740 Stockmann AB (Department Stores) 195,646
- --------------------------------------------------------------------------------------------
Total Finland 450,475
- --------------------------------------------------------------------------------------------
FRANCE - 5.62%
1,580 BIS S.A. (Business Services-Multiple Industry) 95,181
- --------------------------------------------------------------------------------------------
1,700 Bollore Technologies (Electronics) 148,659
- --------------------------------------------------------------------------------------------
200 Business Objects S.A. (a) (Computer Software & Services) 6,525
- --------------------------------------------------------------------------------------------
1,810 Club Mediterranee S.A. (a) (Leisure Time) 154,937
- --------------------------------------------------------------------------------------------
200 De Dietrich et Compagnie S.A. (Diversified) 100,661
- --------------------------------------------------------------------------------------------
580 EBF (Machinery) 104,819
- --------------------------------------------------------------------------------------------
280 Europe 1 Communication (Broadcasting) 88,146
- --------------------------------------------------------------------------------------------
820 Filipacchi Medias (Publishing) 154,407
- --------------------------------------------------------------------------------------------
1,280 Hermes International (Speciality Stores) 151,729
- --------------------------------------------------------------------------------------------
1,360 Legris Industries S.A. (Machinery) 96,727
- --------------------------------------------------------------------------------------------
900 Radiotechnique (Electronics) 88,146
- --------------------------------------------------------------------------------------------
225 Salomon S.A. (Toys & Sporting Goods) 87,053
- --------------------------------------------------------------------------------------------
560 Sidel S.A. (Machinery) 106,645
- --------------------------------------------------------------------------------------------
Total France 1,383,635
- --------------------------------------------------------------------------------------------
GERMANY - 3.72%
500 Draegerwerk A.G. (Drugs) 104,755
- --------------------------------------------------------------------------------------------
770 Escada A.G. (a) (Textiles) 152,617
- --------------------------------------------------------------------------------------------
320 Fresenius A.G. (Medical Equipment & Supplies) 134,087
- --------------------------------------------------------------------------------------------
235 Hugo Boss A.G. (Textiles) 147,549
- --------------------------------------------------------------------------------------------
930 Jungheinrich A.G. (Diversified) 221,443
- --------------------------------------------------------------------------------------------
1,195 Kolbenschmidt A.G. (a) (Auto Parts) 154,988
- --------------------------------------------------------------------------------------------
Total Germany 915,439
- --------------------------------------------------------------------------------------------
HONG KONG - 5.00%
350,000 CDL Hotels International Ltd. (Diversified) 160,789
- --------------------------------------------------------------------------------------------
256,000 Esprit Asia Holdings Ltd. (Department Stores) 120,919
- --------------------------------------------------------------------------------------------
146,000 First Pacific Co. Ltd. (Diversified) 102,970
- --------------------------------------------------------------------------------------------
15,000 Hutchison Whampoa Ltd. (Diversified) 69,298
- --------------------------------------------------------------------------------------------
524,000 Joyce Boutique Holdings (Department Stores) 122,736
- --------------------------------------------------------------------------------------------
480,000 M.C. Packaging Ltd. (Consumer Durables-Multiple Industry) 178,582
- --------------------------------------------------------------------------------------------
46,000 Shangri- La Asia Ltd. (Leisure Time) 66,373
- --------------------------------------------------------------------------------------------
15,000 Sun Hung Kai Properties Ltd. (Real Estate) 114,526
- --------------------------------------------------------------------------------------------
</TABLE>
FS-7
<PAGE> 101
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HONG KONG - CONTINUED
15,000 Television Broadcasts Ltd. (Broadcast Media) $69,298
- --------------------------------------------------------------------------------------------
69,000 Vatronix International (Electronics - Semiconductors/Components) 102,239
- --------------------------------------------------------------------------------------------
312,000 Yizheng Chemical Fibre Co. (Chemicals) 124,154
- --------------------------------------------------------------------------------------------
Total Hong Kong 1,231,884
- --------------------------------------------------------------------------------------------
INDIA - 0.36%
3,500 Reliance Industries (a) (Machinery) 89,705
- --------------------------------------------------------------------------------------------
Total India 89,705
- --------------------------------------------------------------------------------------------
INDONESIA - 1.33%
20,000 PT Bank International Indonesia (Banking) 67,707
- --------------------------------------------------------------------------------------------
26,000 PT Hanjaya Mandala Sampoerna (Tobacco) 125,741
- --------------------------------------------------------------------------------------------
1,000 PT Indosat-ADR (a) (Telecommunications Services) 39,250
- --------------------------------------------------------------------------------------------
24,000 PT Jaya Real Property (Residential Construction) 94,237
- --------------------------------------------------------------------------------------------
Total Indonesia 326,935
- --------------------------------------------------------------------------------------------
ITALY - 1.13%
1,600 Industrie Natuzzi SPA - ADR (Household Appliances/Furnishings) 51,600
- --------------------------------------------------------------------------------------------
41,900 Merloni Elettrodomestici SPA (Household Products) 148,572
- --------------------------------------------------------------------------------------------
114,000 Snia BPD SPA (a) (Capital Goods-Miscellaneous) 76,989
- --------------------------------------------------------------------------------------------
Total Italy 277,161
- --------------------------------------------------------------------------------------------
JAPAN - 4.46%
8,000 Aisin Seiki Co., Ltd. (Auto Parts) 121,406
- --------------------------------------------------------------------------------------------
6,000 Alpine Electronics (Electrical Equipment) 122,645
- --------------------------------------------------------------------------------------------
11,000 Asahi Tec Corp. (Auto Parts) 105,611
- --------------------------------------------------------------------------------------------
9,000 Daikin Manufacturing Co. (Auto Parts) 219,274
- --------------------------------------------------------------------------------------------
12,000 NGK Spark Plug Co., Ltd. (Machinery) 166,004
- --------------------------------------------------------------------------------------------
4,000 Onward Kashiyama Co., Ltd. (Textiles) 57,399
- --------------------------------------------------------------------------------------------
5,000 Ralse Company Ltd. (Food Stores) 111,237
- --------------------------------------------------------------------------------------------
5,000 Senshukai Co. (Specialty Stores) 147,112
- --------------------------------------------------------------------------------------------
200 Shohkoh Fund (Business Credit) 47,695
- --------------------------------------------------------------------------------------------
Total Japan 1,098,383
- --------------------------------------------------------------------------------------------
MALAYSIA - 1.60%
6,000 Aokam Perdana Berhad - Series A (Paper & Forest Products) 46,967
- --------------------------------------------------------------------------------------------
3,000 Aokam Perdana Berhad (Paper & Forest Products) 24,775
- --------------------------------------------------------------------------------------------
24,000 Lam Soon Huat Development Berhad (Real Estate) 84,070
- --------------------------------------------------------------------------------------------
30,000 Sungei Way Holdings Berhad (Building Materials) 118,591
- --------------------------------------------------------------------------------------------
22,000 United Engineers Ltd. (Machinery) 118,826
- --------------------------------------------------------------------------------------------
Total Malaysia 393,229
- --------------------------------------------------------------------------------------------
</TABLE>
FS-8
<PAGE> 102
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO - 0.51%
17,000 Cifra, S.A. de C.V. - Series C (Department Stores) $45,802
- --------------------------------------------------------------------------------------------
25,000 Grupo Industrial Maseca S.A. de C.V. - Series B (Food
Processing) 40,733
- --------------------------------------------------------------------------------------------
2,000 Kimberly-Clark de Mexico S.A. de C.V.(Department Stores) 39,686
- --------------------------------------------------------------------------------------------
Total Mexico 126,221
- --------------------------------------------------------------------------------------------
NETHERLANDS - 3.23%
1,570 Ahrend Groep N.V. (Furniture/Home Appliances) $147,056
- --------------------------------------------------------------------------------------------
4,900 Getronics N.V. (Computer Software & Services) 150,953
- --------------------------------------------------------------------------------------------
5,660 IHC Caland N.V. (Transportation) 143,793
- --------------------------------------------------------------------------------------------
3,100 Internatio - Muller N.V. (Diversified) 170,944
- --------------------------------------------------------------------------------------------
1,700 Philips Electronics N. V. (Household Appliances/Furnishings) 55,675
- --------------------------------------------------------------------------------------------
2,440 Randstad Holdings N.V. (Business Services-Multiple Industry) 126,439
- --------------------------------------------------------------------------------------------
Total Netherlands 794,860
- --------------------------------------------------------------------------------------------
NEW ZEALAND - 0.94%
49,000 Helicopter Line Ltd. (The) (Transportation) 129,686
- --------------------------------------------------------------------------------------------
69,000 Skellerup Group Ltd. (Diversified) 102,351
- --------------------------------------------------------------------------------------------
Total New Zealand 232,037
- --------------------------------------------------------------------------------------------
NORWAY - 0.83%
12,000 Elkjop (Specialty Stores) 203,308
- --------------------------------------------------------------------------------------------
Total Norway 203,308
- --------------------------------------------------------------------------------------------
PANAMA - 0.41%
2,700 Banco Latinoamericano de Exportaciones, S.A. (Banking) 100,238
- --------------------------------------------------------------------------------------------
Total Panama 100,238
- --------------------------------------------------------------------------------------------
PERU - 0.30%
32,100 Cementos Lima S.A. (Building Materials) 74,055
- --------------------------------------------------------------------------------------------
Total Peru 74,055
- --------------------------------------------------------------------------------------------
SINGAPORE - 1.93%
15,000 City Developments Ltd. (a) (Real Estate) 88,355
- --------------------------------------------------------------------------------------------
21,000 Clipsal Industries Ltd. (Electrical Equipment) 109,200
- --------------------------------------------------------------------------------------------
27,000 DBS Land Ltd. (Real Estate) 94,688
- --------------------------------------------------------------------------------------------
14,000 Jurong Engineering Ltd. (Nonresidential Construction) 94,859
- --------------------------------------------------------------------------------------------
8,000 United Overseas Bank Ltd. (Banking 87,709
- --------------------------------------------------------------------------------------------
Total Singapore 474,811
- --------------------------------------------------------------------------------------------
SPAIN - 0.90%
1,330 Azkoyen S.A. (Diversified) 94,397
- --------------------------------------------------------------------------------------------
3,700 Espanol de Carburos Metalicios S.A. (Metals) 126,873
- --------------------------------------------------------------------------------------------
Total Spain 221,270
- --------------------------------------------------------------------------------------------
</TABLE>
FS-9
<PAGE> 103
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWEDEN - 1.71%
13,700 Allgon AB (Electrical Equipment) $308,430
- --------------------------------------------------------------------------------------------
2,700 Autoliv AB (Machinery) (a) 95,306
- --------------------------------------------------------------------------------------------
300 Telefonaktiebolaget L.M. Ericsson - ADR (Telecommunications
Services) 18,281
- --------------------------------------------------------------------------------------------
Total Sweden 422,017
- --------------------------------------------------------------------------------------------
SWITZERLAND - 0.61%
130 Georg Fischer A.G. (a) (Machinery) 150,259
- --------------------------------------------------------------------------------------------
Total Switzerland 150,259
- --------------------------------------------------------------------------------------------
THAILAND - 2.40%
7,000 Juldis Development Co., Ltd. (a) (Real Estate) 37,355
- --------------------------------------------------------------------------------------------
48,000 Krung Thai Bank Ltd. (Banking) 163,704
- --------------------------------------------------------------------------------------------
7,500 Phatra Thanakit Co., Ltd. (Financial-Multiple Industry) 77,037
- --------------------------------------------------------------------------------------------
1,700 Siam City Cement Co., Ltd. (Building Materials) 98,086
- --------------------------------------------------------------------------------------------
11,000 TPI Polene Co., Ltd. (Building Materials) 119,167
- --------------------------------------------------------------------------------------------
1,000 United Communications Industry - Foreign shares
(Telecommunications Equipment) 29,370
- --------------------------------------------------------------------------------------------
2,200 United Communications Industry - Local shares
(Telecommunications Equipment) 64,968
- --------------------------------------------------------------------------------------------
Total Thailand 589,687
- --------------------------------------------------------------------------------------------
UNITED KINGDOM - 5.88%
13,200 Ashtead Group PLC (Diversified) 98,234
- --------------------------------------------------------------------------------------------
26,800 Austin Reed Group PLC (Specialty Stores) 105,640
- --------------------------------------------------------------------------------------------
53,600 Bluebird Toys PLC (Toys & Sporting Goods) 206,019
- --------------------------------------------------------------------------------------------
26,500 Capital Radio PLC (Leisure Time) 147,368
- --------------------------------------------------------------------------------------------
2,800 Danka Business Systems PLC - ADR (Wholesale-Durable Goods) 55,125
- --------------------------------------------------------------------------------------------
6,200 Greggs PLC (Wholesale-Nondurable Goods) 105,463
- --------------------------------------------------------------------------------------------
47,000 Kwik-Fit Holdings PLC (Consumer Services-Miscellaneous) 122,228
- --------------------------------------------------------------------------------------------
21,700 Logica PLC (Computer Software & Services) 105,057
- --------------------------------------------------------------------------------------------
18,300 Sheffield Insulations Group PLC (a) (Building Materials) 72,733
- --------------------------------------------------------------------------------------------
17,600 Spirax Sarco Engineering PLC (Diversified) 128,963
- --------------------------------------------------------------------------------------------
173,700 Taylor Nelson AGB PLC (Business Services-Miscellaneous) 106,538
- --------------------------------------------------------------------------------------------
17,700 Unitech PLC (Electronics) 104,063
- --------------------------------------------------------------------------------------------
Total United Kingdom 1,357,431
- --------------------------------------------------------------------------------------------
Total Foreign Stocks 12,384,603
- --------------------------------------------------------------------------------------------
WARRANTS-0.07%
THAILAND - 0.07%
2,000 Phatra Thanakit Co., Ltd., expiring 11/07/94
(Financial-Multiple Industry) 16,691
- --------------------------------------------------------------------------------------------
Total Warrants 16,691
- --------------------------------------------------------------------------------------------
Total Investments, excluding repurchase agreements 18,791,778
- --------------------------------------------------------------------------------------------
</TABLE>
FS-10
<PAGE> 104
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
Repurchase Agreements - 21.58% (b)
$4,330,135 Goldman, Sachs & Co., 4.78%, 11/01/94(c) $4,330,135
- --------------------------------------------------------------------------------------------
980,000 Prudential-Bache Securities, Inc., 4.85% (d) 980,000
- --------------------------------------------------------------------------------------------
Total Repurchase Agreements 5,310,135
- --------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 97.93% 24,101,913
- --------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 2.07% 509,024
- --------------------------------------------------------------------------------------------
NET ASSETS - 100.00% $ 24,610,937
============================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by
the Fund upon entering into the repurchase agreement. The collateral
is marked to market to market daily to ensure its market value as
being 102 percent of the sales price of the repurchase agreement.
(c) Joint repurchase agreement entered into 10/31/94 with a maturing value
of $114,492,117. Collateralized by $119,992,000 U.S. Treasury
obligations, 5.125% to 8.00% due 06/30/98 to 11/15/24. The aggregate
market value of the collateral at 10/31/94 was $116,879,377. The Fund's
pro-rata interest in the collateral at 10/31/94 was $4,421,009.
(d) Joint open repurchase agreement entered into 10/12/94; however, either
party may terminate the agreement as of any business day not less than
one business day after receipt of written notice from the terminating
party. Interest rates are redetermined daily. Collateralized by
$384,589,940 Federal National Mortgage Association obligations, 0.00%
to 10.50% due 02/01/17 to 10/01/24 and $29,000 U. S. Treasury Notes,
8.00% due 05/15/01. The aggregate market value of the collateral at
10/31/94 was $96,900,386. The Fund's pro-rata interest in the
collateral at 10/31/94 was $1,024,792.
See Notes to Financial Statements.
FS-11
<PAGE> 105
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at market value (cost $18,324,610) $18,791,778
- -----------------------------------------------------------------------------------------------------------
Repurchase agreements (cost $5,310,135) 5,310,135
- -----------------------------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $2,147,354) 2,154,998
- -----------------------------------------------------------------------------------------------------------
Receivables for:
Investments sold 65,249
- -----------------------------------------------------------------------------------------------------------
Foreign currency sold 1,221,768
- -----------------------------------------------------------------------------------------------------------
Capital stock sold 3,075,111
- -----------------------------------------------------------------------------------------------------------
Dividends and interest 11,370
- -----------------------------------------------------------------------------------------------------------
Reimbursement from advisor 16,300
- -----------------------------------------------------------------------------------------------------------
Other assets 29,120
- -----------------------------------------------------------------------------------------------------------
Total assets 30,675,829
- -----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 4,795,808
- -----------------------------------------------------------------------------------------------------------
Foreign currency purchased 1,224,291
- -----------------------------------------------------------------------------------------------------------
Capital stock reacquired 3,625
- -----------------------------------------------------------------------------------------------------------
Accrued administrative service fees 675
- -----------------------------------------------------------------------------------------------------------
Accrued distribution fees 8,344
- -----------------------------------------------------------------------------------------------------------
Accrued operating expenses 32,149
- -----------------------------------------------------------------------------------------------------------
Total liabilities 6,064,892
- -----------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $24,610,937
===========================================================================================================
NET ASSETS:
Class A $18,409,525
===========================================================================================================
Class B $6,201,412
===========================================================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- -----------------------------------------------------------------------------------------------------------
Outstanding 1,802,086
===========================================================================================================
Class B:
Authorized 200,000,000
- -----------------------------------------------------------------------------------------------------------
Outstanding 607,259
===========================================================================================================
Class A:
- -----------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $10.22
===========================================================================================================
Offering price per share:
(Net asset value of $10.22/95.25%) $10.73
===========================================================================================================
Class B:
Net asset value and offering price per share $10.21
===========================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-12
<PAGE> 106
STATEMENT OF OPERATIONS
For the period September 15, 1994 (date operations commenced) through
October 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $1,116 foreign withholding tax) $ 12,818
- ---------------------------------------------------------------------------------------------------------
Interest 21,605
- ---------------------------------------------------------------------------------------------------------
Total investment income 34,423
- ---------------------------------------------------------------------------------------------------------
EXPENSES:
Administrative service fees 3,939
- ---------------------------------------------------------------------------------------------------------
Directors' fees 34
- ---------------------------------------------------------------------------------------------------------
Distribution fees-Class A 5,846
- ---------------------------------------------------------------------------------------------------------
Distribution fees-Class B 3,365
- ---------------------------------------------------------------------------------------------------------
Custodian fees 26,824
- ---------------------------------------------------------------------------------------------------------
Transfer agent fees 792
- ---------------------------------------------------------------------------------------------------------
Filing fees 5,467
- ---------------------------------------------------------------------------------------------------------
Other 2,175
- ---------------------------------------------------------------------------------------------------------
Total expenses 48,442
- ---------------------------------------------------------------------------------------------------------
Less expenses assumed by advisor (16,300)
- ---------------------------------------------------------------------------------------------------------
Net expenses 32,142
- ---------------------------------------------------------------------------------------------------------
Net investment income 2,281
- ---------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) on sales of:
Investment securities (23,048)
- ---------------------------------------------------------------------------------------------------------
Foreign currencies (22,446)
- ---------------------------------------------------------------------------------------------------------
(45,494)
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation of:
Investment securities 467,168
- ---------------------------------------------------------------------------------------------------------
Foreign currencies 2,837
- ---------------------------------------------------------------------------------------------------------
470,005
- ---------------------------------------------------------------------------------------------------------
Net gain on investment securities and foreign currencies 424,511
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $426,792
=========================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-13
<PAGE> 107
STATEMENT OF CHANGES IN NET ASSETS
For the period September 15, 1994 (date operations commenced)
through October 31, 1994
<TABLE>
<S> <C>
OPERATIONS:
Net investment income $ 2,281
- ---------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities and foreign currencies (45,494)
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 470,005
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 426,792
- ---------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 17,086,103
- ---------------------------------------------------------------------------------------------------------
Class B 6,098,042
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets 23,610,937
- ---------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,000,000
- ---------------------------------------------------------------------------------------------------------
End of period $24,610,937
=========================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $24,184,145
- ---------------------------------------------------------------------------------------------------------
Undistributed net investment income 2,281
- ---------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of investment securities and foreign
currencies (45,494)
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 470,005
- ---------------------------------------------------------------------------------------------------------
$24,610,937
=========================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-14
<PAGE> 108
NOTES TO FINANCIAL STATEMENTS
October 31, 1994
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Aggressive Growth Fund (the "Fund") is an investment portfolio of
AIM International Funds, Inc. (the "Company"). The Company is a Maryland
corporation registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company consisting of
four separate series portfolios: AIM Global Aggressive Growth Fund, AIM Global
Growth Fund, AIM Global Income Fund and AIM International Equity Fund. The Fund
currently offers two different classes of shares: the Class A shares and the
Class B shares. Class A shares are sold with a front-end sales charge. Class B
shares are sold with a contingent deferred sales charge. 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 following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations - Investment securities are stated at the last sales
price on the exchange on which the securities are traded or, lacking any
sales, at the mean between the closing bid and asked prices on the day of
valuation. Securities traded in the over-the-counter market are valued at
the mean between the closing bid and asked prices on valuation date.
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 Company's officers in a manner specifically authorized by the Board of
Directors. Investments with maturities of 60 days or less are valued on the
basis of amortized cost which approximates market value. Generally, trading
in foreign securities is substantially completed each day at various times
prior to the close of te New York Stock Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these
securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors.
B. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions.
C. Foreign Currency Contracts - A forward currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a forward contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a forward contract for the
purchase or sale of a security denominated in a foreign currency in order
to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
D. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement
date and is recorded on an accrual basis. Dividend income and distributions
to shareholders are recorded on the ex-dividend date.
E. 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.
FS-15
<PAGE> 109
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, the
Fund pays an advisory fee to AIM at the annual rate of 0.90% of the first $1
billion of the Fund's average daily net assets, plus 0.85% of the Fund's
average daily net assets in excess of $1 billion. During the period September
15, 1994 (date operations commenced) through October 31, 1994, AIM waived fees
of $13,551 and assumed expenses of $13,000 and $3,300 for the Class A shares
and Class B shares, respectively. Under the terms of the master investment
advisory agreement, AIM will, if necessary, reduce its fee or make payments to
the Fund to the extent necessary to satisfy any expense limitations imposed by
the securities laws or regulations thereunder of any state in which the Fund's
shares are qualified for sale.
The Company has entered into a master administrative services agreement with
AIM with respect to the Fund. This agreement provides that AIM may perform, or
arrange for the performance of, certain accounting, shareholder servicing and
other administrative services to the Fund which are not required to be
performed by AIM under the master investment advisory agreement. For such
services, AIM is entitled to receive from the Fund reimbursement of AIM's cost
or such reasonable compensation as is approved by the Company's Board of
Directors. During the period September 15, 1994 (date operations commenced)
through October 31, 1994, AIM was reimbursed $3,939 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Company has adopted
Plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's
Class A shares (the "Class A Plan") and with respect to the Fund's Class B
shares (the "Class B Plan") (collectively the "Plans"). The Fund, pursuant to
the Class A Plan, will pay AIM Distributors an annual rate of 0.50% of the
average daily net assets attributable to the Class A shares. The Class A Plan
is designed to compensate AIM Distributors for certain promotional and other
sales related costs and to implement a program which provides periodic payments
to selected dealers and financial institutions, in amounts of up to 0.25% of
the average net assets of the Class A shares attributable to the customers of
such dealers or financial institutions, who furnish continuing personal
shareholder services to their customers who purchase and own Class A shares of
the Fund. The Fund, pursuant to the Class B Plan, will pay AIM Distributors at
an annual rate of 1.00% of the average daily net assets attributable to the
Class B shares. Of this amount, the Fund may pay a service fee of 0.25% of the
average daily net assets of the Class B shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own Class B shares of the Fund. Any amounts
not paid as a service fee under such Plans would constitute an asset-based
sales charge. The Plans also impose a cap on the total sales charges, including
asset-based sales charges, that may be paid by the respective classes. During
the period September 15, 1994 (date operations commenced) through October 31,
1994, the Class A shares and the Class B shares paid AIM Distributors $5,846
and $3,365, respectively, as compensation under the Plans.
AIM Distributors received commissions of $43,586 from the sales of the Class
A shares of the Fund during the period September 15, 1994 (date operations
commenced) through October 31, 1994. Such commissions are not an expense of the
Fund. They are deducted from, and are not included in, the proceeds from sales
of Class A shares. During the period September 15, 1994 (date operations
commenced) through October 31, 1994, AIM Distributors received commissions of
$79 in contingent deferred sales charges imposed on redemptions of Class B
shares. Certain officers and directors of the Company are officers and
directors of AIM and AIM Distributors.
During the period September 15, 1994 (date operations commenced) through
October 31, 1994, the Fund incurred legal fees of $467 for services rendered by
the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as counsel to
the Company's directors. A member of that firm is a director of the Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest directors'
fees, if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
FS-16
<PAGE> 110
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the period September 15, 1994
(date operations commenced) through October 31, 1994 was $18,505,776 and
$158,118, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 754,863
- -----------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (287,695)
- -----------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 467,168
=============================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 5-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the period September 15,
1994 (date operations commenced) through October 31, 1994 were as follows:
<TABLE>
<CAPTION>
1994
Shares Amount
------ ------
<S> <C> <C>
Sold:
Class A 1,716,450 $17,229,786
- ------------------------------------------------------------- ---------------
Class B 607,443 6,099,880
- ------------------------------------------------------------- ---------------
Reacquired:
Class A (14,364) (143,683)
- ------------------------------------------------------------- ---------------
Class B (184) (1,838)
- ------------------------------------------------------------- ---------------
2,309,345 $23,184,145
============================================================= ===============
</TABLE>
FS-17
<PAGE> 111
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share and
Class B share outstanding during the period September 15, 1994 (dates
operations commenced) through October 31, 1994.
<TABLE>
<CAPTION>
Class A Class B
------- -------
1994 1994
------- ------
<S> <C> <C>
Net asset value, beginning of period $10.00 $10.00
- -------------------------------------------------------------------------------------------- -------------
Income from investment operations:
Net investment income - -
- -------------------------------------------------------------------------------------------- -------------
Net gains on securities (both realized and unrealized) 0.22 0.21
- -------------------------------------------------------------------------------------------- -------------
Total from investment operations 0.22 0.21
- -------------------------------------------------------------------------------------------- -------------
Net asset value, end of period $10.22 $10.21
============================================================================================ =============
Total return(a) 2.20% 2.10%
============================================================================================ =============
Ratios/supplemental data:
Net assets, end of period (000s omitted) $18,410 $6,201
============================================================================================ =============
Ratio of expenses to average net assets 2.02%(b) 2.54%(c)
============================================================================================ =============
Ratio of net investment income (loss) to average net assets 0.27%(b) (0.25)%(c)
============================================================================================ =============
Portfolio turnover rate 2% 2%
============================================================================================ =============
</TABLE>
(a) Does not include sales charges and for periods less than one year, total
returns are not annualized.
(b) Ratios are annualized and based on average net assets of $9,080,196.
Annualized ratios of expenses and net investment income (loss) to average
net assets before fee waivers and expense reimbursements are 4.03% and
(1.74)%, respectively.
(c) Ratios are annualized and based on average net assets of $2,612,907.
Annualized ratios of expenses and net investment income (loss) to average
net assets before fee waivers and expense reimbursements are 4.43% and
(2.14)%, respectively.
FS-18
<PAGE> 112
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of the AIM
Global Growth Fund (a portfolio of AIM International Funds, Inc.), including
the schedule of investments, as of October 31, 1994, and the related statements
of operations, changes in net assets and financial highlights for the period
September 15, 1994 (date operations commenced) through October 31, 1994. 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 audit.
We conducted our audit 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
October 31, 1994, by correspondence with the custodian and brokers. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Global Growth Fund as of October 31, 1994, the results of its operations,
changes in its net assets and the financial highlights for the period September
15, 1994 (date operations commenced) through October 31, 1994, in conformity
with generally accepted accounting principles.
/S/ KPMG PEAT MARWICK LLP
Houston, Texas KPMG Peat Marwick LLP
December 9, 1994
FS-19
<PAGE> 113
SCHEDULE OF INVESTMENTS
October 31, 1994
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 30.45%
BASIC INDUSTRY - 1.16%
CHEMICALS - 1.16%
2,200 Praxair, Inc. $50,875
- ---------------------------------------------------------------------------------------
Total Basic Industry 50,875
- ---------------------------------------------------------------------------------------
BUSINESS SERVICES - 2.97%
COMPUTER SOFTWARE & SERVICES - 2.97%
900 Adobe Systems, Inc. 32,568
- ---------------------------------------------------------------------------------------
1,200 Computer Associates International, Inc. 59,550
- ---------------------------------------------------------------------------------------
600 Microsoft Corp. (a) 37,838
- ---------------------------------------------------------------------------------------
Total Business Services 129,956
- ---------------------------------------------------------------------------------------
CAPITAL GOODS - 9.76%
AEROSPACE/DEFENSE - 0.17%
100 TRW Inc. 7,125
- ---------------------------------------------------------------------------------------
COMPUTER & OFFICE EQUIPMENT - 3.44%
700 Cabletron Systems, Inc. (a) 35,176
- ---------------------------------------------------------------------------------------
900 COMPAQ Computer Corp. (a) 36,113
- ---------------------------------------------------------------------------------------
1,200 EMC Corp. (a) 25,800
- ---------------------------------------------------------------------------------------
1,000 Silicon Graphics Inc. (a) 30,375
- ---------------------------------------------------------------------------------------
700 Sun Microsystems, Inc. (a) 23,012
- ---------------------------------------------------------------------------------------
150,476
- ---------------------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS/COMPONENTS) - 4.44%
1,200 Altera Corp. (a) 47,325
- ---------------------------------------------------------------------------------------
400 Applied Materials, Inc. (a) 20,750
- ---------------------------------------------------------------------------------------
1,600 Gateway 2000 Inc.(a) 37,600
- ---------------------------------------------------------------------------------------
400 Motorola, Inc. 23,550
- ---------------------------------------------------------------------------------------
500 Novellus Systems, Inc. (a) 27,312
- ---------------------------------------------------------------------------------------
500 Texas Instruments Inc. 37,438
- ---------------------------------------------------------------------------------------
193,975
- ---------------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT - 0.35%
500 DSC Communications Corp. (a) 15,406
- ---------------------------------------------------------------------------------------
MULTIPLE INDUSTRY - 1.36%
700 Philips Electronics N.V. - New York Shares 22,925
- ---------------------------------------------------------------------------------------
800 Thermo Electron Corp. (a) 36,500
- ---------------------------------------------------------------------------------------
59,425
- ---------------------------------------------------------------------------------------
Total Capital Goods 426,407
- ---------------------------------------------------------------------------------------
</TABLE>
FS-20
<PAGE> 114
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER DURABLES - 1.30%
HOUSEHOLD APPLIANCES/FURNISHINGS - 0.82%
800 Premark International Inc. $35,800
- ---------------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES - 0.48%
400 Medtronic, Inc. 20,850
- ---------------------------------------------------------------------------------------
Total Consumer Durables 56,650
- ---------------------------------------------------------------------------------------
CONSUMER NONDURABLES - 4.46%
DRUGS - 1.48%
500 Amgen, Inc. (a) 27,906
- ---------------------------------------------------------------------------------------
500 Pfizer, Inc. 37,063
- ---------------------------------------------------------------------------------------
64,969
- ---------------------------------------------------------------------------------------
TOBACCO - 0.67%
1,100 UST Inc. 29,150
- ---------------------------------------------------------------------------------------
MULTIPLE INDUSTRY - 2.31%
500 Johnson & Johnson 27,312
- ---------------------------------------------------------------------------------------
1,200 Philip Morris Companies, Inc. 73,500
- ---------------------------------------------------------------------------------------
100,812
- ---------------------------------------------------------------------------------------
Total Consumer Nondurables 194,931
- ---------------------------------------------------------------------------------------
CONSUMER SERVICES - 3.75%
BROADCAST MEDIA - 0.57%
300 Capital Cities/ABC Inc. 24,937
- ---------------------------------------------------------------------------------------
HEALTH CARE - 3.18%
700 Columbia Healthcare Corp. 29,138
- ---------------------------------------------------------------------------------------
200 Foundation Health Corp (a) 6,550
- ---------------------------------------------------------------------------------------
1,000 Humana Inc. (a) 24,375
- ---------------------------------------------------------------------------------------
800 Mid Atlantic Medical Services, Inc. (a) 18,500
- ---------------------------------------------------------------------------------------
500 U.S. Healthcare, Inc. 23,562
- ---------------------------------------------------------------------------------------
700 United Healthcare Corp. 36,925
- ---------------------------------------------------------------------------------------
139,050
- ---------------------------------------------------------------------------------------
Total Consumer Services 163,987
- ---------------------------------------------------------------------------------------
FINANCIAL - 2.67%
BANKING - 1.42%
600 Bank of Boston Corp. 17,250
- ---------------------------------------------------------------------------------------
500 First Interstate Bancorp 40,000
- ---------------------------------------------------------------------------------------
100 NationsBank Corp. 4,950
- ---------------------------------------------------------------------------------------
62,200
- ---------------------------------------------------------------------------------------
PERSONAL CREDIT - 0.55%
900 MBNA Corp. 24,075
- ---------------------------------------------------------------------------------------
</TABLE>
FS-21
<PAGE> 115
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MISCELLANEOUS - 0.70%
400 Federal National Mortgage Association $30,400
- ---------------------------------------------------------------------------------------
Total Financial 116,675
- ---------------------------------------------------------------------------------------
RETAIL - 2.65%
SPECIALTY STORES - 2.65%
800 Circuit City Stores, Inc. 20,400
- ---------------------------------------------------------------------------------------
200 Home Depot, Inc. (The) 9,100
- ---------------------------------------------------------------------------------------
1,300 Lowe's Companies, Inc. 51,675
- ---------------------------------------------------------------------------------------
700 Nordstrom, Inc. 34,563
- ---------------------------------------------------------------------------------------
Total Retail 115,738
- ---------------------------------------------------------------------------------------
UTILITIES - 1.22%
TELEPHONE - 1.22%
300 American Telephone & Telegraph Co. 16,500
- ---------------------------------------------------------------------------------------
1,200 Rogers Cantel Mobile Communications, Inc. - Class B (a) 36,675
- ---------------------------------------------------------------------------------------
Total Utilities 53,175
- ---------------------------------------------------------------------------------------
WHOLESALE - 0.51%
NONDURABLE GOODS - 0.51%
900 Office Depot, Inc. (a) 22,275
- ---------------------------------------------------------------------------------------
Total Wholesale 22,275
- ---------------------------------------------------------------------------------------
Total Common Stocks 1,330,669
- ---------------------------------------------------------------------------------------
FOREIGN STOCKS - 50.70%
AUSTRALIA - 3.47%
2,000 Broken Hill Proprietary Co. Ltd. (Diversified) 30,653
- ---------------------------------------------------------------------------------------
4,000 Coca-Cola Amatil Ltd. (Beverages) 25,247
- ---------------------------------------------------------------------------------------
4,400 ICI Australia Ltd. (Chemicals) 37,902
- ---------------------------------------------------------------------------------------
3,000 National Australia Bank Ltd. (Banking) 23,702
- ---------------------------------------------------------------------------------------
700 News Corp. Ltd. (The) (Consumer Services-Miscellaneous) 34,212
- ---------------------------------------------------------------------------------------
Total Australia 151,716
- ---------------------------------------------------------------------------------------
CANADA - 0.61%
1,000 Alcan Aluminum Ltd. (Basic Industry - Multiple Industry) 26,800
- ---------------------------------------------------------------------------------------
Total Canada 26,800
- ---------------------------------------------------------------------------------------
FINLAND - 0.69%
200 Nokia Corp. (Telecommunications Equipment) 30,171
- ---------------------------------------------------------------------------------------
Total Finland 30,171
- ---------------------------------------------------------------------------------------
FRANCE - 5.43%
180 Compagnie De Saint-Gobain (a) (Building Materials) 22,841
- ---------------------------------------------------------------------------------------
260 Docks de France, S.A. (Food Stores) 36,075
- ---------------------------------------------------------------------------------------
20 Legrand S.A. (Electrical Equipment) 26,817
- ---------------------------------------------------------------------------------------
</TABLE>
FS-22
<PAGE> 116
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE - continued
120 L'Oreal S.A. (Cosmetics/Toiletries) $26,071
- ---------------------------------------------------------------------------------------
130 LVMH Moet Hennessy Louis Vuitton (Beverages) 20,968
- ---------------------------------------------------------------------------------------
150 Peugeot S.A. (a) (Automobile) 22,474
- ---------------------------------------------------------------------------------------
150 Promodes S.A. (Food Stores) 29,236
- ---------------------------------------------------------------------------------------
150 Redoute (La) (Consumer Nondurables-Miscellaneous) 27,079
- ---------------------------------------------------------------------------------------
230 Roussel Uclaf (Drugs) 25,700
- ---------------------------------------------------------------------------------------
Total France 237,261
- ---------------------------------------------------------------------------------------
GERMANY - 2.39%
60 Buderus AG (Automobile) 29,731
- ---------------------------------------------------------------------------------------
85 Mannesmann A.G. (Machinery) 22,727
- ---------------------------------------------------------------------------------------
55 Sap A.G. (Computer Software & Services) 31,789
- ---------------------------------------------------------------------------------------
60 Veba A.G. (Electric Services) 20,113
- ---------------------------------------------------------------------------------------
Total Germany 104,360
- ---------------------------------------------------------------------------------------
HONG KONG - 3.27%
5,000 Cheung Kong Holdings Ltd. (Real Estate) 24,070
- ---------------------------------------------------------------------------------------
5,000 Guoco Group Ltd. (Financial - Multiple Industry) 23,617
- ---------------------------------------------------------------------------------------
6,000 Hutchison Whampoa Ltd. (Diversified) 27,719
- ---------------------------------------------------------------------------------------
4,000 Sun Hung Kai Properties Ltd. (Real Estate) 30,540
- ---------------------------------------------------------------------------------------
8,000 Television Broadcasts Ltd. (Broadcast Media) 36,959
- ---------------------------------------------------------------------------------------
Total Hong Kong 142,905
- ---------------------------------------------------------------------------------------
INDONESIA - 0.73%
5,000 PT Hanjaya Mandala Sampoerna (Tobacco) 24,181
- ---------------------------------------------------------------------------------------
200 PT Indostat (Telecommunications Services) 7,850
- ---------------------------------------------------------------------------------------
Total Indonesia 32,031
- ---------------------------------------------------------------------------------------
ITALY - 1.07%
5,200 Fiat S.P.A. (Automobile) 21,247
- ---------------------------------------------------------------------------------------
9,200 Societa Italiana per L Esercizio delle
Telecomunicazioni, P.A. (Telephone) 25,260
- ---------------------------------------------------------------------------------------
Total Italy 46,507
- ---------------------------------------------------------------------------------------
JAPAN - 10.15%
200 Autobacs Seven (Specialty Stores) 25,190
- ---------------------------------------------------------------------------------------
2,000 Bridgestone Corp (Tires & Rubber) 33,036
- ---------------------------------------------------------------------------------------
2,000 Canon, Inc. (Computer & Office Equipment) 37,165
- ---------------------------------------------------------------------------------------
1,000 Fanuc Ltd. (Electronics) 48,521
- ---------------------------------------------------------------------------------------
5,000 Hitachi, Ltd. (Electronics) 52,134
- ---------------------------------------------------------------------------------------
2,000 NGK Spark Plug Co., Ltd. (Machinery) 27,667
- ---------------------------------------------------------------------------------------
120 Nippon Television Network Corp. (Broadcasting) 30,723
- ---------------------------------------------------------------------------------------
3,000 Ricoh Co., Ltd. (Computer & Office Equipment) 29,887
- ---------------------------------------------------------------------------------------
1,000 Rohm Co., Ltd. (Electronics) 44,082
- ---------------------------------------------------------------------------------------
2,000 Sharp Corp. (Electronics) 37,372
- ---------------------------------------------------------------------------------------
</TABLE>
FS-23
<PAGE> 117
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN - CONTINUED
1,000 Tokyo Electron, Ltd. (Electronics) $33,449
- ---------------------------------------------------------------------------------------
2,000 Toyota Motor Corp. (Automobile) 44,185
- ---------------------------------------------------------------------------------------
Total Japan 443,411
- ---------------------------------------------------------------------------------------
MALAYSIA - 2.27%
3,000 Genting Berhad (Entertainment) 27,592
- ---------------------------------------------------------------------------------------
9,000 Land & General Berhad (Paper & Forest Products) 44,384
- ---------------------------------------------------------------------------------------
5,000 United Engineers (Malaysia) Berhad (Machinery) 27,006
- ---------------------------------------------------------------------------------------
Total Malaysia 98,982
- ---------------------------------------------------------------------------------------
NETHERLANDS - 4.19%
200 Akzo N.V. (Chemicals) 25,275
- ---------------------------------------------------------------------------------------
350 DSM N.V. (Chemicals) 30,332
- ---------------------------------------------------------------------------------------
2,750 Elsevier N.V. (Publishing) 28,076
- ---------------------------------------------------------------------------------------
480 Hoogovens + Staalfabr N.V. (Steel) 22,394
- ---------------------------------------------------------------------------------------
570 PolyGram N.V. (Entertainment) 25,375
- ---------------------------------------------------------------------------------------
200 Ver Ned Uitgevuer Bezit (Publishing) 21,369
- ---------------------------------------------------------------------------------------
420 Wolters Kluwer N.V. (Publishing) 30,390
- ---------------------------------------------------------------------------------------
Total Netherlands 183,211
- ---------------------------------------------------------------------------------------
SINGAPORE - 1.63%
3,000 Keppel Corp. Ltd. (Diversified) 27,579
- ---------------------------------------------------------------------------------------
4,000 United OverSeas Bank Ltd. (Banking) 43,854
- ---------------------------------------------------------------------------------------
Total Singapore 71,433
- ---------------------------------------------------------------------------------------
SPAIN - 1.40%
280 Acerinox, S.A. (Steel) 30,983
- ---------------------------------------------------------------------------------------
50 Banco de Santander SA (Banking) 2,032
- ---------------------------------------------------------------------------------------
615 Empresa Nacional de Electricidad, S.A. (Telephone) 28,183
- ---------------------------------------------------------------------------------------
Total Spain 61,198
- ---------------------------------------------------------------------------------------
SWEDEN - 3.43%
490 Aktiebolaget Electrolux (Household Appliances/Furnishings) 25,433
- ---------------------------------------------------------------------------------------
1,050 Astra AB (Drugs) 28,016
- ---------------------------------------------------------------------------------------
550 Hennes and Mauritz AB (Specialty Stores) 30,421
- ---------------------------------------------------------------------------------------
1,400 Sandvik AB (Metals) 23,736
- ---------------------------------------------------------------------------------------
200 Telefonaktiebolaget L.M. Ericsson - ADR (Telecommunications
Services) 12,188
- ---------------------------------------------------------------------------------------
1,520 Volvo AB (Automobile) 29,995
- ---------------------------------------------------------------------------------------
Total Sweden 149,789
- ---------------------------------------------------------------------------------------
SWITZERLAND - 0.99%
20 BBC Brown Boveri Ltd. (Engineering) 17,187
- ---------------------------------------------------------------------------------------
45 Ciba-Geigy Ltd. (Chemicals) 26,257
- ---------------------------------------------------------------------------------------
Total Switzerland 43,444
- ---------------------------------------------------------------------------------------
</TABLE>
FS-24
<PAGE> 118
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
THAILAND - 0.94%
2,000 Land & House Co. Ltd. (Residential Construction) $41,087
=======================================================================================
Total Thailand 41,087
=======================================================================================
UNITED KINGDOM - 8.04%
2,200 Barclays Bank PLC (Financial-Multiple Industry) 20,942
- ---------------------------------------------------------------------------------------
2,700 BOC Group (Chemicals) 29,720
- ---------------------------------------------------------------------------------------
4,900 BPB Industries (Building Materials) 24,043
- ---------------------------------------------------------------------------------------
3,600 British Petroleum (Oil & Gas) 25,613
- ---------------------------------------------------------------------------------------
4,600 Cable & Wireless Public Limited Co. (Telephone) 31,600
- ---------------------------------------------------------------------------------------
2,900 Granada Group PLC (Broadcast Media) 24,617
- ---------------------------------------------------------------------------------------
11,600 Morrison (Wm.) Supermarkets PLC (Food Stores) 25,221
- ---------------------------------------------------------------------------------------
3,100 Pearson PLC (Diversified) 32,146
- ---------------------------------------------------------------------------------------
2,400 Peninsular and Oriental Steam Navigation Co. (The)
(Transportation) 24,966
- ---------------------------------------------------------------------------------------
3,500 Rank Organisation PLC (Entertainment) 23,184
- ---------------------------------------------------------------------------------------
8,100 Rentokil Group PLC (Business Services-Miscellaneous) 30,206
- ---------------------------------------------------------------------------------------
1,900 Thorn EMI PLC (Entertainment) 30,206
- ---------------------------------------------------------------------------------------
8,300 Vodafone Group PLC (Telephone) 28,746
- ---------------------------------------------------------------------------------------
Total United Kingdom 351,210
- ---------------------------------------------------------------------------------------
Total Foreign Stocks 2,215,516
- ---------------------------------------------------------------------------------------
Total Investments, excluding repurchase
agreements 3,546,185
- ---------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENTS - 20.39% (b)
$890,678 Goldman, Sachs & Co., 4.78%, 11/01/94 (c) 890,678
- ---------------------------------------------------------------------------------------
Total Repurchase Agreements 890,678
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 101.54% 4,436,863
- ---------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (1.54)% (67,119)
- ---------------------------------------------------------------------------------------
NET ASSETS - 100.00% $4,369,744
=======================================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by
the Fund upon entering into the repurchase agreement. The collateral
is marked to market daily to ensure its market value as being 102
percent of the sales price of the repurchase agreement.
(c) Joint repurchase agreement entered into 10/31/94 with a maturing value
of $114,492,117. Collateralized by $119,992,000 U.S. Treasury
obligations, 5.125% to 8.00% due 06/30/98 to 11/15/24. The aggregate
market value of the collateral at 10/31/94 was $116,879,377. The Funds
pro-rata interest in the collateral at 10/31/94 was $909,370.
See Notes to Financial Statements.
FS-25
<PAGE> 119
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at market value (cost $3,425,722) $3,546,185
- ---------------------------------------------------------------------------------------------------
Repurchase agreements (cost $890,678) 890,678
- ---------------------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $495,955) 498,488
- ---------------------------------------------------------------------------------------------------
Receivables for:
Investments sold 72,602
- ---------------------------------------------------------------------------------------------------
Foreign currency sold 99,923
- ---------------------------------------------------------------------------------------------------
Capital stock sold 281,544
- ---------------------------------------------------------------------------------------------------
Dividends and interest 1,093
- ---------------------------------------------------------------------------------------------------
Reimbursement from advisor 9,500
- ---------------------------------------------------------------------------------------------------
Other assets 31,750
- ---------------------------------------------------------------------------------------------------
Total assets 5,431,763
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 950,083
- ---------------------------------------------------------------------------------------------------
Foreign currency purchased 99,998
- ---------------------------------------------------------------------------------------------------
Accrued administrative service fees 2,592
- ---------------------------------------------------------------------------------------------------
Accrued distribution fees 1,593
- ---------------------------------------------------------------------------------------------------
Accrued operating expenses 7,753
- ---------------------------------------------------------------------------------------------------
Total liabilities 1,062,019
- ---------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $4,369,744
===================================================================================================
NET ASSETS:
Class A $3,093,112
===================================================================================================
Class B $1,276,632
===================================================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- ---------------------------------------------------------------------------------------------------
Outstanding 302,370
===================================================================================================
Class B:
Authorized 200,000,000
- ---------------------------------------------------------------------------------------------------
Outstanding 124,910
===================================================================================================
Class A:
Net asset value and redemption price per share $10.23
===================================================================================================
Offering price per share:
(Net asset value of $10.23/95.25%) $10.74
===================================================================================================
Class B:
Net asset value and offering price per share $10.22
===================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-26
<PAGE> 120
STATEMENT OF OPERATIONS
For the period September 15, 1994 (date operations commenced) through
October 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $78 foreign withholding tax) $1,489
- ---------------------------------------------------------------------------------------------------------
Interest 5,287
- ---------------------------------------------------------------------------------------------------------
Total investment income 6,776
- ---------------------------------------------------------------------------------------------------------
EXPENSES:
Administrative service fees 2,686
- ---------------------------------------------------------------------------------------------------------
Directors' fees 40
- ---------------------------------------------------------------------------------------------------------
Distribution fees-Class A 1,217
- ---------------------------------------------------------------------------------------------------------
Distribution fees-Class B 880
- ---------------------------------------------------------------------------------------------------------
Custodian fees 6,040
- ---------------------------------------------------------------------------------------------------------
Transfer agent fees 483
- ---------------------------------------------------------------------------------------------------------
Legal fees 1,945
- ---------------------------------------------------------------------------------------------------------
Filing fees 2,914
- ---------------------------------------------------------------------------------------------------------
Other 244
- ---------------------------------------------------------------------------------------------------------
Total expenses 16,449
- ---------------------------------------------------------------------------------------------------------
Less expenses assumed by advisor (9,500)
- ---------------------------------------------------------------------------------------------------------
Net expenses 6,949
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) (173)
- ---------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) on sales of:
Investment securities (13,027)
- ---------------------------------------------------------------------------------------------------------
Foreign currencies (1,554)
- ---------------------------------------------------------------------------------------------------------
(14,581)
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation of:
Investment securities 120,463
- ---------------------------------------------------------------------------------------------------------
Foreign currencies 2,337
- ---------------------------------------------------------------------------------------------------------
122,800
- ---------------------------------------------------------------------------------------------------------
Net gain on investment securities and foreign currencies 108,219
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $108,046
=========================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-27
<PAGE> 121
STATEMENT OF CHANGES IN NET ASSETS
For the period September 15, 1994 (date operations commenced) through
October 31, 1994
<TABLE>
<S> <C>
OPERATIONS:
Net investment income (loss) $ (173)
- ---------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities and foreign currencies (14,581)
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 122,800
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 108,046
- ---------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 2,020,630
- ---------------------------------------------------------------------------------------------------------
Class B 1,241,068
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets 3,369,744
- ---------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,000,000
- ---------------------------------------------------------------------------------------------------------
End of period $4,369,744
========================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $4,261,698
- ---------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (173)
- ---------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of investment securities and
foreign currencies (14,581)
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 122,800
- ---------------------------------------------------------------------------------------------------------
$4,369,744
=========================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-28
<PAGE> 122
NOTES TO FINANCIAL STATEMENTS
October 31, 1994
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Growth Fund (the "Fund") is an investment portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland
corporation registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company consisting of
four separate series portfolios: AIM Global Growth Fund, AIM Global Aggressive
Growth Fund, AIM Global Income Fund and AIM International Equity Fund. The Fund
currently offers two different classes of shares: the Class A shares and the
Class B shares. Class A shares are sold with a front-end sales charge. Class B
shares are sold with a contingent deferred sales charge. 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 following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations - Investment securities are stated at the last sales
price on the exchange on which the securities are traded or, lacking any
sales, at the mean between the closing bid and asked prices on the day of
valuation. Securities traded in the over-the-counter market are valued at
the mean between the closing bid and asked prices on valuation date.
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 Company's officers in a manner specifically authorized by the Board of
Directors. Investments with maturities of 60 days or less are valued on the
basis of amortized cost which approximates market value. Generally, trading
in foreign securities is substantially completed each day at various times
prior to the close of the New York Stock Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these
securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors.
B. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions.
C. Foreign Currency Contracts - A forward currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a forward contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a forward contract for the
purchase or sale of a security denominated in a foreign currency in order
to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
D. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on an accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
E. 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
FS-29
<PAGE> 123
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.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first
$1 billion of the Fund's average daily net assets, plus 0.80% of the Fund's
average daily net assets in excess of $1 billion. During the period September
15, 1994 (date operations commenced) through October 31, 1994, AIM waived fees
of $2,816 and assumed expenses of $7,000 and $2,500 for the Class A shares and
Class B shares, respectively. Under the terms of the master investment advisory
agreement, AIM will, if necessary, reduce its fee or make payments to the Fund
to the extent necessary to satisfy any expense limitations imposed by the
securities laws or regulations thereunder of any state in which the Fund's
shares are qualified for sale.
The Company has entered into a master administrative services agreement
with AIM with respect to the Fund. This agreement provides that AIM may
perform, or arrange for the performance of, certain accounting, shareholder
servicing and other administrative services to the Fund which are not required
to be performed by AIM under the master investment advisory agreement. For such
services, AIM is entitled to receive from the Fund reimbursement of AIM's cost
or such reasonable compensation as is approved by the Company's Board of
Directors. During the period September 15, 1994 (date operations commenced)
through October 31, 1994, AIM was reimbursed $2,686 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Company has adopted
Plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's
Class A shares (the "Class A Plan") and with respect to the Fund's Class B
shares (the "Class B Plan") (collectively the "Plans"). The Fund, pursuant to
the Class A Plan, will pay AIM Distributors an annual rate of 0.50% of the
average daily net assets attributable to the Class A shares. The Class A Plan
is designed to compensate AIM Distributors for certain promotional and other
sales related costs and to implement a program which provides periodic payments
to selected dealers and financial institutions, in amounts of up to 0.25% of
the average net assets of the Class A shares attributable to the customers of
such dealers or financial institutions, who furnish continuing personal
shareholder services to their customers who purchase and own Class A shares of
the Fund. The Fund, pursuant to the Class B Plan, will pay AIM Distributors at
an annual rate of 1.00% of the average daily net assets attributable to the
Class B shares. Of this amount, the Fund may pay a service fee of 0.25% of the
average daily net assets of the Class B shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own Class B shares of the Fund. Any amounts
not paid as a service fee under such Plans would constitute an asset-based
sales charge. The Plans also impose a cap on the total sales charges, including
asset-based sales charges, that may be paid by the respective classes. During
the period September 15, 1994 (date operations commenced) through October 31,
1994, the Class A shares and the Class B shares paid AIM Distributors $1,217
and $880, respectively, as compensation under the Plans.
AIM Distributors received commissions of $5,382 from the sales of the Class
A shares of the Fund during the period September 15, 1994 (date operations
commenced) through October 31, 1994. Such commissions are not an expense of the
Fund. They are deducted from, and are not included in, the proceeds from sales
of Class A shares. During the period September 15, 1994 (date operations
commenced) through October 31, 1994, AIM Distributors received commissions of
$5 in contingent deferred sales charges imposed on redemptions of Class B
shares. Certain officers and directors of the Company are officers and
directors of AIM and AIM Distributors.
During the period September 15, 1994 (date operations commenced) through
October 31, 1994, the Fund incurred legal fees for services rendered by the law
firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
FS-30
<PAGE> 124
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest directors'
fees, if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the period September 15, 1994
(date operations commenced) through October 31, 1994 was $3,563,924 and
$125,175, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $155,613
- ---------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (35,150)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $120,463
===============================================================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 5-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the period September 15,
1994 (date operations commenced) through October 31, 1994 were as follows:
<TABLE>
<CAPTION>
1994
Shares Amount
<S> <C> <C>
Sold:
Class A 211,509 $2,109,618
- ---------------------------------------------------------------------------------------------- ----------------
Class B 131,203 1,303,950
- ---------------------------------------------------------------------------------------------- ----------------
Reacquired:
Class A (9,139) (88,988)
- ---------------------------------------------------------------------------------------------- ----------------
Class B (6,293) (62,882)
- ---------------------------------------------------------------------------------------------- ----------------
327,280 $3,261,698
============================================================================================== ================
</TABLE>
FS-31
<PAGE> 125
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share and
Class B share outstanding during the period September 15, 1994 (dates
operations commenced) through October 31, 1994.
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
1994 1994
---- ----
<S> <C> <C>
Net asset value, beginning of period $10.00 $10.00
- ------------------------------------------------------------------------------------------- ----------------
Income from investment operations:
Net investment income (loss) - -
- ------------------------------------------------------------------------------------------- ----------------
Net gains (losses) on securities (both realized and unrealized) 0.23 0.22
- ------------------------------------------------------------------------------------------- ----------------
Total from investment operations 0.23 0.22
- ------------------------------------------------------------------------------------------- ----------------
Net asset value, end of period $10.23 $10.22
=========================================================================================== ================
Total return (a) 2.30% 2.20%
=========================================================================================== ================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,093 $1,277
=========================================================================================== ================
Ratio of expenses to average net assets 1.95%(b) 2.51%(c)
=========================================================================================== ================
Ratio of net investment income (loss) to average net assets 0.10%(b) (0.47)%(c)
=========================================================================================== ================
Portfolio turnover rate 6% 6%
=========================================================================================== ================
</TABLE>
(a) Does not include sales charges and for periods less than one year, total
returns are not annualized.
(b) Ratios are annualized and based on average net assets of $1,890,074.
Annualized ratios of expenses and net investment income (loss) to average
net assets before fee waivers and expense reimbursements are 5.67% and
(3.63)%, respectively.
(c) Ratios are annualized and based on average net assets of $683,047.
Annualized ratios of expenses and net investment income (loss) to average
net assets before fee waivers and expense reimbursements are 6.20% and
(4.16)%, respectively.
FS-32
<PAGE> 126
INDEPENDENT AUDITORS' REPORT
The Board Of Directors And Shareholders Of
Aim International Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of the
AIM Global Income Fund (a portfolio of AIM International Funds, Inc.),
including the schedule of investments, as of October 31, 1994, and the related
statements of operations, changes in net assets and financial highlights for
the period September 15, 1994 (date operations commenced) through October 31,
1994. 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
audit.
We conducted our audit 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
October 31, 1994, by correspondence with the custodian and brokers. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Global Income Fund as of October 31, 1994, the results of its operations,
changes in its net assets and the financial highlights for the period September
15, 1994 (date operations commenced) through October 31, 1994, in conformity
with generally accepted accounting principles.
/s/KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
December 9, 1994
FS-33
<PAGE> 127
SCHEDULE OF INVESTMENTS
October 31, 1994
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
-------- ------ -----
<S> <C> <C> <C>
DOMESTIC NON-CONVERTIBLE BONDS
AND NOTES-23.40%
BASIC INDUSTRY-1.70%
STEEL-1.70%
GS Technologies Operating Corp., Gtd. Sr. Note, 12.00% 09/01/04 $50,000 $51,250
- -------------------------------------------------------------------------------------------------------------------------
Total Basic Industry 51,250
- -------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS-0.34%
MANUFACTURING-0.34%
Ivex Packaging, Sr. Sub. Notes, 12.50% 12/15/02 10,000 10,350
- -------------------------------------------------------------------------------------------------------------------------
Total Capital Goods 10,350
- -------------------------------------------------------------------------------------------------------------------------
CONSUMER DURABLES-1.59%
RESIDENTIAL CONSTRUCTION-1.59%
Ryland Group, Sr. Sub. Notes, 10.50% 07/15/02 50,000 48,000
- -------------------------------------------------------------------------------------------------------------------------
Total Consumer Durables 48,000
- -------------------------------------------------------------------------------------------------------------------------
CONSUMER SERVICES-6.81%
BROADCAST MEDIA-3.54%
Diamond Cable Communications Co., Sr. Disc. Note, 13.25%(a) 09/30/04 100,000 52,375
- -------------------------------------------------------------------------------------------------------------------------
Videotron Holdings, Sr. Disc. Notes, 11.125%(a) 07/01/04 100,000 54,500
- -------------------------------------------------------------------------------------------------------------------------
106,875
- -------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT-3.27%
Aztar Corp., Sr. Sub. Notes, 13.75% 10/01/04 100,000 99,000
- -------------------------------------------------------------------------------------------------------------------------
Total Consumer Services 205,875
- -------------------------------------------------------------------------------------------------------------------------
FINANCIAL-3.30%
INSURANCE-3.30%
American Life Holding Co., Sr. Sub. Notes, 11.25% 09/15/04 50,000 50,250
- -------------------------------------------------------------------------------------------------------------------------
GPA Delaware Inc., Deb., 8.75% 12/15/98 60,000 49,500
- -------------------------------------------------------------------------------------------------------------------------
Total Financial 99,750
- -------------------------------------------------------------------------------------------------------------------------
RETAIL-9.66%
DEPARTMENT STORES-1.60%
Pamida Inc., Sr. Sub. Notes, 11.75% 03/15/03 50,000 48,500
- -------------------------------------------------------------------------------------------------------------------------
FOOD STORES-5.54%
Food 4 Less Supermarkets, Sr. Note, 10.45% 04/15/00 50,000 49,000
- -------------------------------------------------------------------------------------------------------------------------
Ralphs Grocery, Sr. Sub. Notes, 10.25% 07/15/02 50,000 48,500
- -------------------------------------------------------------------------------------------------------------------------
Penn Traffic Co., Sr. Note, 10.65% 11/01/04 70,000 69,825
- -------------------------------------------------------------------------------------------------------------------------
167,325
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
FS-34
<PAGE> 128
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
-------- ------ -----
<S> <C> <C> <C>
SPECIALTY STORES-2.52%
Southland Corp., Deb., 4.50% 06/15/04 $50,000 $30,813
- -------------------------------------------------------------------------------------------------------------------------
Color Tile Inc., Sr. Note, 10.75% 12/15/01 50,000 45,500
- -------------------------------------------------------------------------------------------------------------------------
76,313
- -------------------------------------------------------------------------------------------------------------------------
Total Retail 292,138
- -------------------------------------------------------------------------------------------------------------------------
Total Domestic Non-Convertible Bonds and Notes 707,363
- -------------------------------------------------------------------------------------------------------------------------
FOREIGN NON-CONVERTIBLE
BONDS AND NOTES(b)-15.02%
CANADA-5.79%
Bell Canada (Telephone), Deb., 13.875% 05/01/00 C$55,000 43,976
- -------------------------------------------------------------------------------------------------------------------------
Canadian Oil Debco Inc. (Industrial), Deb., 11.00% 10/31/00 45,000 34,883
- -------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit (Financial), Mtn., 10.375% 09/17/96 125,000 96,028
- -------------------------------------------------------------------------------------------------------------------------
Total Canada 174,887
- -------------------------------------------------------------------------------------------------------------------------
FRANCE-4.80%
Credit Local de France (Financial), Sr. Unsub. Deb., 6.00% 11/15/01 Fr250,000 42,776
- -------------------------------------------------------------------------------------------------------------------------
IBM International Finance NV (Financial),
Sr. Unsub. Deb., 10.00% 08/29/97 500,000 102,264
- -------------------------------------------------------------------------------------------------------------------------
Total France 145,040
- -------------------------------------------------------------------------------------------------------------------------
ITALY-1.53%
KFW International Finance (Financial), Gtd. Deb., 11.625% 11/27/98 L70,000,000 46,271
- -------------------------------------------------------------------------------------------------------------------------
Total Italy 46,271
- -------------------------------------------------------------------------------------------------------------------------
SWEDEN-2.90%
Credit Foncier de France (Financial), Sr. Unsub. Deb., 6.50% 02/22/99 Kr750,000 87,812
- -------------------------------------------------------------------------------------------------------------------------
Total Sweden 87,812
- -------------------------------------------------------------------------------------------------------------------------
Total Foreign Non-Convertible Bonds and Notes 454,010
- -------------------------------------------------------------------------------------------------------------------------
FOREIGN CONVERTIBLE BONDS AND
NOTES(b)-4.43%
FRANCE-1.52%
Societe Generale (Financial), Conv. Deb., 3.50% 01/01/00 Fr231,000 45,827
- -------------------------------------------------------------------------------------------------------------------------
Total France 45,827
- -------------------------------------------------------------------------------------------------------------------------
JAPAN-1.35%
Glaxo Holdings PLC (Financial), Unsub. Conv. Deb., 4.30% 09/28/98 Yen 4,000,000 40,778
- -------------------------------------------------------------------------------------------------------------------------
Total Japan 40,778
- -------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM-1.56%
ELF Enterprise Finance PLC (Financial), Pound
Gtd. Conv. Bonds, 8.75% 06/27/06 Sterling 30,000 47,277
- -------------------------------------------------------------------------------------------------------------------------
Total United Kingdom 47,277
- -------------------------------------------------------------------------------------------------------------------------
Total Foreign Convertible Bonds and Notes 133,882
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
FS-35
<PAGE> 129
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
-------- ------ -----
<S> <C> <C> <C>
FOREIGN GOVERNMENT BONDS AND NOTES(b)-23.00%
AUSTRALIA-5.97%
Australian Government, Gtd. Deb., 9.00% 09/15/04 A$70,000 $ 47,231
- -------------------------------------------------------------------------------------------------------------------------
Queensland Treasury Corp., Mtn., 8.875% 11/08/96 180,000 133,259
- -------------------------------------------------------------------------------------------------------------------------
Total Australia 180,490
- -------------------------------------------------------------------------------------------------------------------------
CANADA-6.74%
Ontario Province, Sr. Unsub. Deb., 6.875% 09/15/00 C$35,000 50,806
- -------------------------------------------------------------------------------------------------------------------------
Province of British Columbia, Deb., 9.44%(c) 06/21/04 150,000 45,479
- -------------------------------------------------------------------------------------------------------------------------
Saskatchewan Canada, Deb., 9.875% 07/06/99 140,000 107,541
- -------------------------------------------------------------------------------------------------------------------------
Total Canada 203,826
- -------------------------------------------------------------------------------------------------------------------------
GERMANY-6.61%
International Bank for Reconstruction & Development,
Unsub. Global Bonds, 7.25% 10/13/99 DM300,000 199,933
- -------------------------------------------------------------------------------------------------------------------------
Total Germany 199,933
- -------------------------------------------------------------------------------------------------------------------------
NEW ZEALAND-3.68%
New Zealand Government, Government Gtd. Deb., 9.00% 11/15/96 NZ$180,000 111,122
- -------------------------------------------------------------------------------------------------------------------------
Total New Zealand 111,122
- -------------------------------------------------------------------------------------------------------------------------
Total Foreign Government Bonds and Notes 695,371
- -------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES--13.25%
U.S. Treasury Notes, 7.50% 10/31/99 $400,000 400,500
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 400,500
- -------------------------------------------------------------------------------------------------------------------------
Total investments (excluding Repurchase Agreements) 2,391,126
- -------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--43.93%(d)
Daiwa Securities Inc., 4.80%(e) 11/01/94 500,000 500,000
- -------------------------------------------------------------------------------------------------------------------------
Goldman, Sachs & Co., Inc., 4.78%(f) 11/01/94 688,063 688,063
- -------------------------------------------------------------------------------------------------------------------------
Prudential Bache Securities, Inc., 4.85% (g) -- 140,000 140,000
- -------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements 1,328,063
- -------------------------------------------------------------------------------------------------------------------------
Total Investments--123.03% 3,719,189
- -------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities--(23.03)% (696,199)
- -------------------------------------------------------------------------------------------------------------------------
Net Assets--100.00% $3,022,990
=========================================================================================================================
</TABLE>
FS-36
<PAGE> 130
NOTES TO SCHEDULE OF INVESTMENTS
October 31, 1994
(a) Discounted bond at purchase. Interest rate represents coupon rate at
which the bond will accrue at a specified future date.
(b) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(c) Zero coupon bond traded at discount. The interest rate shown represents
the rate of original issue discount.
(d) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is
marked to market daily to ensure its market value as being 102 percent of
the sales price of the repurchase agreement.
(e) Joint repurchase agreement entered into 10/31/94 with a maturing value of
$200,526,733. Collateralized by $202,124,000 U.S. Treasury obligations,
3.875% to 8.625% due 01/15/95 to 08/15/08. The aggregate market value of
the collateral at 10/31/94 was $204,510,916. The Fund's pro-rata interest
in the collateral at 10/31/94 was $510,002.
(f) Joint repurchase agreement entered into 10/31/94 with a maturing value of
$114,492,117. Collateralized by $119,992,000 U.S. Treasury obligations,
5.125% to 8.00% due 06/30/98 to 11/15/24. The aggregate market value of
the collateral at 10/31/94 was $116,879,377. The Fund's pro-rata interest
in the collateral at 10/31/94 was $702,503.
(g) Joint open repurchase agreement entered into 10/12/94; however either
party may terminate the agreement as of any business day not less than
one business day after receipt of written notice from the terminating
party. Interest rates are redetermined daily. Collateralized by $29,000
U.S. Treasury Notes, 8.00% due 05/15/01 and $384,589,940 Federal National
Mortgage Association obligations, 0.00% to 10.50% due 02/01/17 to
10/01/24. The Fund's pro-rata interest in the collateral at 10/31/94 was
$146,399.
ABBREVIATIONS
Conv. Convertible
Deb. Debentures
Disc. Discounted
Gtd. Guaranteed
Mtn. Medium term note
Sr. Senior
Sub. Subordinated
Unsub. Unsubordinated
See Notes to Financial Statements.
FS-37
<PAGE> 131
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at market value (cost $2,386,393) $2,391,126
- ----------------------------------------------------------------------------------------------------------
Repurchase agreements (cost $1,328,063) 1,328,063
- ----------------------------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $28,466) 28,397
- ----------------------------------------------------------------------------------------------------------
Receivables for:
Capital stock sold 138,512
- ----------------------------------------------------------------------------------------------------------
Foreign currency contracts, at value 358,615
- ----------------------------------------------------------------------------------------------------------
Dividends and interest 44,995
- ----------------------------------------------------------------------------------------------------------
Reimbursement from advisor 13,100
- ----------------------------------------------------------------------------------------------------------
Other assets 29,595
- ----------------------------------------------------------------------------------------------------------
Total assets 4,332,403
- ----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 923,197
- ----------------------------------------------------------------------------------------------------------
Capital stock reacquired 6,897
- ----------------------------------------------------------------------------------------------------------
Foreign currency purchased 358,139
- ----------------------------------------------------------------------------------------------------------
Dividends 10,934
- ----------------------------------------------------------------------------------------------------------
Accrued administrative service fees 2,485
- ----------------------------------------------------------------------------------------------------------
Accrued distribution fees 1,041
- ----------------------------------------------------------------------------------------------------------
Accrued operating expenses 6,720
- ----------------------------------------------------------------------------------------------------------
Total liabilities 1,309,413
- ----------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $3,022,990
==========================================================================================================
NET ASSETS:
Class A $2,660,750
- ----------------------------------------------------------------------------------------------------------
Class B $362,240
==========================================================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- ----------------------------------------------------------------------------------------------------------
Outstanding 265,464
==========================================================================================================
Class B:
Authorized 200,000,000
- ----------------------------------------------------------------------------------------------------------
Outstanding 36,177
==========================================================================================================
Class A:
Net asset value and redemption price per share $10.02
==========================================================================================================
Offering price per share:
(Net asset value of $10.02/95.25%) $10.52
==========================================================================================================
Class B:
Net asset value and offering price per share $10.01
==========================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-38
<PAGE> 132
STATEMENT OF OPERATIONS
For the period September 15, 1994 (date operations commenced) through
October 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $21,528
- ----------------------------------------------------------------------------------------------------------
Total investment income 21,528
- ----------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 2,099
- ----------------------------------------------------------------------------------------------------------
Administrative service fees 2,508
- ----------------------------------------------------------------------------------------------------------
Directors' fees 110
- ----------------------------------------------------------------------------------------------------------
Distribtion fees-Class A 1,434
- ----------------------------------------------------------------------------------------------------------
Distribution fees-Class B 132
- ----------------------------------------------------------------------------------------------------------
Custodian fees 4,625
- ----------------------------------------------------------------------------------------------------------
Transfer agent fees 214
- ----------------------------------------------------------------------------------------------------------
Other 7,889
- ----------------------------------------------------------------------------------------------------------
Total expenses 19,011
- ----------------------------------------------------------------------------------------------------------
Less expenses assumed by Advisor (15,199)
- ----------------------------------------------------------------------------------------------------------
Net expenses 3,812
- ----------------------------------------------------------------------------------------------------------
Net investment income 17,716
- ----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) on sales of:
Investment securities --
- ----------------------------------------------------------------------------------------------------------
Foreign currencies (680)
- ----------------------------------------------------------------------------------------------------------
(680)
- ----------------------------------------------------------------------------------------------------------
UNREALIZED APPRECIATION (DEPRECIATION )OF:
Investment securities 4,733
- ----------------------------------------------------------------------------------------------------------
Foreign currencies (26)
- ----------------------------------------------------------------------------------------------------------
4,707
- ----------------------------------------------------------------------------------------------------------
Net gain on investment securities and foreign currencies 4,027
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $21,743
==========================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-39
<PAGE> 133
STATEMENT OF CHANGES IN NET ASSETS
For the period September 15, 1994 (date operations commenced) through
October 31, 1994
<TABLE>
<S> <C>
OPERATIONS:
Net investment income $ 17,716
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities and foreign currencies (680)
- ----------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 4,707
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 21,743
- ----------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (15,845)
- ----------------------------------------------------------------------------------------------------------
Share transactions-net:
- ----------------------------------------------------------------------------------------------------------
Class A 655,059
- ----------------------------------------------------------------------------------------------------------
Class B 362,023
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets 1,022,980
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period $2,000,010
- ----------------------------------------------------------------------------------------------------------
End of period 3,022,990
==========================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $3,017,092
- ----------------------------------------------------------------------------------------------------------
Undistributed net investment income 1,871
- ----------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of investment securities and
foreign currencies (680)
- ----------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 4,707
- ----------------------------------------------------------------------------------------------------------
$3,022,990
==========================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-40
<PAGE> 134
NOTES TO FINANCIAL STATEMENTS
October 31, 1994
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Income Fund (the "Fund") is an investment portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland
corporation registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company consisting of
four separate series portfolios: AIM Global Aggressive Growth Fund, AIM Global
Growth Fund, AIM Global Income Fund, and AIM International Equity Fund. The
Fund currently offers two different classes of shares: the Class A shares and
the Class B shares. Class A shares are sold with a front-end sales charge.
Class B shares are sold with a contingent deferred sales charge. 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 following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Investment securities are stated at the last sales
price on the exchange on which the securities are traded or, lacking any
sales, at the mean between the closing bid and asked prices on the day of
valuation. Securities traded in the over-the-counter market are valued at
the mean between the closing bid and asked prices on valuation date.
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 Company's officers in a manner specifically authorized
by the Board of Directors. Investments with maturities of 60 days or less
are valued on the basis of amortized cost which approximates market
value. Generally, trading in foreign securities, as well as corporate
bonds and U.S. Government securities, is sustantially completed each day
at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of a
Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York
Stock Exchange. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which
they are determined and the close of the New York Stock Exchange which
will not be reflected in the computation of a Fund's net asset value. If
events materially affecting the value of such securities and exchange
rates occur during such period, then these securities and exchange rates
will be valued at their fair value as determined in good faith by or
under the supervision of the Board of Directors.
B. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions.
C. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to
attempt to minimize the risk to the Fund from adverse changes in the
relationship between currencies. The Fund may also enter into a foreign
currency contract for the purchase or sale of a security denominated in a
foreign currency in order to "lock in" the U.S. dollar price of that
security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value
of the foreign currency changes unfavorably.
D. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement
date and is recorded on an accrual basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
FS-41
<PAGE> 135
E. 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.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.70% of the first $1
billion of the Fund's average daily net assets, plus 0.65% of the Fund's
average daily net assets in excess of $1 billion. During the period September
15, 1994 (date operations commenced) through October 31, 1994, AIM waived fees
of $2,099 and assumed expenses of $10,500 and $2,600 for the Class A shares and
Class B shares, respectively. Under the terms of the master investment advisory
agreement, AIM will, if necessary, reduce its fee or make payments to the Fund
to the extent necessary to satisfy any expense limitations imposed by the
securities laws or regulations thereunder of any state in which the Fund's
shares are qualified for sale.
The Company has entered into a master administrative services agreement with
AIM with respect to the Fund. This agreement provides that AIM may perform, or
arrange for the performance of, certain accounting, shareholder servicing and
other administrative services to the Fund which are not required to be
performed by AIM under the master investment advisory agreement. For such
services, AIM is entitled to receive from the Fund reimbursement of AIM's cost
or such reasonable compensation as is approved by the Company's Board of
Directors. During the period September 15, 1994 (date operations commenced)
through October 31, 1994, AIM was reimbursed $2,508 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Company has adopted
Plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's
Class A shares (the "Class A Plan") and with respect to the Fund's Class B
shares (the "Class B Plan") (collectively the "Plans"). The Fund, pursuant to
the Class A Plan, will pay AIM Distributors an annual rate of 0.50% of the
average daily net assets attributable to the Class A shares. The Class A Plan
is designed to compensate AIM Distributors for certain promotional and other
sales related costs and to implement a program which provides periodic payments
to selected dealers and financial institutions, in amounts of up to 0.25% of the
average net assets of the Class A shares attributable to the customers of such
dealers or financial institutions, who furnish continuing personal shareholder
services to their customers who purchase and own Class A shares of the Fund.
The Fund, pursuant to the Class B Plan, will pay AIM Distributors at an annual
rate of 1.00% of the average daily net assets attributable to the Class B
shares. Of this amount, the Fund may pay a service fee of 0.25% of the average
daily net assets of the Class B shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own Class B shares of the Fund. Any amounts not paid
as a service fee under such Plans would constitute an asset-based sales charge.
The Plans also impose a cap on the total sales charges, including asset-based
sales charges, that may be paid by the respective classes. During the period
September 15, 1994 (date operations commenced) through October 31, 1994, the
Class A shares and the Class B shares paid AIM Distributors $1,434 and $132,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $2,102 from the sales of the Class
A shares of the Fund during the period September 15, 1994 (date operations
commenced) through October 31, 1994. Such commissions are not an expense of the
Fund. They are deducted from, and are not included in, the proceeds from sales
of Class A shares. During the period September 15, 1994 (date operations
commenced) through October 31, 1994, AIM Distributors received commissions of
$0 in contingent deferred sales charges imposed on redemptions of Class B
shares. Certain officers and directors of the Company are officers and
directors of AIM and AIM Distributors.
FS-42
<PAGE> 136
During the period September 15, 1994 (date operations commenced) through
October 31, 1994, the Fund incurred legal fees of $467 for services rendered by
the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as counsel to
the Company's directors. A member of that firm is a director of the Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest directors'
fees, if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 4-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the period September 15, 1994
(date operations commenced) through October 31, 1994 was $2,457,411 and
$73,926, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1994 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciaion of investment securities $16,489
- ---------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (11,756)
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $4,733
=========================================================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 5-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the period September 15,
1994 (date operations commenced) through October 31, 1994 were as follows:
<TABLE>
<CAPTION>
1994
- ---------------------------------------------------------------------------------------------------------
Shares Amount
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sold:
Class A 65,461 $655,027
- ---------------------------------------------------------------------------------------------------------
Class B 36,863 368,895
- ---------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
- ---------------------------------------------------------------------------------------------------------
Class A 3 32
- ---------------------------------------------------------------------------------------------------------
Class B 2 25
- ---------------------------------------------------------------------------------------------------------
Reacquired:
- ---------------------------------------------------------------------------------------------------------
Class A 0 0
- ---------------------------------------------------------------------------------------------------------
Class B (689) (6,897)
- ---------------------------------------------------------------------------------------------------------
101,640 $1,017,082
=========================================================================================================
</TABLE>
FS-43
<PAGE> 137
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share and
Class B share outstanding during the period September 15, 1994 (dates
operations commenced) through October 31, 1994.
<TABLE>
<CAPTION>
Class A Class B
<S> <C> <C>
Net asset value, beginning of period $10.00 $10.00
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.08 0.07
- --------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.01 0.01
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.09 0.08
- --------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.07) (0.07)
- --------------------------------------------------------------------------------------------------------------------
Total distributions (0.07) (0.07)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.02 $10.01
====================================================================================================================
Total return(a) 0.93% 0.79%
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,661 $ 362
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.25%(b) 1.73%(c)
- --------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 6.01%(b) 3.59%(c)
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 6% 6%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not include sales charges and for periods less than one year, total
returns are not annualized.
(b) Ratios are annualized and based on average net assets of $2,226,439.
Annualized ratios of expenses and net investment income to average net
assets before fee waivers and expense reimbursements are 5.61% and 1.65%,
respectively.
(c) Ratios are annualized and based on average net assets of $102,724.
Annualized ratios of expenses and net investment income to average net
assets before fee waivers and expense reimbursements are 22.09% and
(16.77%), respectively.
FS-44
